We talked about New Zealand’s plan to legalize iGaming, and now, we’re taking a look at the projected revenue they expect to get from these online casinos.
The gambling industry in New Zealand is booming and yields revenues to the tune of NZ$1 billion annually. The one area that has remained unregulated for a long time is the online casino industry. Now, the government has shifted its focus recently to bring it under the regulatory banner.
On 8 March 2024, the New Zealand Parliament passed the New Zealand Taxation (Annual Rates for 2023-24, Multinational Tax and Remedial Matters) Act. This Act introduces a new gaming duty—the offshore gambling duty—with the objective of bringing offshore casino operators under the tax umbrella and significantly contributing to the nation’s revenue generation exercise annually.
The proposal for new regulation to ensure the taxation of offshore online casino operators was finalised through a regulatory impact statement (RIS) that was put together under the aegis of the New Zealand government's Ministry of Finance.
Finalised on 21 February 2024, the proposal sought to regulate offshore operators by introducing a new gaming duty of 12%. This would be a significant revenue generator, given that the only tax offshore operators were paying so far was the GST.
According to the estimates in the paper, in the fiscal year 2024-25 itself the new regulations would ensure collection of at least NZ$35 million in additional tax money. The projected growth every subsequent year was pegged at 5%.
As per insights provided by True Legal, regulating the online gambling market would yield revenues of NZ$500 million – or US$300.8 million – annually. Industry stakeholders beg to differ, though; according to them it is lower than the current revenue of NZ$900 million that the grey market is generating.
While the Act has been passed in Parliament, the government is looking to introduce the new framework for regulating online casino gambling by 2026. That timeline seems to be interesting, given that it coincides with New Zealand’s general elections.
According to True Legal, this strangely ‘coincidental timeline’ could just be the government’s way of highlighting the seriousness of regulating the online gambling industry and positioning it as a legislative priority.
As mentioned earlier, a draft of the legislation has already been made and approved by the Cabinet. It is expected to be released later in 2024. Once the approved draft is released, the next step would be a process of public consultation.
Set to be held in 2025, the consultation process would see stakeholders would be asked to provide their inputs with regard to the proposed framework. This is a critical step as it would allow international stakeholders to come and state their case. For the government, it would be a good learning opportunity – it would be able to see what jurisdictions that have regulated online gambling had to do.
At this point in time there are no details yet on critical aspects of the regulatory framework, such as the number of licenses that the licensing body would be issuing. There is no information yet on the cost of a license and other details, as well.
This is because the regulations were still being put together. In a statement earlier, Brooke Van Velden, New Zealand’s Minister of Internal Affairs said there would be strict regulation of gambling-related advertising, a critical step in ensuring the safety of vulnerable individuals.
While nothing is certain, it is also likely that there would be limitations on the kind of online gambling products that offshore operators as well as local operators would be able to offer, besides sportsbetting and lotteries.
With all of this in play, it is highly likely that the government will change its stance – from having no cap on the number of licenses and lowering the barriers for entry – to providing a limiting model that works for all stakeholders.
Speculation is also rife that lobbying by land-based casino giants like SkyCity Entertainment Group would play a role – at least to an extent – in ensuring that only a limited number of licenses are issued to online operators.
Coincidentally, SkyCity—and Skyline Entertainment, another land-based operator—is already testing the online gambling waters by launching online casinos licensed by the Malta Gaming Authority (MGA).
SkyCity has, in fact, tied up with Gaming Innovation Group, while Skyline is using the services of White Hat Gaming for its casino, ChristchurchCasino.com.
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