New Zealand Government to Auction Online Casino Licenses and Implement Strict Regulations

In recent years, the landscape of gambling in New Zealand has been on the brink of a significant transformation. The government’s plan to auction licenses for online casinos marks a pivotal moment in this journey. This initiative is spearheaded by Internal Affairs Minister Brooke van Velden, who has been at the forefront of outlining the new regulatory framework aimed at minimizing harm while boosting tax revenue.

A Shift in Policy

Currently, online casinos based in New Zealand are illegal, a rule that has been in place to curb unregulated gambling activities. However, SkyCity Entertainment, the country’s only casino company, operates an online casino based in Malta. SkyCity has long advocated for a regulated industry within New Zealand, pushing for changes that would allow it to compete fairly with foreign operators and increase its market share. The government's recent proposal seems to be a step in that direction, setting the stage for a more controlled and beneficial gambling environment.

The proposed system involves a limited number of licenses to be auctioned for three-year terms. Operators wishing to obtain these licenses will need to meet stringent standards before they can offer their services. This approach is designed not to increase gambling among New Zealanders but to ensure that all operators meet strict requirements for consumer protection and harm minimization while contributing to the country’s tax revenue.

One of the key aspects of the new regulation is the age restriction. Gamblers will have to be at least 18 years old to participate in online casino activities. Additionally, the types of games available will be strictly limited to casino games. This means sports betting, lotteries, and sponsorships will be banned, creating a focused and regulated environment for online gambling.

SkyCity Entertainment has welcomed these changes. The company, which set up its online business through a Malta-based subsidiary in 2019, has been vocal about the need for a regulated market. Although SkyCity recently sold its 10 percent stake in the site’s founder and operator, it continues to support regulations that ensure fair competition and responsible gaming. SkyCity's CEO, Jason Walbridge, has expressed that a regulated market with limited advertising and operator numbers is crucial to protecting New Zealand players and ensuring community benefits from gambling revenues.

The public will have an opportunity to provide feedback on the regulatory plans during the select committee process, ensuring that the community's voice is heard in this significant policy shift. A research report by investment house Forsyth Barr suggests that the tax rate on online operators could be higher than that for land-based counterparts. Despite this, the new regime is expected to be positive for companies like SkyCity.

Concerns about problem gambling have also been a driving force behind these changes. Last month, a problem gambling organization highlighted alarming cases of children as young as 11 gambling online and accumulating thousands of dollars in debt. This has underscored the urgent need for stringent regulations to protect vulnerable individuals and ensure responsible gambling practices.

A New Era by 2026

Van Velden has stated that the new licensing system is set to come into force by 2026. Although details on the new offshore gambling tax, a pre-election promise, have not yet been disclosed, the government’s commitment to creating a regulated environment is clear. This tax is expected to ensure that offshore operators contribute fairly to New Zealand's economy, addressing the current issue of significant gambling revenues flowing out of the country.

This regulatory shift is also one of the first major changes to gambling under the new government. The National Party, which won the recent election, has long criticized the previous government’s handling of offshore gambling revenue. The National Party claimed it could raise NZ$179 million per year from offshore operators, arguing that the current GST system only generates around $40 million annually. These figures highlight the potential economic benefits of a regulated online gambling market.

Source:

''Regulating online casinos approach'', beehive.govt.nz, July 30, 2024.