New Zealand is set to implement regulatory reforms in its online casino sector that could potentially funnel up to NZ$20 million (approximately $11.2 million) per year into community funding, according to government estimates.
Under the forthcoming Online Casino Gambling Bill, part of the revenue generated from offshore gambling duties will be allocated specifically for grassroots organizations through the Lottery Grants Board. The proposal was made public for review last week.
The idea for this community funding initiative first emerged in December of the previous year and will be based on 4% of the gross gaming revenue (GGR) from operators. This initiative aims to enhance existing funding sources such as Lotto, Class 4 gambling, and TAB proceeds, creating an additional financial resource for local communities. The funding is scheduled to begin on January 1, 2027.
Government officials project that the contribution to community funding could range from NZ$10 million (around US$5.6 million) to NZ$20 million annually, largely influenced by how much market activity shifts to licensed online operators.
There are up to 15 online licenses currently under consideration, with applications being evaluated following an auction that took place in September. The government expects to finalize the licensing process this month, after which any operators that do not secure a license will have to cease operations by December 1.
The community funding proposal will undergo a review two years post-implementation. During the public consultation, concerns were raised regarding how the rise of online gambling might impact the traditional gambling revenue streams, particularly from electronic gaming machines (pokies), which are a vital funding source for many local communities.
Out of 4,837 submissions received during consultations, 3,966 expressed apprehensions about how community funding would be affected. Government documents indicated that available evidence on the effects of online gambling on current funding systems was inconclusive, which led to the decision to revisit the community funding arrangements after two years.
The assessment will seek input from both current and prospective operators, as well as community organizations. The consultation brought to light various risks and uncertainties regarding the anticipated benefits for communities.
One report noted, “While this proposal creates benefits for community groups, these groups highly value grants, the benefits cannot be monetised easily as the value of them is unknown.”
The report also pointed out potential direct costs for operators, administrative expenses for the government, unquantified opportunity costs, risks to Lotto NZ, and a low risk of increased gambling-related harm.
After evaluating these factors, it emphasized the risk that the costs might outweigh the community benefits.
Despite receiving royal assent in May, New Zealand's iGaming legislation will not fully operationalize until 2027. This timeline has shifted over a year from an original launch date of June this year, as stakeholders cautioned last July about uncertainties within the legislation contributing to the delay.
Access to the market will be meticulously regulated. Marketing guidelines are stringent, prohibiting affiliate and influencer advertising along with various promotional messaging. Compliance with the law remains a priority, with operators facing an increase in gambling duty from 12% to 16%, and additional charges including a 15% GST, a 1.24% problem gambling levy, and a 3.5% licensing fee.
