After much debate, New Zealand is officially moving forward with plans to impose a 16% online casino tax on offshore platforms, following pressure from advocates and New Zealand residents. A major motivator for increasing the tax duty from 12% to 16% is to put more funding into community organizations like youth leagues.
To impose the 4% increase, NZ will roll out a new licensing system that will also come with more regulations and oversight. Currently, there are 15 offshore operators online in The Shaky Isles. The expectation from the 4% increase is to add onto the current structure of project funding, rather than take away from them. It is still not clear how or what new regulations will come regulating the 15 offshore online casinos, which include Ignition.
The Department of Internal Affairs will set up a national fund to collect all taxes on offshore online casinos. The agency will redistribute the revenue through local community funds. The new fund is estimated to deliver tens of millions in extra tax revenue from the new licensing system. To see how everything is working, or if there are new amendments, the New Zealand government will review the effectiveness of the tax increase and its impact on communities.
Local sports clubs and charities approve of the 4% measure to make up ground from the continued shift to iGaming. Many local groups have seen traditional revenue sources stagnate or dry up while online casinos have grown without compensating local communities. The new tax measure hopes to bridge that divide.
The new tax measures mean that these offshore operators must account for higher overhead costs. Many international brands that offer large game libraries and secure, reliable withdrawals will be required to obtain a license, meet technical standards for third-party auditing, and give part of their revenue to the community fund. The impact of the new tax law is bound to impact other countries, and perhaps rethink their offshore iGaming laws. The New Zealand measure follows the lead of other countries like Great Britain and Australia when it comes to offshore iGaming paying for cultural and local communities.
This move is not unique to New Zealand. Governments around the world are rethinking their relationship to digital gambling and taking steps to capture a larger share of the market value through local taxation and compliance. Needless to say, many iGaming operators aren’t pleased with the new measure, because it only adds to their operational costs.
Some believe that the smaller online operators might not be able to afford the new licenses and pay the additional overhead. However, it is widely expected that the larger operators will just absorb the additional costs, which can create a monopoly of offshore operators, possibly presenting a future problem down the road.
It is unclear when New Zealand’s parliament will officially sign the measure into law, and the timetable for the Department of Internal Affairs for drafting the new licensing measures. However, as part of any future deal, operators will need to prove that they can satisfy the minimum technical requirements, pass a financial audit, and offer responsible gaming measures. It is expected that offshore operators will be able to apply for a new license in 2026.