New Zealand’s Upcoming Controversial Online Gambling Licensing Scheme

New Zealand is rolling the dice on a controversial new online gambling policy.

By 2026, the government will auction 15 online casino licenses, effectively ending the country’s long-standing prohibition on domestic online casinos while bringing order to the regulatory wild west where Kiwis freely access offshore gambling sites without protection.

The stakes couldn’t be higher. Officials claim the move will protect consumers and capture millions in lost tax revenue. Critics warn it’s a dangerous bet that normalizes gambling and funnels money away from communities. The question dividing the nation: is this sensible modernization or a reckless gamble with public welfare?

Key Takeaways

• 15 online casino licenses will hit the auction block in 2026
• Operators will pay 12% gambling duty plus other fees, totaling roughly 25% of revenue
• Unlike pokies and other gambling, online casinos won’t fund community causes
• Problem gambling advocates fear increased addiction and harm
• Local operators want protection; government expects foreign companies to dominate
• Projected annual government revenue: NZD 716 million
• The system breaks with New Zealand’s traditional approach to gambling regulation
• Enforcement mechanisms include fines up to NZD 5 million for violations

The Regulatory Black Hole

Right now, New Zealand’s online gambling landscape is bizarre. Domestic online casinos? Illegal. Kiwis gambling on offshore websites? Perfectly legal.

This contradiction has created a massive unregulated market worth at least NZD 304 million annually, possibly reaching NZD 3 billion in turnover. That’s larger than the racing industry and double the size of Lotto – all operating beyond government reach.

Internal Affairs Minister Brooke van Velden pulls no punches: “New Zealand remains a haven for harmful gambling operations that scam consumers by not paying out prizes and provide a mechanism for financial crimes such as money laundering and serious fraud.”

This regulatory vacuum leaves players vulnerable. When an offshore casino refuses to pay winnings or engages in predatory practices, New Zealand gamblers have nowhere to turn. No consumer protections, no regulatory oversight, and no contribution to the country’s economy or harm reduction programs.

While most developed nations have tackled online gambling regulation, New Zealand has sat on its hands. Until now.

The Licensing Blueprint

The government’s roadmap looks like this:

• Legislation presented by April 2025
• Bill passed by end of 2025
• License auction opens February 2026
• Online casinos launch April 2026

The centerpiece: 15 three-year licenses awarded to the highest bidders. After three years, operators must reapply – giving the government leverage to cut problematic players and maintain regulatory compliance.

Licensed operators will fork over:

• 12% gambling duty on profits
• 13% GST
• Problem gambling levy
• Higher license fees

That’s about 25% of gambling revenue flowing to government coffers – “competitive” by global standards according to officials.

Players will gain some protections, including age verification (minimum age 18), advertising restrictions, continued ban on sponsorships, and Department of Internal Affairs regulatory oversight. But will these measures be sufficient to prevent increased gambling harm?

The licensing structure represents a significant departure from New Zealand’s traditional approach to gambling regulation, which typically includes strong community benefit requirements.

The Case For: Protection and Cold, Hard Cash

The government’s argument boils down to two points: protection and money.

Consumer Protection

Right now, Kiwi gamblers are playing without a safety net. Offshore operators can refuse payouts, manipulate odds, or simply vanish with deposits. There’s zero recourse when things go wrong.

The new system promises to change that with:

• Licensed operators meeting minimum standards for fairness and security
• Fines up to NZD 5 million for violations of regulations
• Power to revoke licenses from bad actors
• Better monitoring of gambling patterns and behaviors

Van Velden argues these measures create real accountability in a market currently operating in shadows: “If someone is a bad operator, DIA can always revoke their license.”

The Money Trail

Follow the money – currently, it disappears offshore. The government estimates it will collect over NZD 716 million annually once the tax kicks in. That’s serious cash currently leaving New Zealand’s economy with no benefit to public services or harm reduction efforts.

Van Velden argues regulation also brings transparency: “Once we regulate the market, we can actually capture data and figure out whether harm increases over time, whether we’re getting the harm minimisation standards correct or the advertising standards correct to make sure that we’re not incentivizing people to gamble online.”

Bringing this substantial market into the regulated fold could also potentially reduce financial crimes like money laundering and fraud that thrive in unregulated environments.

The Case Against: Harm and Community Loss

Critics aren’t buying what the government’s selling. Their concerns fall into two camps:

Addiction Explosion

Problem gambling advocates are horrified by the license numbers. Andree Froude from the Problem Gambling Foundation didn’t mince words: “We had no idea it would be as high as 15. We thought around five. How can that not increase gambling and harm?”

They’re particularly worried about advertising normalizing gambling behavior – something that will be permitted under the new rules. Froude noted that gambling advertising “just feeds into the normalization of gambling,” arguing that inducements “should be prohibited.”

The concern isn’t just theoretical. Research from other jurisdictions shows increased accessibility and advertising can lead to higher rates of problem gambling, especially among vulnerable populations. Critics argue that without stronger preventative measures, the licensing scheme could create a public health crisis.

