Offshore Operators Poised to Dominate New Zealand’s Online Gambling Market
Foreign gambling companies are positioned to take control of New Zealand’s nascent online casino market as the government prepares to auction 15 online gambling licenses for the first time, according to documents obtained through Official Information Act requests.
Government Confirms Offshore Dominance Expected
Internal Affairs Minister Brooke van Velden, deputy leader of the Act Party, has acknowledged that large international gambling operators are likely to secure most of the available licenses when bidding opens.
“We don’t have a huge online gambling market, so I would expect that it’s mainly offshore providers,” van Velden told RNZ in a recent interview.
The minister emphasized that the licenses, which will be valid for three years under the new regulatory framework set to launch in February 2026, are not permanent. “Somebody else could put forward their name and say, ‘hey, I can do it better,'” she noted, adding that the Department of Internal Affairs (DIA) retains the power to revoke licenses from problematic operators.
Domestic Operators Express Serious Concerns
Documents obtained by RNZ reveal significant opposition from New Zealand’s established gambling entities to the government’s approach:
SkyCity’s Position
SkyCity casino wrote to Minister van Velden in March 2024 urging the government to:
- Limit the market to just five online casino licenses
- Restrict licenses to entities with a domestic presence
- Ensure profits are subject to New Zealand income tax by only allowing incorporated New Zealand companies to hold licenses
TAB’s Warnings
TAB Chief Executive Nick Roberts expressed similar concerns in correspondence with Racing Minister Winston Peters:
- Warned that ten or more licenses would constitute an “open market”
- Argued that such a market “threatens the viability of all domestic gambling operators for the benefit of offshore multinational organisations”
- Recommended only 5-7 licenses be granted, specifically to New Zealand-based entities
- Cautioned about the “severe implications for TAB NZ if this fast-growing online casinos market cannibalises our existing operations”
Community Funding Gap Raises Alarms
Unlike other forms of regulated gambling in New Zealand—including Lotto, the TAB, physical casinos, and pokies—the new online casino license holders will not be required to distribute any portion of their profits to community organizations.
While licensees will pay GST, a 12 percent gambling duty, and contribute to the problem gambling levy, the absence of community grant requirements has drawn criticism from domestic gambling operators who currently fund numerous local initiatives.
Martin Cheer, managing director of Pub Charity Ltd, which operates approximately 1,700 pokie machines generating $125 million in revenue, highlighted this disparity: “Effectively, in Class 4 [pokies], 100 percent of all the profits have to be given away. Well, in this instance, none of it has to be given away. So instead of the local ambulance service or coast guard or the local footy team getting some money, it’s going to offshore shareholders.“
Government Rationale for Policy Approach
A November 2024 Cabinet paper obtained by RNZ reveals the government’s reasoning behind not requiring community grants:
- Imposing additional financial requirements beyond taxes, duties, and levies would make New Zealand “one of the highest taxed jurisdictions for online gambling”
- This could make licenses “less valuable and attractive” to potential bidders
- Evidence from other countries shows operators withdrawing from markets when operating costs increase significantly due to tax and duty changes
The Cabinet paper acknowledges that community funding could suffer if gamblers shift from existing domestic operators to online platforms run by offshore companies.
Minister van Velden defended the policy decision, stating she did not want community groups to become dependent on grants from online casino operators: “It creates a perverse incentive where we want to see gambling in our communities increase, because more money then flows back into the community, and that was not something I felt comfortable with under this law.“
Revenue Expectations Significantly Reduced
While the National Party had campaigned on generating substantial revenue from online casino operators—claiming the 12 percent gaming duty would bring in approximately $179 million annually—Minister van Velden has substantially lowered these expectations.
The minister now estimates the Crown will receive only about $13 million in additional annual revenue during the initial years of the regulated market, emphasizing that her primary motivation is improving online gambling safety rather than maximizing tax receipts.
“For me, that’s less about how do we gather tax and more about how do we get the balance right for allowing people to use a legal channel to gamble, while at the same time protecting people from the worst kinds of harm that can come from online gambling,” van Velden explained.
Regulatory Timeline and Enforcement
The new regulatory regime will make it illegal for unlicensed operators to offer online casino gambling to New Zealanders, with potential fines of up to $5 million for violations.
Currently, New Zealanders can legally gamble on foreign websites, but it is illegal to operate an online casino from within New Zealand. The country is among the last developed nations to implement regulations for online gambling.
Trade Agreement Considerations
Minister van Velden also cited international trade obligations as a factor in the government’s decision not to favor domestic operators, suggesting that tilting the playing field toward local companies could potentially breach New Zealand’s free trade agreements.
“I have considered whether or not it should be domestic priority or offshore priority. I think it’s fair just to allow anybody to bid for one of the licenses, rather than try and say, just because you’re here and you’ve been established for years in New Zealand, you’re necessarily a better operator,” she stated.
