New Zealand Set to Regulate Online Gambling Market: What It Means for Local Operators and Communities
New Zealand is on the brink of a seismic shift in its gambling landscape, as the government prepares to auction online casino licenses for the first time. This landmark decision, expected to launch in February 2026, aims to regulate a sector that has until now largely existed in a legal gray area. However, this move raises significant concerns among local operators about the potential dominance of foreign companies and the implications for community funding derived from gambling profits.
The Auction Process and Anticipated Outcomes
Documents obtained by RNZ indicate that local operators are apprehensive about the prospect of large offshore gambling firms capturing a significant portion of the market. With 15 licenses up for auction, Internal Affairs Minister Brooke van Velden anticipates that most will likely be won by international companies, stating, “We don’t have a huge online gambling market, so I would expect that it’s mainly offshore providers.” The auction is not a permanent solution; licenses will last for three years, allowing for a future review where new entities can bid for licenses.
Implications for Community Grants
One of the most contentious aspects of the new gambling regime is that successful bidders will not be obligated to contribute to community grants. Unlike existing gaming operators such as Lotto, the TAB, and poker machines—which allocate a portion of their profits to community initiatives—the newcomers will not have similar requirements. This exemption has sparked fears that local charities and sports organizations could suffer significant financial setbacks as funds get directed overseas rather than reinvested in New Zealand communities.
Local charity operators and communities that rely on these grants are gravely concerned. Martin Cheer, managing director of Pub Charity Ltd, lamented, “Instead of the local ambulance service or coast guard or the local footy team getting some money, it’s going to offshore shareholders.” This raises questions about the long-term sustainability and social impact of the new regulation.
Opposition from Established Operators
Domestic operators, including Sky City casino and the TAB, have expressed strong opposition to the government’s decision to open the market. Sky City has petitioned for a limit on the number of licenses available, suggesting that only five should be permitted and restricted to companies with a domestic presence. The casino argues that this would ensure that online casino profits are taxed in New Zealand and that funding remains within local communities.
The TAB also voiced concerns that an open online casino market threatens the viability of domestic gambling operators while disproportionately benefiting offshore multinationals. They proposed a limited number of licenses for New Zealand-based entities, fearing the loss of crucial funding streams for racing and sports.
Regulatory Framework and Enforcement
Under the new regime, online gambling will be regulated more formally. Non-compliance with the licensing requirements will lead to hefty penalties, potentially reaching up to $5 million. This development is a vital step for New Zealand, which stands among the few developed nations yet to regulate online gambling comprehensively.
Changing the landscape from a largely unregulated online market to a controlled environment raises complex questions about the balance between consumer protection and the financial sustainability of local operators. While the government aims to provide a safer gambling experience, observers worry about the long-term financial repercussions for local businesses and community initiatives.
Striking a Balance Between Regulation and Profit
Van Velden acknowledges the challenges in balancing community funding with the vibrancy of a regulated online gambling market. “It creates a perverse incentive where we want to see gambling in our communities increase because more money then flows back into the community,” she explained. Critics, however, argue that having funds leaving the country to benefit foreign shareholders is a far more detrimental scenario.
An internal Cabinet paper suggests that imposing community funding obligations could deter potential bidders, ultimately harming the Australian market’s robustness by making licenses less appealing. This conclusion has led to a difficult choice: prioritize community grants or allow for a competitive market conducive to innovation and growth.
Conclusion: A Brave New World for New Zealand Gambling
As New Zealand inches closer to a regulated online gambling market, the decision will undoubtedly have far-reaching consequences for local operators and communities. The introduction of licenses presents both opportunities and threats, indicating a new phase in gambling regulation that could lead the way for greater safety and oversight.
While the government promotes its commitment to consumer safety, the potential for diminished community contributions and the socio-economic implications remain pressing topics for discussion. Local operators are rightfully concerned that the regulatory framework will tip the scales in favor of offshore companies, thus challenging the very fabric of community engagement and support. Only time will tell if this new regulatory framework can achieve its stated aims while maintaining a robust local gambling industry.
