New Zealand has a thriving online casino market – although it’s restricted for casinos to operate domestically. Currently, only two online casinos have permission to operate inside New Zealand. That isn’t to say there aren’t numerous off-shore casinos with websites with a NZ address.
The industry only keeps growing, with a projected trajectory of reaching an industry worth $1.64bn (US) by 2029 across the entire online gambling network. That seems achievable, considering the projected value by the end of 2024 is $1.25bn.
But lately, everyone’s speaking about the significant incoming (potentially) shift in the online gambling sector with the implementation of a new tax regime targeting online casinos. Why? The aim is to align the digital gambling landscape with more traditional forms of betting, ensuring fair play across all platforms. And at the minute, the consensus leans towards a more regulated and equitable online casino industry.
Keep reading to learn about the specifics of the legislation changes and what it would mean for online casinos.
Recent Developments
Recent developments in New Zealand show an impending shift toward stricter regulation of the online casino sector. The government plans to introduce a new 12% gaming duty on top of the existing GST, which equals 25% tax. The government’s initiative to introduce new tax measures for online casinos was initially projected to increase state revenues significantly (although less than thought). It also wants to combat harmful gambling, but the reality of whether it’ll work is different.
The proposed legislation wants to establish a fair and transparent taxation system, compelling off-shore online casino operators to contribute their fair share to the national coffers. Do you think 25% is fair? And do you think it will close the tax loophole and protect players?
Potential Impact
The new online casino tax in New Zealand will impact the country’s digital gambling landscape. Beyond the goal of enhancing government revenues through a well-defined taxation framework, this move with the new legislation is likely to trigger significant shifts across the industry – some positive, some negative.
Consumer Protection: The regulatory measures with the tax changes aim to improve consumer protection. It’ll ensure players engage in online gambling within a safer and more controlled environment. That’s, as long as the casinos are staying safe and controlled. Will some attempt to boycott the new tax increase? Of course. But by mandating stringent compliance standards, the government seeks to curb problem gambling.
Responsible Gambling: The tax initiative should reinforce responsible gambling practices. With enhanced oversight and mandatory contributions to gambling harm prevention programs like the Gambling Harm Prevention and Minimisation Amendment Regulations 2023, operators must integrate more robust mechanisms to promote responsible behavior among players.
Then again, in the government report, it’s also worried about unregulated and irresponsible gaming. There are talks of introducing a licensing system to combat that. The Department of Internal Affairs advised attempting to ban non-regulated casinos would be ineffective and costly.
Revenue Generation: The primary aim of the legislation is to close the loophole and make the online casino market more lucrative for New Zealand. The actual financial outcomes will depend on the efficacy of the tax structure and compliance rates among operators. We’ll discuss some worries about revenue generation in the next section.
Industry Growth: The regulatory changes could influence how attractive New Zealand’s online casino market is. Still, it’s in line with other countries like parts of the US, but not as lucrative as countries like the UK, demanding only 21%. Operators may need to adjust their business models, which could lead to innovation in offerings and potentially more competitive services for players. Or it could do the opposite.
Stakeholder Perspectives
Government officials advocate for enhanced regulations and taxation to safeguard consumers and ensure fair play – but stakeholders think the opposite. They’re expressing concerns about increased participation in online gambling attributed to an inevitable increase in off-shore casinos.
Industry experts caution against the potential for over-regulating to stifle growth or innovation. They argue that a balanced approach is necessary to maintain New Zealand’s attractiveness as a market for reputable online casino operators. The emphasis is on creating a regulatory environment that supports sustainability while ensuring protection for players and stakeholders.
And public health experts will agree it’s needed, with some experts thinking it will undermine the Gambling Harm Prevention and Minimisation Amendment Regulations 2023 if there’s an increase in gambling activity.
Advocacy groups mimic this opinion. They see it as an opportunity to implement more robust mechanisms for player protection and that there’s a risk player protection could be compromised. Again, the challenge is how it’ll impact players.
And what about gambling operators? They express a desire for clear, stable, and fair regulatory frameworks.
For everyone – we’d say it’s a 50/50 split on opinions. As for the government, they’re determined to close the loophole in the current legislation that means overseas online casinos are profiting too much from New Zealand players.
Comparative Analysis
New Zealand – compared to other countries – is pretty strict. As we mentioned, only two online casinos operate from within the country. Compare it to the US – with 200+ online casinos – and operations are tight.
A comparative analysis of New Zealand’s approach to online casino taxation with international casinos gives you a valuable perspective. Globally, countries adopt diverse regulatory frameworks to govern online gambling. For example, the UK’s well-established regulatory body, the Gambling Commission, ensures compliance, fairness, and responsible gambling. That could provide a blueprint for comprehensive oversight.
Sweden’s recent re-regulation (2019) of its online casino market emphasizes consumer protection and responsible gaming, aligning with New Zealand’s legislation proposal. The lesson from Sweden? Despite changing regulations, they’re still suffering from unsolved regulatory issues, including insufficient responsible gambling (RG) measures.
New Zealand must learn from pitfalls encountered by other nations. Despite regulations, some countries (like Sweden) face challenges with enforcement, as operators may circumvent rules.
Public Opinion and Concerns
There are different opinions about new taxation and regulation plans for online casinos.
Stakeholders, naturally, are particularly vocal about issues such as problem gambling. It’s their money the country is coming for. But the issue is that it comes into effect in July 2024, with stakeholders and casino operators worrying about whether they’ll have to adjust their systems and commercial practices. On the other hand, some operators, like ones from Malta, think it’ll level the playing field. Casinos can increase their low share of the market despite the tax increases. They want New Zealand to regulate online gambling for everyone.
Still, the government’s move to introduce new regulations is seen by some as a positive step toward a more responsible gambling environment – that and more money are the two goals of the move. However, others express apprehension about the effectiveness of these measures and their potential unintended consequences, like driving players to unregulated platforms or facilitating underage access.
Future Outlook
The anticipated changes in online casino regulation and taxation are a massive shift for the industry. Yes, it’s not official, yet, but it’s looking that way. And yes, it most likely won’t impact players – it’ll be the casinos. The industry of online casinos within the country simply wants to have more control over off-shore casinos and regulate the industry.
They’re at a disadvantage by only providing two online casinos ‘in-house’ and letting off-shore casinos have the control. And, anyway, in the report released, they highlight how this tax collection is in line with other countries’ regulations and still lower than New Zealand’s tax demand.
Still, considerations include how these regulatory adjustments will influence market competitiveness, consumer protection, and responsible gambling initiatives. The potential legislative changes should create a more transparent and accountable online gambling environment, which could set a precedent for future regulatory frameworks. Stakeholders, including operators and players, need clear outcomes from these discussions to see the impact.
But will they get clarity? Well, it turns out that recent reports show the move would generate far less than the campaign first stated. It predicted the change would bring in an average of $179 million yearly over four years, or $719m in total. But a recent statement by Inland Revenue predicts it will actually bring in $35m in its first year, rising by 5% each year. That means the National’s costs are almost half a billion off what Inland initially predicted.
So, what do you think about the new regulation plans for online casinos in New Zealand? It’s complex, that’s for sure, but it’s part of a push to increase taxes across different industries. And there’s no denying that the ultimate aim remains clear – to establish a regulated, fair, and prosperous online gambling environment for all involved. Did they need this? Casino owners might say no, but the government will say yes. Still, the impact, if and when it happens, will sting.
