Online gambling regulation in NZ was announced in July – can you give us an insight into how far along the Government is in the process of drawing up a presentable framework?
The Government has made the decision that it is going to open the way for online licences. There is a consensus as to what the framework will look like regarding how many licences there will be, what regulations will apply, what limits on advertising will apply, what taxes will be applicable. If all goes according to plan, the parliamentary council will draft the first scope of the legislation that will be introduced by April 2025. We then go through a public consultation process which, in fact, is a really powerful tool for people in the industry to make written submissions, or to appear in front of the committee and say, Our Government is very receptive in that consultation process to changes and tweaks. Currently, the proposal is there will be 15 licences, but we could see that increase or potentially be unlimited. There’s scope during the process for that to be amended, which I feel it should be. Once we’ve got the final version of the legislation and it’s passed in parliament, it will be put into place by the end of 2025 and then there’ll be a two-stage process for licences. If you want to be considered for a licence, there will be a vetting process starting on 2 February, where you put forward your intention to obtain a licence. Once you pass the vetting process, you’ll then be eligible to participate in the subsequent auction, which will occur six weeks after that. Then, people will be permitted to be up and running, and trading under the new regime in April 2026.
At present, New Zealand’s estimated online gambling grey market spend is anywhere between $500m-$900m. Why do you think the country has chosen now to try and capture its grey market?
I think it’s just a logical, sensible thing. The catalyst has been the fact that we, in New Zealand, have a new centre-right Government that’s a bit more business friendly. It’s more their cup of tea to introduce gambling legislation as opposed to our previous left-leaning Government. The new Government is also promising tax cuts and greater infrastructure growth. It needs new sources of revenue. Nevertheless, everyone in our industry agrees that regulation is well overdue. Online gambling is happening on a large scale here and currently we’re in the Wild West. People are allowed to participate in online gambling via the offshore providers and there are no harm minimisation controls. There are plenty of advertising restrictions, but also plenty of workarounds that people use. There are also real issues with player fairness. People that play on a large number of our online casinos and win simply never get paid.
A continuous problem within the Australian market has been a lack of compliance. How do you think New Zealand will set up its online gaming regulations to try and avoid these issues?
I think AML and harm minimisation is hard in the physical environment – and that’s where Australia is really struggling. It’s hard to monitor how many hours a player has been active after walking into a casino, or how much they’ve spent, without sophisticated facial recognition-tracking technology and a mandatory carded play that tracks all their spending. Whereas that kind of monitoring is easy in the online environment, you require a process to sign up to play, which includes providing ID. You can do AML checks as part of the sign-up process. Then, you have 100% transparency on the exact amounts spent, time spent and patterns of play; if a person goes from spending $40 a week to suddenly spending $4,000 a week, there are algorithms that detect it. You can then very easily ban people by simply saying this customer is no longer permitted to play. Whereas in the physical environment that kind of activity is much harder for security guards – for example – to deal with, especially without cutting-edge technology.
Online gambling is happening on a large scale here and, currently, we’re in the Wild West... Greater innovation, greater products, more consumer choice. Why wouldn’t that be a good thing?
What do you think will be the biggest hurdles the Government have to cross as it attempts to build New Zealand’s online gambling legislation?
I don’t think the Government will face many hurdles at all. There is a broad consensus that this is entirely appropriate and, in fact, overdue. The industry wants it. The public want it because, currently, there are situations where players aren’t getting paid. I think the debates will just be about the number of licences there should be. Currently, the way New Zealand’s gambling system operates is that every form of gambling in New Zealand, apart from our six land-based commercial casinos, can only be done to raise money for community or charitable purposes. All the profits from our gambling, aside from those six commercial casinos, go 100% back to the community. The proposal here is that we would allow commercial online operators to operate purely as a business with no community return; that’s quite odd for us and a fairly drastic change. Those that are already in the community fundraising space will no doubt be saying, ‘if you’re going to grant licenses, why don’t you grant them to the people that are currently returning all their profits to the community?’ We may have a situation where the commercial people might be eligible for a licence without being subject to the 15 number limit and without being required to pay for it as part of the auction process.
An early policy set out by the Government was a ban on gambling sponsorship. What kind of repercussions do you think this will have for the market and do you think any positives will come out of this policy with regard to player protection?
I don’t think anyone’s going to have any major concern or objection in relation to the sponsorship prohibition. It’s not an advertising prohibition. Simply, you can’t – in any way – sponsor a sports team. You’re still free to advertise on billboards, you’re free to advertise on people’s social media feeds, on the radio and TV et cetera. Therefore, I would guess it just mirrors our smoke-free legislation that prevents harmful products from being associated with sports teams. I also think it just complements the rules we have in relation to advertising for 18+ products. Advertising needs to be focused on adults, and it needs to be at a time where adults are viewing. No cartoons, no superhero characters and advertise at night-time.
From what you have observed so far, what do you feel are the Government’s key priorities for New Zealand’s online gambling market – and perhaps what should its priorities should be?
Firstly, tax. Gambling is happening already, and we’re not getting our fair share of tax. They’ve introduced a new 12% online casino duty, and there’s an existing 15% GST for offshore and casinos outside New Zealand’s jurisdiction; but there’s no incentive to pay that. A licence will enable you to freely advertise and promote within New Zealand. Put simply, there are big benefits to being licensed and paying tax. The second priority is to wrap some harm minimisation around things, to make sure everyone’s supplying games where the odds are fair, where when players win, they are actually paid, and we want to ensure there are exclusion self-systems. However, as far as to what their priorities should be? I think they have been a little bit shortsighted by simply saying there will be 15 licences. We currently have 36 providers paying tax in New Zealand, 15 is obviously less than half of that. There are about 3,000 current providers accepting deposits from people based in New Zealand. With only 15 licences, there is still a risk that there would be a large black market. If there was a larger number of licenses, would that risk reduce the risk? I think it would. I think there should be a space for the providers that want to operate on a non-commercial basis to be able to do so. It makes sense that, if you have a physical presence, you also have an online presence, and that online funding could go out to community purposes via our unique grant model process. Greater innovation, greater products, more consumer choice. Why wouldn’t that be a good thing? Nevertheless, this legislation is coming. The first draft won’t be perfect. The good thing is our regulator and our select committee are really receptive to change – and we’ve found them to be very open already.
