New Zealand's government is moving ahead with regulatory changes for the online casino sector that may generate up to NZ$20 million (approximately US$11.2 million) annually for community funding, based on official projections.
Under the proposed Online Casino Gambling Bill, part of the offshore gambling duty will be allocated specifically to grassroots organizations through the Lottery Grants Board. This policy was released for public viewing last week.
The concept of community funding was first introduced in December of the previous year as a component of the bill. It is set to be established at 4% of the gross gaming revenue (GGR) from operators.
This initiative aims to supplement funding that already comes from Lotto, Class 4 gambling, and proceeds from the TAB, creating an additional financial stream for local communities set to take effect on 1 January 2027.
Officials believe this community contribution could range between NZ$10 million (US$5.6 million) and NZ$20 million annually, largely influenced by market engagement and the transition of wagering to licensed online platforms.
The government has made available up to 15 online licenses, with current applications being evaluated following an auction held in September. The conclusion of this final stage is expected within the month, and any unsuccessful applicants will need to halt their operations by 1 December.
A review of the community funding grant is scheduled for two years after implementation. During the public consultation phase regarding this policy, concerns were raised about potential impacts on revenue from traditional gambling methods, such as electronic gaming machines (pokies), which are essential for local funding.
Out of 4,837 submissions received, 3,966 expressed concerns about the possible effects on community returns. Government documents indicated that research on online gambling's impact on existing funding streams yielded mixed results, prompting a commitment to re-evaluate community funding arrangements two years post-implementation.
The consultation revealed various risks and highlighted uncertainty about the promised benefits. According to the report, "While this proposal creates benefits for community groups and these groups highly value grants, the benefits cannot be monetised easily as the value of them is unknown."
It also pointed out that the proposal would impose direct costs on operators and administrative burdens on the government, stating that there are unquantifiable risks to Lotto NZ and a low risk of increased gambling harm. "On balance therefore, we consider that there is a risk that these costs may outweigh community benefits," the report concluded.
The review will gather insights from licensed and potential operators, alongside community organizations.
Even though New Zealand's iGaming legislation received royal assent in May, the fully operational licensed market won’t launch until 2027. Originally expected to go live in June, the timeline experienced more than a year of delays, with stakeholders cautioning of legislative uncertainties as early as last July.
Access to the market will be tightly regulated, and marketing regulations are equally strict; advertising through affiliates and influencers, along with many promotional methods, is prohibited. Compliance measures are demanding, requiring operators to pay gambling duties that will increase from 12% to 16%, in addition to a 15% GST, a 1.24% problem gambling levy, and a 3.5% licensing fee.
