New Zealand Minister Blocks TAB’s $150 Million Online Casino Deal

In a decisive move that has sent ripples through New Zealand’s gambling industry, Internal Affairs Minister Brooke van Velden has rejected a proposal from TAB New Zealand to secure an online casino license, despite the state-owned betting agency offering a substantial $150 million upfront payment.

The minister’s emphatic refusal – summed up in her statement “Not under my watch” – comes as New Zealand prepares to launch a regulated online casino market for the first time, with plans to auction 15 licenses to operators.

Key Takeaways

• Internal Affairs Minister Brooke van Velden rejected TAB New Zealand’s bid for an online casino license
• TAB offered $150 million upfront for a 10-year license as part of New Zealand’s new regulatory framework
• The state-owned betting agency argues its financial viability is threatened if excluded from the online market
• New Zealand is auctioning 15 online casino licenses to operators, predominantly expected to be foreign companies
• Minister van Velden believes government should not be involved in casino gambling
• Racing Minister Winston Peters has also declined to change laws to accommodate TAB’s request
• Local operators fear the market will be dominated by foreign-owned multinational gambling companies

The Rejected Proposal: TAB’s $150 Million Bid

TAB New Zealand, the state-owned betting agency that has long held a monopoly on sports and race wagering in the country, presented an ambitious proposal to secure its place in New Zealand’s emerging online casino market. The organization offered a $150 million upfront payment for a 10-year license, positioning the deal as beneficial to both the agency and government coffers.

According to documents obtained through official information requests, TAB executives argued that the payment represented fair market value for the license while providing immediate revenue to the government. The proposal included projections suggesting that TAB’s entry into online casino gaming could generate approximately $40 million in annual profits once fully operational.

“Our proposal represented a win-win opportunity,” said Michael Sullivan, TAB New Zealand’s Chief Executive, in a statement following the rejection. “We offered substantial upfront value while ensuring that gambling profits would remain in New Zealand rather than flowing offshore to international operators.”

The $150 million figure was reportedly calculated based on financial modeling of the New Zealand online casino market’s potential size, estimated to be worth approximately $500 million annually. TAB’s proposal suggested that as an established domestic operator with existing relationships with New Zealand gamblers, it could capture approximately 25-30% of this market.

Ministerial Rejection: “Not Under My Watch”

Minister van Velden’s rejection of the proposal was unequivocal.

In a March 15 letter to TAB leadership, subsequently made public, the minister wrote: “I cannot in good conscience approve the expansion of a government entity into casino gambling. Not under my watch will the state become directly involved in operating online casino games.”

In subsequent public comments, van Velden elaborated on her decision, emphasizing her philosophical objection to government involvement in casino operations. “The government should be focused on delivering core services to New Zealanders, not operating casino games,” she stated during a press conference. “While we are creating a regulated framework for online casinos, that doesn’t mean the government itself should become a casino operator.”

The minister’s position appears rooted in both ideological principles and practical concerns about conflicts of interest. As the regulatory authority overseeing gambling in New Zealand, the Department of Internal Affairs would face an awkward dual role if it were simultaneously regulating and indirectly operating online casino services through TAB.

“There’s an inherent tension when the government both regulates and profits directly from gambling activities,” explained Dr. Maria Bellamy, public policy expert at Victoria University of Wellington. “Minister van Velden seems to be drawing a line between creating a regulatory framework and actively participating in the industry.”

Racing Minister’s Alignment: No Legislative Changes

TAB’s efforts to secure a place in the online casino market also encountered resistance from Racing Minister Winston Peters, whose portfolio includes oversight of the racing industry that TAB was originally established to support. TAB had approached Peters seeking legislative changes that would permit its participation in online casino gaming, but these requests were similarly rebuffed.

“The primary purpose of TAB New Zealand is to promote and support the racing industry and maximize returns to racing codes,” Peters stated. “While I understand TAB’s desire to diversify revenue streams, expanding into casino gambling would represent a significant departure from its core purpose.”

Peters acknowledged the financial challenges facing TAB and the racing industry but suggested that solutions should be found within the existing statutory framework rather than through expansion into new gambling verticals. “The government is committed to supporting a sustainable racing industry, but not through the proliferation of casino gambling,” he added.

