Analysis: The lawless and lucrative wasteland of New Zealand’s online gambling scene abides by only one true rule – no advertising.

But Internal Affairs Minister Brooke van Velden shook that earlier this week, announcing the coalition Government had agreed to a “high-level” approach to regulating online casinos.

New Zealand is one of a very few developed countries to not have regulation in this area, creating a wild west situation where the country is aggressively targeted by offshore operators.

The finer details haven’t been hashed out yet, but there are already a few glaring problems with what is being proposed.

The plan thus far, agreed to by Act, NZ First and National (who promised regulation as a tax revenue source before last year’s election), is to create a limited number of licences for online casinos (in line with domestic casinos), with criteria to meet before they can serve New Zealanders.

It will be illegal for unlicensed operators to offer services to New Zealanders.

In return for the privileges of paying tax (to the tune of $179m according to lofty pre-election estimates), these companies, often operated out of nations with lax gambling laws such as Malta, will be allowed to advertise.

Again, advertising is currently illegal (or is supposed to be) and is our only real law relating to online gambling, considering the Gambling Act is more than 20 years old and online gambling wasn’t much of a thing when it was written.

There are other bits of legislation that butt into the space – New Zealand has collected $37.8m in GST from offshore casinos since National introduced the “Netflix Tax” in 2016.

Enforcement

This is where it all gets a bit sticky – the Government hasn’t figured out enforcement.

Enforcement in other jurisdictions relies on geo-blocking/internet filtering. The Department of Internal Affairs has been looking into this since 2019.

TAB’s operator Entain has said it would like to see geo-blocking to enforce its sports betting monopoly. The Government’s proposal would ban all other online sports betting.

Both National and NZ First have supported getting internet service providers to block illegal gambling operations in the past.

However, blocking websites would set a precedent that Act would be unlikely to support.

Without filtering, casino operators looking to buy an online licence would be getting into it for social licence, trust and advertising purposes.

Whether geo-blocking even works is another question.

In Australia geo-blocking is used to enforce bans on unlicensed operators – but it just doesn’t work.

Ineffective

The Australian Communications and Media Authority has blocked more than 1000 illegal gambling websites. A scan through the list shows variations on variations of the same names.

But despite all of this effort, simply Googling “online pokies” turns up pages and pages of illegal operators with fully operational websites coming from domains that are yet to be put on the blacklist.

No VPN or workarounds needed.

So the Government is correct to take more time to consider the pros and cons of geo-blocking – particularly considering we haven’t even taken the step to block content such as the March 15 terror attack video.

Though the sanctioned operators will have harm minimisation measures such as time and spend limits and other good things, the industry itself believes it’s hard to compete with non-tax paying entities.

Industry Groups such as Responsible Wagering Australia have a clear interest in lobbying against high tax rates, so their point of view needs to be taken with a grain of salt, but they argue that taxes and other costs need to be passed along to consumers, resulting in more expensive products than illegal competitors.

An interesting case study for this is SkyCity’s online gambling website.

Though SkyCity is a New Zealand business, the lack of online gambling rules onshore means its offering is run out of Malta.

Still, SkyCity pays New Zealand taxes on its online gambling platform and includes harm minimisation principles (somewhere its domestic operations have fallen short recently).

It seems to be doing all right considering it has these expenses, with the Maltese operation growing pretty significantly since it was launched in 2019, though SkyCity says an “uneven playing field” has prevented it taking a bigger market share.

The risk here is that for the sake of collecting a bit more cash to go towards tax cuts, we will normalise online gambling and allow gambling ads with no meaningful reduction in harmful gambling.

There are other methods to reduce online gambling harm out there. Looking at Australia again, last year the federal government announced it would ban the use of credit cards for online betting in Australia after a parliamentary enquiry and banking industry pressure.

New Zealand’s banking industry has questioned the effectiveness of a credit card ban – and, perhaps most importantly, it doesn’t generate any cash for the taxpayer.

The Government has a moral obligation to do something about online gambling, but it needs to be careful about its next move.