NZ Online Gaming Reforms- the delicate balance of regulation, innovation and safer gambling
New Zealand's online gaming landscape is on the brink of significant change, with a new Online Gambling Bill set to be passed, which aims to facilitate a regulated domestic online gambling market. The legal reforms are poised to impact not only online gaming consumers and service providers, but also the broader gaming industry and policymakers.
Here’s a detailed look at what these changes entail.
The Current Legal Framework
Currently, New Zealand's online casino gaming environment is regulated under the Gambling Act 2003 (NZ). While this legislation emphasises harm minimisation and gambling integrity, there is a noticeable gap in addressing the rise of international online casinos and the rising number of New Zealand consumers who access their online gaming services. Under existing laws, New Zealand customers are allowed to access international online gaming platforms, but these platforms operate outside of New Zealand's jurisdiction and therefore generally escape regulation or taxation.
This raises concerns for the government and the community about matters such as:
player protections and responsible gambling measures;
taxation revenue loss for New Zealand, as offshore platforms are not taxed locally; and
ethical challenges regarding gambling advertisements published on international websites.
According to research, compared to regulated land-based gamblers, gamblers who participate in betting on offshore wagering markets are more likely to be moderate-risk (more than twice as likely) or problem gamblers (more than three times as likely), with higher levels of gambling expenditure with annual losses. The safety of players who partake in unregulated offshore gaming is impacted by the inadequacy of consumer protections, absence of systemic grievance redress mechanisms, lack of protection of funds and misuse of personal information. The availability of offshore gaming operators and the lack of consumer protection presents a high risk to consumers and may facilitate gambling harm.
The availability of unregulated offshore gaming markets also impacts gambling taxation revenue. As highlighted in various reports including the O’Farrell Review and Sport Integrity Australia's “The distribution of Australian sports data into foreign jurisdictions”, quantifying the size of offshore gambling leakage is extremely difficult. However offshore gambling does deny revenue streams to domestic operators and government.
Government revenue for domestic licensees is derived from taxes, licensing fees, Goods and Service Tax (GST), company tax and fringe benefits tax etc, whereas offshore online gaming providers pay no domestic tax in New Zealand. Domestic offshore leakage means the government does not collect fees from this type of gaming activity which could be used to fund consumer protection initiatives and other benefits for the taxpayers.
Proposed Changes to Online Casino Gaming Laws
The proposed reforms will implement several pivotal changes including the establishment of a licensing framework for online casinos.
Key aspects of the proposed reforms include:
Licensing Requirements for Online Casinos
Online gaming operators wishing to serve New Zealand customers would need to obtain a licence authorising the provision of their services. The licence will likely include conditions ensuring compliance with New Zealand's strict gambling standards, fair play rules, transparency obligations, and harm prevention principles.
Only a limited number of 15 licences are likely to be granted by the New Zealand Government, which will be available through an ‘auction’ process subject to bidders meeting certain regulatory requirements. This means that existing operators such as SkyCity Entertainment Group, who currently operate multiple casinos in New Zealand, will not be automatically guaranteed a licence and will need to apply in the same manner as other international operators.
View the Bill’s key timeline.
Taxation of Offshore Platforms
International gambling companies who provide services to New Zealand consumers will also be required to pay a fee or tax. This approach aims to recover revenue which would otherwise be lost offshore and to reinvest such revenue into New Zealand's regulatory frameworks or social initiatives, such as problem gambling support.
At present, there is limited data providing expenditure estimates for offshore online gambling among New Zealanders. The Department of Internal Affairs yearly gambling expenditure statistics does not split out data on online gambling and does not include offshore online gambling. It is therefore difficult to estimate how much money is being spent by New Zealanders in offshore markets and what taxation revenue might be generated by regulated onshore online gambling.
Enhanced Player Protections
New responsible gaming obligations will be mandated, such as offering limits on deposits, time tracking tools, and self-exclusion mechanisms. These changes aim to reduce gambling-related harm among New Zealand consumers.
Restrictions on Advertising
Stricter rules are proposed in respect of the publication of gambling advertisements and promotions directed at New Zealanders, including digital marketing published by or on behalf of international gambling platforms. The aim is to limit exposure to promotional material encouraging excessive or impulsive gambling.
Monitoring and Enforcement
A regulatory authority may be established or adapted to monitor and enforce compliance. This includes powers to issue penalties to unlicensed operators attempting to unlawfully provide services to New Zealand consumers.
Balancing regulation, market innovation and ensuring safer gambling
For policymakers, the proposed reforms represent a significant step forward in addressing the complexities and issues posed by the proliferation of online gaming while balancing the social and economic implications of excessive gambling. Enforcement will, however, present challenges, particularly in terms of enforcing compliance with offshore platforms.
A key ongoing challenge in respect of the reforms lies in striking a balance between safeguarding citizens and encouraging technological innovation. Emerging trends, such as virtual reality (VR) casinos, blockchain-based gambling platforms, and AI-assisted gaming systems, suggest that the online gaming industry is rapidly evolving. Any reforms ought to therefore remain flexible enough to accommodate these shifts, ensuring that New Zealand stays on top of future trends while maintaining robust protections.
The proposed NZ online gaming reforms represent a critical turning point for the country’s gambling industry. By introducing a licensing system, taxation mechanisms, and enhanced player protections, New Zealand aims to create a safer, more regulated gaming environment.
NZ online gaming licence application advice
Senet has considerable experience navigating regulated licensing frameworks and can assist you with advice in understanding the proposed regulatory framework, navigating the probity assessment process and applying and bidding for an Online Gambling licence in New Zealand.
Contact the team at Senet to discuss New Zealand licensing in more detail.