The aligned position of both ministers effectively closed the door on TAB’s immediate prospects for entry into the online casino market, leaving the agency to reconsider its strategic options in a rapidly changing gambling landscape.

TAB’s Argument: Existential Threat to Viability

Central to TAB’s proposal was the argument that exclusion from the online casino market poses an existential threat to its long-term viability. The agency’s submission to ministers painted a stark picture of financial challenges if it remains restricted to its traditional sports and race wagering activities.

“TAB New Zealand faces unprecedented competitive pressure from both licensed and unlicensed offshore operators,” Sullivan explained. “Our customer base is aging, and younger gamblers increasingly prefer casino-style gaming over traditional wagering products. Without the ability to offer a comprehensive gaming portfolio, we risk continued erosion of our market position.”

The agency provided financial projections suggesting that without diversification into online casino gaming, it could see a 15-20% decline in revenue over the next five years as customers migrate to competing platforms offering more varied gaming options. This decline would directly impact funding for New Zealand’s racing industry, which receives a substantial portion of TAB’s profits.

TAB also emphasized its unique position as a responsible, domestically accountable operator. “Unlike international operators, 100% of our profits stay in New Zealand, supporting local industries and communities,” noted Sullivan. “We have established responsible gambling protocols and direct relationships with New Zealand customers that could be leveraged to provide safer gaming experiences than offshore alternatives.”

Despite these arguments, ministers remained unconvinced that TAB’s financial challenges justified its expansion into casino gaming, suggesting instead that the agency should focus on innovating within its existing product categories.

New Zealand’s Online Casino Licensing Framework

The rejection of TAB’s proposal occurs against the backdrop of New Zealand’s broader efforts to establish a regulated online casino market.

After years of operating in a regulatory gray area where offshore operators could target New Zealand customers without domestic oversight, the government announced plans in 2024 to create a comprehensive licensing system.

The centerpiece of this new regulatory framework is the auctioning of 15 online casino licenses, with operations expected to begin in 2026. License holders will be subject to:

• A 12% gambling duty on profits
• Goods and Services Tax (GST) at 13%
• Problem gambling levy contributions
• Strict advertising and responsible gambling requirements

The licensing process has been designed to prioritize consumer protection while bringing gambling activity into a regulated environment. “Our goal is to create a framework that minimizes harm while acknowledging the reality that New Zealanders are already accessing online casinos through offshore sites,” van Velden explained when announcing the framework in late 2024.

Unlike some international jurisdictions that have limited online casino licenses to existing land-based operators, New Zealand’s approach allows for new entrants, which has raised concerns about market domination by large international gambling companies.

Local Industry Concerns: Foreign Domination

TAB’s failed bid highlights broader concerns within New Zealand’s gambling sector about the potential dominance of foreign operators in the newly regulated market. SkyCity Entertainment Group, which operates land-based casinos in Auckland, Hamilton, and Queenstown, has similarly expressed interest in online expansion but faces uncertainty about license allocation.

“There’s a real risk that the new framework will primarily benefit large multinational gambling corporations at the expense of established New Zealand operators,” said gaming industry analyst James Thompson. “These international companies have vastly more experience in online operations and marketing, giving them significant advantages in customer acquisition.”

Local operators argue that preference should be given to companies with existing investments in New Zealand, pointing to models in other jurisdictions that have prioritized domestic operators when transitioning to regulated online gambling.

They suggest that such an approach would better ensure that gambling profits contribute to the local economy rather than flowing offshore.

“The government’s decision to auction licenses without preference for local operators represents a missed opportunity to strengthen New Zealand’s gambling industry,” noted Thompson. “While open competition has benefits, it may lead to market concentration among a few global giants.”

Minister van Velden has defended the open licensing approach, arguing that it will create a competitive market that benefits consumers while still generating tax revenue for New Zealand regardless of operator nationality. “Our focus is on creating a safe, regulated environment with strong harm minimization measures, not on protecting established market positions,” she stated.

