Foreign Operators Expected to Lead New Zealand’s Online Gambling Market

New Zealand is preparing to regulate online gambling for the first time, with the government set to auction 15 online casino licenses. However, concerns have been raised that large offshore companies will dominate the market, leaving local operators struggling to compete. The shift, expected to take effect in February 2026, marks a significant change in New Zealand’s approach to internet gambling.

Offshore Companies Expected to Secure Majority of Licenses

Under the new regulatory framework, operators must obtain a government-issued license to offer online casino gambling to New Zealanders. Internal Affairs Minister Brooke van Velden has indicated that most of these licenses are likely to be secured by offshore firms rather than domestic operators.

“We don’t have a huge online gambling market, so I would expect that it’s mainly offshore providers,” van Velden stated; she noted that the competitive nature of the licensing system could allow for changes over time, with new entrants able to challenge existing operators if they prove to be better suited. The licenses will be valid for three years, after which they may be reassigned.

Theion of this licensing regime will also come with strict penalties for unlicensed operators. Those found offering online casino services to New Zealanders without approval will face fines of up to $5 million.

Local Open of Market Disruptionas

Major domestic gambling entities, including SkyCity Casino and the TAB, have expressed serious concerns about the impact of the new system. Documents obtained under the Official Information Act reveal that both organizationslobbied against the government’s decision to allow 15 licenses, arguing that such an open market would undermine local businesses and reduce funding for community initiatives.

SkyCity, in particular, needs the government to cap the number of licenses to five and limit them to companies with a local presence. The company argued that this would ensure online casino profits remain subject to New Zealand taxation rather than being funneled offshore. “The safest way to ensure online casino profits are subject to New Zealand income tax is to only allow incorporated New Zealand companies to hold licenses and not permit a license to be held by a foreign company or a New Zealand branch of a foreign company,” SkyCity wrote to van Velden in March 2024.

Similarly, TAB chief executives warned that opening the market to 10 or more operators would create a highly competitive landscape, potentially destabilizing domestic gambling businesses. He cautioned that increased competition from multinational companies could “threaten the viability of all domestic gambling operators” while reducing established funding for racing and sports.

Concerns Over Community Funding

The main point of contention is the absence of mandatory community grants for licensed online casinos. Unlike traditional gambling operations such as Lotto, TAB, and Class 4 pokies, which are required to allocate a portion of their profits to community organizations, online casinos will not have this obligation under the new framework.

Martin Cheer, managing director of Pub Charity Ltd, which operates around 1,700 pokie machines, highlighted the financial impact this could have on local initiatives. “Effectively, in Class 4, 100 percent of all profits have to be given away. Well, in this instance, none of it has to be given away,” Cheer said. “So instead of the local ambulance service or coast guard or the local footy team getting some money, it’s going to offshore shareholders.”

A cabinet paper from November 2024 acknowledged that the decision to exclude community funding requirements could make New Zealand’s licensing framework more appealing to international companies. It also noted that imposing additional financial obligations might discourage operators from entering the market, as they may opt to exit rather than comply with costly regulations.

“If a shift to online gambling on offshore operators moves away from other forms of gambling like TAB NZ or Lotto NZ, there could be a negative impact on current community funding streams,” the Cabinet paper stated.

Government Stands by Open Market Approach

Despite concerns about businesses and community organizations, van Velden defended the decision to keep the licensing process open to both domestic and international operators. She argued that prioritizing New Zealand-based firms could violate the country’s free trade agreements and insisted that the market should be open to all qualified applicants.

“I have considered whether or not it should be a 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,” van Velden explained.

Her primary goal, she said, was not to generate additional tax revenue but to create a safer and more regulated online gambling environment. While the National Party previously projected that a 12 percent gaming duty could bring in $179 million annually, van Velden estimated that the new system would initially generate only around $13 million annually in additional revenue.

“For me, that’s less about how do we gather tax and more about how do we get the bat 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,” she said.

While the new regulatory system aims to curb the risks of unregulated gambling, the decision for foreign companies to dominate the industry—and the potential loss of community funding—remains a contentious issue among New Zealand’s gambling stakeholders.

Source:

Offshore Operators Poised to Dominate New Online Gambling Market, RNZ, March 11, 2025.