Overview

Last month, New Zealand announced a review of its legal approach towards online betting services provided by offshore operators to New Zealand residents. This announcement was made on 16 April 2015 by New Zealand’s Racing Minister, Nathan Guy. The review is to be conducted by a Working Group in accordance with specified Terms of Reference.

Current Legal Position in New Zealand

New Zealand’s current regulatory regime concerning gambling is largely set out in the Gambling Act 2003 and the Racing Act 2003 (the Acts). It has the following key features:

  • Gambling is prohibited generally unless authorised under the Acts.
  • The Gambling Act makes illegal “remote interactive gambling”. This includes gambling by a person at a distance through a communications device (which would cover gambling online).
  • The New Zealand Racing Board (NZRB), to the extent it provides gambling services authorised under the Racing Act, is exempt from this prohibition. The NZRB is statutorily obliged to use betting profits to benefit the racing industry and sporting organisations.
  • Exempt from the prohibition in the Gambling Act are gambling providers located overseas. This is because the definition of “remote interactive gambling” excludes “gambling by a person in New Zealand conducted by a gambling operator located outside of New Zealand”.
  • Advertising to New Zealanders by these gambling providers are prohibited.

The overall effect of the Acts is that the NZRB has a monopoly and is the only New Zealand based entity entitled to conduct sports and racing wagering. The NZRB runs the TAB - this is the customer-facing portal for wagering and provides services both online and through outlets. However, the TAB competes against online wagering-providers located outside of New Zealand in providing betting services to New Zealand-based customers.

The perceived difficulties with this approach (and the basis) of the review announced recently by Mr Guy include whether offshore betting operators are making money on New Zealand racing and sports without:

  • being taxed;
  • ‘giving back’ to the racing industry or sporting bodies; and
  • adhering to harm-mitigation requirements under New Zealand law.

These issues are reflected in the Terms of Reference.

The review aims to “clarify the extent of the problem and work towards developing solutions”. Its announcement follows a speech given by Mr Guy to the NZRB’s Annual General Meeting in November 2014. In estimating $300 million as the amount wagered with online offshore bookmakers, he referred to ‘combating’ this issue as his number one priority for the coming term. He referred positively to developments in Australia concerning ‘cracking down’ on offshore bookmakers.

The Working Group comprises a former Minister of Internal Affairs, current officials of the Department of Internal Affairs (which bears responsibility for gaming regulation in New Zealand); the Chief Executive of the NZRB; the Chair of Sport New Zealand; and a breeder and racehorse owner who also serves as the NZRB’s Thoroughbred representative.

We note that reviews of offshore online betting have occurred recently in Singapore and the United Kingdom. In Singapore, the supply and use of online gambling services has been prohibited; while, in the UK, a point of consumption tax has been introduced in an attempt to generate a ‘level playing field’.

The New Zealand Working Group’s final report is expected by 30 September 2015. It will be interesting to see which approach, if either, is the subject of the recommendations of the Working Group.