Technology has been evolving at almost light-speed and one direct outcome of that when it comes to things like online gambling is the inability of the laws of the land to keep pace with it. That gap, over a period of time, becomes big enough to allow some real money casino operators to use it to their advantage.
That is exactly what has been happening in the gambling industry in New Zealand, with operators hawking their wares despite regulations not being the most favorable for them. A good example of this is SkyCity casino, which has already been in hot water for legal challenges in the past.
The Gambling Act of 2003 effectively prohibits local operators from offering online gambling options to New Zealanders. The only legitimate options available are the government-run Lotto NZ and sportsbetting activities run by TAB. However, the law doesn’t prevent New Zealand players from gambling at online casinos run by overseas operators.
It is this loophole that led SkyCity, one of the leading players in the land-based gambling business in the country, to open an online casino in 2019. At the beginning this may have seemed a difficult proposition given the rules against gambling.
The solution was simple – launch it such that it doesn’t come under the ambit of the laws of New Zealand. And the path SkyCity chose was to collaborate with Gaming Innovation Group (GIG), an outfit based out of Malta and operate the casino with a license from the Malta Gaming Authority (MGA).
The reason for choosing to go the online casino way despite the illegality of it was simple and pure economics. Statistical data shows that online casinos catering to New Zealanders rake in more than $160 billion annually: one way of getting a share of that large pie was to open an online casino.
The size of its business and the reputation SkyCity enjoyed gave it the leverage to inform the New Zealand government of its decision to launch the online casino despite the existing laws. The Department of Internal Affairs responded with a statement about looking to put together a regulatory body to issue licenses for local and international casino operators.
As of now nothing is confirmed, however, as the entire process of introducing a regulatory framework is set to start only from 1st July, 2024.
The impact and implications of SkyCity opening its online casino were manifold and on multiple fronts. At first glance the economics are a definite plus, because the online casino would earn SkyCity a significant profit year-on-year. It would also give New Zealand players the chance to play from the comfort of their home at a casino that was owned by one of their own.
However, look a little closer and the economics start appearing a tad skewed. While it is true that the GST that SkyCity pays the government adds to its coffers, a majority of the revenue – including various other taxes and a share of the profits – goes to Malta. The result – New Zealand loses out on the opportunity to collect additional revenue.
That is not all: there are questions that arise, about the legality and ethics of this whole exercise. The company scores legally because the casino is licensed overseas and there is no law that prevents New Zealand players.
The ethics of it all are a bit different though. There is the grim specter of gambling-related issues like addiction and debt to consider – these are things, critics of the proposed regulation say – that the Gambling Act of 2003 had effectively contained.
One way out of it all, advocates of reform say, is to regulate the easy access that New Zealanders have to overseas casinos along with easing the restrictions on local players have for online gambling. That would bring in a degree of control and create a kind of level playing field for all.
Of course thorough research will be needed before any course of action is decided. The government would need to consider the potential implications of any changes it makes. It would be hugely counterproductive if the government, in its enthusiasm to control and regulate gambling, pushes legitimate overseas operators away and drives players into the hands of unscrupulous brands.
One thing is for sure: the entire situation of SkyCity opening an online casino in New Zealand by exploiting the legal loophole that exists is a direct indicator of the need to introduce laws that understand the various aspects of online gambling enough to be able to regulate it.
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