New Zealand's government is moving to implement regulatory changes in the online casino sector that could direct up to NZ$20 million (approximately $11.2 million) annually into community funding. These estimates are based on the new Online Casino Gambling Bill recently made public.
Under this legislation, a portion of the offshore gambling duty will be allocated specifically for grassroots organizations through the Lottery Grants Board. The concept of dedicated community funding was initially proposed in December 2022 and will be determined from 4% of the operators' gross gaming revenue (GGR).
The policy aims to supplement existing funding from sources such as Lotto, Class 4 gambling, and the TAB, thus creating a new revenue stream for local communities. This initiative is scheduled to take effect on January 1, 2027.
Officials are projecting that the contributions to community funding could vary between NZ$10 million (around US$5.6 million) and NZ$20 million annually, depending on how many gamblers transition to licensed online operators and overall market engagement.
Up to 15 licenses for online gambling are up for auction, with the government currently reviewing applications that followed a bidding process in September. The final decisions are set to be announced this month, and entities that do not obtain a license will need to cease operations by December 1.
A review of the community funding grant will occur after two years of its implementation. During the public consultation phase for the funding policy, there were significant concerns regarding the impact of online gambling on revenues from traditional sources like electronic gaming machines, or pokies, which are crucial for community funding. Out of 4,837 submissions, 3,966 expressed apprehension regarding community returns.
Government documentation indicated mixed evidence on how online gambling affects existing funding, prompting a commitment to evaluate the funding arrangements two years post-implementation. The consultation process brought attention to various risks and uncertainties related to the benefits promised to the community.
The report concluded that although the proposal is beneficial to community organizations, quantifying these benefits is challenging. It also noted that there are direct costs for operators and administrative expenses for the government, as well as potential unmeasured opportunity costs and risks associated with increased gambling harm. The assessment of these factors will guide the review.
Since New Zealand's iGaming legislation received royal assent in May, the licensed market is not expected to become operational until 2027. This timeline represents a delay of over a year from the original June 2023 target, attributed to uncertainties within the legislation.
Access to the market will be strictly regulated, with stringent marketing rules prohibiting affiliate and influencer advertising along with various promotional tactics. Compliance will also be a significant aspect, as operators will face rising gambling duties from 12% to 16%, plus a 15% GST, a 1.24% problem gambling levy, and a 3.5% licensing fee.