Communities Left Empty-Handed

Here’s where it gets really interesting. New Zealand’s existing gambling operations have strict community obligations:

• Pokies must distribute 100% of profits to community causes
• Lotto and the TAB have significant community contribution requirements
• Online casinos? Zero community funding requirements

Martin Cheer from Pub Charity Ltd highlighted this glaring double standard: “Effectively, in Class 4 [pokies], 100 percent all the profits have to be given away. Well, in this instance, none of it has to be given away. So instead of the local ambulance service or coast guard or football team getting money, it’s going to offshore shareholders.”

This departure from New Zealand’s traditional gambling model could leave community organizations that currently rely on gambling proceeds scrambling for funding. Sports clubs, cultural events, health services, and educational programs might all face shortfalls as gambling shifts to a sector with no community distribution requirements.

The Turf War: Local Operators vs. International Giants

The battle lines are clearly drawn between New Zealand operators and international gambling companies.

Home Team Disadvantage

SkyCity Entertainment Group, which runs three physical casinos in New Zealand, lobbied hard for just five licenses restricted to domestic companies. They argued that foreign operators would dodge taxes and drain money offshore.

In their submission, SkyCity didn’t mince words: “The safest way to make sure 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.”

The TAB went further, warning that “an open online casinos market threatens the viability of all domestic gambling operators for the benefit of offshore multinational organisations, putting at risk established funding streams for racing and sport.” They recommended limiting licenses to 5-7 and restricting them to New Zealand-based entities.

These arguments reflect genuine concern about market dominance by international operators, but also transparently protect their own commercial interests.

Government Bets on Open Market

Van Velden dismissed these arguments as self-interest: “They are looking out for themselves. I’m not here to look out for Sky City. I’m not here to look out for any established particular casino or their brands. I’m here to make sure that we have a fair marketplace and a fair, regulated market.”

She further argued that restricting licenses to domestic operators would potentially violate New Zealand’s free trade agreements – introducing legal complications that could undermine the entire regulatory framework.

Van Velden acknowledged foreign companies will likely dominate but defended the approach as creating necessary market competition. The three-year license terms provide an opportunity to reassess and adjust the system as needed, potentially creating more opportunities for domestic operators over time.

International Players at the Table

The government has been surprisingly candid about who they expect to win licenses: large international gambling companies with established online operations.

Van Velden stated plainly, “We don’t have a huge online gambling market, so I would expect that it’s mainly offshore providers.”

Major players already circling include:

• 888 Holdings
• Bet365
• Betway

Domestic companies like SkyCity and Christchurch Casino have also indicated their intention to bid, but they’ll be competing against global giants with vastly more experience in the online gambling space.

Why 15 licenses? A November 2024 Cabinet paper revealed the government worried that additional requirements might scare off bidders: “By adding further financial requirements on top of tax, duties and levies, New Zealand would become one of the highest taxed jurisdictions for online gambling, making licenses less valuable and attractive.”

The same paper noted that “evidence from overseas has seen operators pull out of markets to protect their profits when their operating costs are increased by tax and duty changes.”

Translation: attracting international operators trumped tougher social responsibility measures.

Dollars vs. Social Responsibility

The fundamental tension here is painfully obvious. New Zealand is trying to thread the needle between maximizing economic benefits and minimizing social harm.

The government claims regulation provides better protection than the status quo of unregulated access. Critics counter that the proposed system favors industry profits over public welfare. Both sides have valid points.

The decision to exempt online casinos from community funding requirements that apply to every other gambling sector speaks volumes. Cabinet papers reveal the government feared making licenses less commercially attractive – essentially admitting they prioritized commercial appeal over stronger social protections.

But there’s also a legitimate argument that bringing this market into the open creates opportunities for better monitoring, intervention, and harm reduction that simply don’t exist in the current unregulated environment.

The Real Test Lies Ahead

As 2026 approaches, all eyes will be on New Zealand’s gambling experiment. Success won’t be measured by revenue alone, but by whether the system delivers on its promise of safer gambling without increasing addiction.

Critics fear a gambling boom fueled by advertising and easy access. Supporters envision a better-regulated industry with proper safeguards. The reality will likely fall somewhere in between.

The government is basically admitting that online gambling is here to stay regardless of prohibition. They’re betting regulation is better than the wild west status quo. Whether that bet pays off for New Zealand society – not just government coffers – remains the million-dollar question.

What’s certain is that this represents a fundamental shift in New Zealand’s approach to gambling regulation. The country is moving from prohibition to managed access, from community benefit requirements to commercial attractiveness, and from domestic protection to international competition.

For better or worse, New Zealand is about to join the global online gambling community. The cards have been dealt – now we wait to see what hand the country ends up with.

Sources

• NZ Online Gambling Regulations
• NZ Introduces 12 Offshore Gambling Duties
• Offshore Operators Likely Dominate New Online Gambling Market