New Zealand iGaming could generate $20m for community funding per new policy

New Zealand’s government is in the process of introducing regulatory changes to the online casino sector that could channel as much as NZ$20 million ($11.2 million) annually into community funding, according to official estimates.

As part of its Online Casino Gambling Bill, a portion of offshore gambling duty would be ring-fenced for grassroots organisations via the Lottery Grants Board. The policy was published for viewing last week. 

The community funding guarantee was first considered in December last year, as part of the bill. It will be calculated as the equivalent to 4% of operator GGR.

It was designed to complement existing funding from Lotto, Class 4 gambling and TAB proceeds, to establish a new funding stream for local communities.

This will come into action from 1 January 2027. 

Government officials anticipate that this community contribution should range between NZ$10 million (US$5.6 million) and NZ$20 million per year, depending largely on market uptake and the shift of wagering activity to licensed online operators.

Up to 15 online licences are up for tender from the government, with applications currently being assessed following an auction in September.

The final stage is expected this month, and those that fail to secure a licencemust cease operations from 1 December.

Community funding grant to be reviewed in two years

During the community funding policy’s public consultation phase, concerns arose about how online gambling might affect existing revenue streams from traditional gambling channels such as electronic gaming machines (pokies), which remain a critical source of funding for local communities.

Of the 4,837 submissions received, 3,966 highlighted worries about community returns.

Government papers noted that evidence on the impact of online gambling on existing funding was mixed, leading it to make a commitment to reassess the community funding arrangements two years after implementation.

The consultation highlighted various risks, as well as uncertainty around the value of the benefits promised to the community.

“While this proposal creates benefits for community groups and these groups highly value grants, the benefits cannot be monetised easily as the value of them is unknown,” the report stated. 

“The proposal incurs direct costs to operators and administrative costs for the government. The proposal also incurs unquantifiable opportunity costs, risk to Lotto NZ and a low risk of increased gambling harm.

“On balance therefore, we consider that there is a risk that these costs may outweigh community benefits,” it emphasised. 

The review, to take place two years after implementation, will seek out opinions from licensed and prospective operators as well as community groups. 

The opening of the market

Despite New Zealand’s iGaming legislation receiving royal assent in May, the licensed market will not become fully operational until 2027.

The timeline was delayed over a year, from an initial launch target of June of this year, but stakeholders warned iGB last July that uncertainties within the legislation would result in a delay.

Market access will be tightly controlled. Marketing rules are equally stringent, with affiliate and influencer advertising banned alongside many forms of promotional messaging. 

The legislation is equally demanding on compliance. Operators face gambling duty that will rise from 12% to 16%, alongside 15% GST, a 1.24% problem gambling levy and a 3.5% licensing fee.