New Zealand is taking a ring fenced approach to its gambling framework as it looks to level the playing field between offshore and domestic operators.
Minister of Internal Affairs Brooke van Velden laid out that offshore gambling duty is set to rise from 12% to 16%, with that extra 4% ring fenced to fund community and grassroots sports funding.
Announcing the decision, van Velden emphasised: “While I am confident the regulated online casino market will provide new community funding opportunities for New Zealand sports clubs and community organisations, I do acknowledge that predicting the exact impact on existing Class 4 [pokies] returns creates some uncertainty.
“Cabinet has agreed on a two-year review after implementation of the community returns policy to assess the impact of online casino gambling on other forms of gambling and community returns.”
She added: “The message from communities was loud and clear – if we’re regulating online gambling, they want to see benefits flow back to local sports clubs, community groups and grassroots organisations.
“I have listened, and now as a government, we are delivering on what matters most to communities across the country.”
“Problem gambling prevention and harm minimisation standards are non-negotiable and unchanged. Protecting Kiwis from gambling harm is still my number one objective.
“Community funding will not compromise this government’s commitment to reducing gambling harm.”
Rallying against proliferation
Van Velden has long spearheaded the campaign to safeguard against the proliferation of gambling operators in New Zealand, implementing regulation to ensure that a maximum of 15 licences can be issued in the country.
The increase comes at a vital time for the industry as it approaches the two year mark of regulation, which means an examination of the sector’s performance and structure will take place.
There has also been pressure around the impact of gambling within local communities and the economy as questions are raised over the prevalence of offshore gambling operators in the country.
Commenting on the upcoming review, van Velden said: “This evidence-based review will inform necessary adjustments allowing us to make informed policy decisions based on real-world data in future.
The Minister added: “This is new money on top of existing funding from pokies, Lotto, and TAB. We’re not taking anything away – we’re adding to what’s already there.
The Bill addresses a critical gap in New Zealand’s regulatory framework.
“Right now, Kiwis are gambling on thousands of overseas websites with no safety nets, no spending limits, and no recourse when things go wrong. That’s unacceptable.
“This Bill brings those operators under New Zealand law, with proper consumer protections, harm minimisation measures, and now – community benefits.”
The ring fencing approach to gambling taxation has been taken up in other markets, with government’s aiming to ensure that state revenue from the gambling industry goes to the right places.
It’s a particularly common theme in Australia. However, the New Zealand model appears more defined and purposeful than the model adopted in Australian states.
This may indicate that the New Zealand government is looking to alter the framework for offshore gambling operators, and enable the domestic TAB betting operator, managed by Entain under a 25 year contract, to thrive.
Closing off the market to offshore firms would also enable New Zealand’s domestic casino space, both incumbents like Sky City and potential new market entrants under the planned 15 licence framework, to better compete.
A different ring fencing strategy proposed in the UK
The idea of ring fencing was also touted as a potential solution tackling high risk gaming engagement in the UK during a Select Committee hearing this week.
This idea was met with disdain, understandably, from the UK trade body, the Betting and Gaming Council. MPs seem in favour, however, with Treasury Select Committee member Dame Meg Hillier the MP stating: “In other industries you can have ring fencing of different types of activity.
“Is that something you have considered at the Betting and Gaming Council, so that you can have online treatment in one way, even though the businesses operate as one? Would you consider ring fencing so that you are taxing things on different bases?”
The BGC’s CEO, Grainne Hurst, fired back with: “I think that would be difficult for operators to do. Obviously, they will be reinvesting some of their profits back into particular areas of the business where they think it is needed. If they were to ring fence particular elements of their offering, that would be quite difficult and would probably lead to a reduction.”