The NSW government announced on Friday supermarkets would not be permitted to sell lottery tickets until March 31, 2018.

It comes after the government and Tatts Group signed a new memorandum of understanding (MOU) - which the Newsagents Association of NSW & ACT (NANA) claim they were not party to.

The new MOU does not prevent Tatts Group from expanding into service stations.

"Instead of a moratorium, it would be more beneficial to have some territory protection," Turvey Tops newsagent David Ritter said.

Territory protection can mean, once a franchise has been opened, another business can not open the same franchise in the same area.

Only if the franchise was sold or the agreement not renewed could a new operator open its doors.

It could provide compensation for newsagents who are close to supermarkets.

Newsagents are worried about what will happen if Woolworths and Coles begin selling lottery tickets.

South City newsagent John Byrne is worried about what allowing petrol stations to sell lotteries will lead to.

"There's no (guaranteed) exclusivity for selling lotteries, but they still expect us to outlay a substantial amount on a (new) shop fit-out," Mr Byrne said.

To counter this, the state government is offering a total of $15 million, or $10,000 per newsagent with the costs of a fit-out.

However, not everyone has welcomed the money.

Mr Ritter said the Tatts Group had specified only certain suppliers could complete the shop fit-outs and the cost depends on the size of the newsagent.

"They must be done by 'approved shop-fitters', none of which are in the Riverina," Mr Ritter said.

Shop fit-outs include cabinet work, signage and advertising material - it could potentially cost up to $25,000 for a small to medium-sized newsagent.

"With the state government offering $10,000 ... it increases the potential for rorting through the supply chain ... it's just going to line suppliers' pockets with taxpayer's money.

"I have been hugely surprised by the level of support from our wonderful customers, the voters don't want their lottery outlets trampled on," Mr Ritter said.

Mr Byrne said South City newsagency had received overwhelming support from the public.

"They're against Coles and Woolies getting their hands on more of what small business has been providing".

NANA will meet with premier Mike Baird today and treasurer Andrew Constance tomorrow to discuss the terms of the new MOU with Tatts Group.