Maurice Blackburn lodged the legal action in Victoria's Supreme Court on behalf of gamblers who have allegedly lost money through live in-game bets on Sportsbet.
Principal Elizabeth O'Shea said the gambling giant had circumvented the law through its "Fast Code" service, which she claimed was illegal.
"Betting on a sporting event after the event commences is prohibited in Australia," she said.
"There is an exception to this if the bet is made wholly by telephone.
"We believe that Sportsbet's use of the Fast Code service is not just an attempt to circumvent important laws aiming to prevent gambling harm, it is also illegal because key information about the bet is communicated by punters otherwise than by a voice call."
The class action is calling for Sportsbet to refund gamblers who lost money at the beginning of a sporting event using the service, in the past six years.
Bets placed on racing, including horse, harness and greyhound events, are not included.
Sportsbet has been contacted by AAP for a response.
National Gambling Helpline 1800 858 858
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