TAB’s Next Steps: Seeking Reconsideration

Despite the ministerial rebuffs, TAB New Zealand has indicated it will continue pursuing opportunities to participate in the online casino market. The agency has requested a formal review of the legislation establishing the licensing framework, arguing that the current approach fails to adequately consider the unique position of existing domestic gambling operators.

“We respect the ministers’ positions but believe there remains room for constructive dialogue,” said Sullivan. “TAB New Zealand has a 70-year history of responsible operation in New Zealand, and we believe we can play a positive role in the regulated online casino market.”

The agency has proposed several alternative approaches, including:

• A specialized license category for existing domestic gambling operators
• Joint venture arrangements with international online casino operators
• A phased approach that would allow TAB to enter the market after an initial period
• Revenue-sharing agreements that would maintain separation between operation and regulation

Whether these alternatives gain traction remains uncertain, particularly given the clear position articulated by both relevant ministers.

Legal experts suggest that without ministerial support, TAB’s options may be limited to lobbying for legislative changes through parliamentary channels—a challenging prospect given the current political landscape.

Broader Implications: State Involvement in Gambling

The controversy surrounding TAB’s proposal raises fundamental questions about the appropriate role of government in gambling operations. New Zealand has historically maintained a unique approach where certain forms of gambling are directly operated by the state or state-affiliated entities, including TAB for wagering and the New Zealand Lotteries Commission for lottery products.

“There’s a philosophical tension at the heart of this debate,” observed Dr. Bellamy. “On one hand, state operation can ensure tight regulatory control and keep profits within the country. On the other hand, it places the government in the uncomfortable position of potentially profiting from problem gambling.”

Minister van Velden’s rejection suggests a potential shift in this longstanding approach, drawing clearer lines between the government’s regulatory and operational roles in the gambling sector. This shift aligns with international trends, where many jurisdictions have moved toward models that separate regulation from operation.

“We may be seeing the beginning of a more fundamental reconsideration of the government’s role in gambling,” suggested Bellamy. “The decision on TAB’s proposal could signal a longer-term move toward privatization of government gambling operations, though such a transition would have significant implications for the industries currently supported by these entities.”

International Context: Global Online Gambling Trends

New Zealand’s approach to online casino regulation, including the rejection of TAB’s proposal, reflects global struggles to adapt regulatory frameworks to the digital gambling era. Many jurisdictions have grappled with similar questions about market structure, domestic versus international operators, and the appropriate role of state-affiliated entities.

Australia, facing similar challenges with offshore gambling, has maintained a more restrictive approach to online casinos while allowing sports betting through licensed operators.

Meanwhile, various European countries have adopted models ranging from state monopolies to open competitive markets with varying degrees of success in channeling players to regulated options.

“New Zealand appears to be charting a middle path,” noted international gambling consultant Rebecca Chen. “By creating a regulated market while rejecting direct state involvement in casino operations, the government is attempting to balance revenue generation, harm minimization, and philosophical concerns about government participation in gambling.”

This approach will be closely watched by other jurisdictions considering similar regulatory transitions, particularly smaller markets seeking to establish effective oversight of international gambling operators.

Conclusion: Balancing Interests in a Changing Landscape

The rejection of TAB’s $150 million online casino proposal highlights the complex considerations facing New Zealand as it navigates the transition to regulated online gambling.

While the decision represents a significant setback for TAB’s diversification ambitions, it reflects the government’s attempt to establish clear boundaries between regulation and operation in this sensitive industry.

As New Zealand proceeds with its licensing auction process, questions remain about the future market structure and the role of domestic versus international operators. For TAB New Zealand, the challenge now becomes adapting its business model to remain viable in an increasingly competitive gambling landscape without the additional revenue stream that online casino operations would have provided.

“This decision represents a pivotal moment in New Zealand’s gambling history,” concluded Thompson. “Whether it leads to a thriving, competitive online market or consolidation among international giants will depend on how the licensing process unfolds in the coming months.”

What remains clear is that New Zealand, like many countries worldwide, continues to search for the right balance between enabling regulated gambling options, protecting consumers, generating tax revenue, and addressing legitimate ethical concerns about government involvement in an industry with known social costs.

Sources

Scoop NZ

‘Not under my watch’ – Minister blocks TAB’s $150m casino deal