Online gambling

The online game ‘aggressively’ targeting New Zealand

Company

A lack of regulation has made New Zealand an easy target for online gambling providers, with estimated spending rising from $139.3m in 2014 to $332.6m in 2020

New Zealand’s unregulated online gambling space is set to reach $600 million by 2025 if the government does not intervene to stem the “aggressive targeting” of offshore providers.

At the end of last month, Christchurch Casino announced that it would be launching an online gambling site outside of Malta. Christchurch’s offering will be the second New Zealand-owned and Malta-operated online casino, following SkyCity’s product launched in 2019.

Both casinos chose to launch their products outside of Malta because (apart from Lotto and TAB) it is illegal to provide online gambling services in New Zealand, but legal to play on offshore websites.

Offshore websites targeting New Zealand are not subject to New Zealand laws, regulations or taxes, although they are not permitted to advertise.

According to research conducted by consultancy Regulus for SkyCity, conservative estimates estimated that total online gaming revenue increased from $139.3 million to $332.6 million between 2014 and 2020.

The increase represents a compound annual growth rate of 15.6%. The largest one-time increases in estimated revenue occurred in 2018, when it increased by 18.2%, and in 2020, when it jumped by 33.5%.

The massive uptick in 2020 aligns with SkyCity’s online casino gaining momentum and the onset of the pandemic.

The market is worth around $350 million in 2022 and is expected to grow to over $600 million in 2025 at the rate things are going.

Super Group’s Jackpot City, listed on the New York Stock Exchange, is by far the largest operator in New Zealand, followed by Flutter Entertainment

far west

The Department of Home Affairs undertook a review of online gambling in New Zealand in 2019, but work on it has since stalled, at least publicly.

Home Affairs Department Minister Jan Tinetti was out of the country and unable to answer questions, but the ministry itself said the review was still under consideration and the Cabinet was expected to consider the proposals by the end of the year.

National internal affairs spokesman Todd Muller said it was an area he was looking at, but not one he raised in caucus as he awaited Tinetti’s review.

“Let’s see what she finally delivers. For some reason, she seems to take forever to come to a final view.

“At first glance, it looks a bit like the Wild West. Anyone can essentially establish themselves as providing online gambling opportunities and that strikes me as incongruous with the much more regulated approach we have with every other game of chance on land whether in the casino context or even slot machines.

A spokesman for the Department of Home Affairs said the lack of regulation limited government influence in the online gambling market for New Zealanders.

“This means, for example, that operators cannot currently be held liable for any oversight or non-compliance with damage minimization measures. Legislation would be needed to ensure government oversight of the online gambling market.

The 2019 discussion paper released by the DIA stated that when the Gambling Act of 2003 was being drafted, internet technology was a work in progress and smartphones did not exist. “Legislators could not foresee how online gambling would develop 16 years later.”

The document outlines four options, including maintaining the status quo, expanding the services TAB and Lotto could offer, licensing domestic operators, and licensing domestic and foreign operators.

In Europe, 21 countries have regulated online gambling since 2001, including nine since 2016. Nearly half of US states have adopted online betting regulations since 2018.

Outside of potentially securing more market share, SkyCity, which has been pushing for regulation since 2016, seems an unlikely advocate for greater oversight.

Last gray market

A spokesperson for SkyCity said that being one of the last remaining “grey markets” and with widespread regulation around the world, online brands were increasingly aggressively targeting customers in “grey” markets without barriers or taxation like New Zealand.

The casino operator pays tax on its Maltese earnings and claims that it adheres to host liability/minimization of damage standards and seeks to establish a level playing field for others.

“SkyCity supports taxation of the online gaming market. Currently, the unregulated supply of online gambling brings nothing to the community, whether in taxes, levies or other benefits.

He estimates that regulation, including proper marketing controls, would generate approximately $1 billion in taxes, gambling levies, jobs and community contributions over a decade, as well as a slowdown in the growth.

Some of the games offered by SkyCity’s Malta-based online casino.

SkyCity’s four New Zealand casinos have paid $1.152 billion in taxes over the past 10 years.

Problem Gambling Foundation chief executive Paula Snowden also supports space regulation, unsurprisingly much more closely than SkyCity.

“We know why SkyCity and now Christchurch Casino want an offshore offering, it’s because they are competing for the gambling market.

“Just because the online environment is so porous, and you plug a hole here and it pops up somewhere else, doesn’t mean you shouldn’t try to do something with the things you can control.

“That’s what we would say to the regulator, at least try where you have some ability to control, otherwise you just put your hands up and say, ‘Oh, there’s nothing we can do’. Well, actually , we can do something and do these little things well, it’s better than nothing.