The Potential of New Zealand's Online Gambling Market

Author: Matthew Haynes

From spectacular, contrasting landscapes to extreme sports and the freshest kiwi fruit, New Zealand does not need any introduction. Of course, Peter Jackson - the director of the Lord of the Rings trilogy, filmed against the country's stunning backdrop, gets an honorable mention.

One industry that has perhaps been operating almost under the radar for the last few years, though, is online gambling. However, recently this has witnessed considerable growth, underlining the potential that numerous industry personnel have recognized.

While other markets, such as the US, have shown extreme promise already, the New Zealand online gambling market is still one that should be taken seriously.

Compared to other online gambling markets, there are a number of differences with New Zealand, and it is interesting in terms of how the industry works, especially when neighboring Australia has also show shown particular traction over the last few years - especially with native brand PointsBet starting to stake a claim on the global stage.

With a population that is just shy of five million people, it is perhaps surprising when thinking about how quickly this has become so popular, as well as the potential that it has to challenge some of the European markets on the global stage.

Being such a small country, with only three main cities, Auckland, Wellington, and Christchurch, neither of these places exactly scream' gambling hotspot', more known instead for outdoor pursuits and tourism - an industry that the country has built its reputation on over the last few decades.

It is, therefore, fascinating how online gambling has captured the imagination of locals over the years and, indeed, whether migrants from other countries have influenced the growth and, as a result, affected the popularity of the iGaming industry.

New Zealand Gambling Market – Regulatory Implications

To understand why the country has become a force in the industry, getting to know New Zealand gambling laws and regulation first is wise in establishing what the future may hold.

In 2003, the Gambling Act was implemented in New Zealand, which essentially means that any activities that fall inside the regulations that cover the relevant forms of gambling are allowed.

Ultimately in the country, all of the laws related to the Gambling Act are geared towards the regulation of businesses (both online and land-based) in the industry and ensuring that they comply with the relevant legislation rather than the individual gamblers themselves.

What the 2003 Gambling Act in New Zealand entailed was bringing together a series of previous separate acts and pulling them into one entity, with some moderation. These included the 1988 Gaming and Lotteries Act and the 1993 Casino Control Act. However, the 2003 Racing Act, with some exceptions, is still individual enforcement.

Certain provisions in the 2003 Gambling Act cover in excess of 370 different elements, with these all split into different sections across both online and landbased casinos, relating to a number of aspects, such as licensing, financial provisions, and general operational procedures.

One of the main reasons for the popularity of online gambling in New Zealand refers to Section 9 of the act, which refers to the allowance of foreign operators in the country under the remote gambling provision. This, however, can be risky for customers gambling at a site that is, perhaps, not as well-known as some, with there being a possibility of fraudulent activity by the company - something that the government will not offer protection from.

Illegal gambling participation in New Zealand, meanwhile, can carry severe consequences, with fines ranging from $10,000 for individuals and $50,000 for gambling firms.

There are also certain stipulations of the industry in New Zealand, with each gambling company required to contribute to the community, not least by way of paying taxes on their revenue, just like in every other jurisdiction where gambling is considered legal.

However, some are also involved in giving back to the community. Just a few examples of that are contributions to education or healthcare and providing help to vulnerable gamblers. All customers' winnings from gambling, though, are not subject to tax. Professional poker players are the exception to this rule, with them being required to declare their winnings.

The legislation also requires each gambling company to have safeguards, which act in a series of ways. One is to make sure that all customers are of legal gambling age (20), and as a result, a rigorous KYC (Know Your Customer) policy is implemented by companies during the registration process at a site.

Of course, under the Gambling Act, each site is required to protect online gamblers in other ways, such as by ensuring there is SSL (Secure Socket Layer) encryption technology, which keeps details relating to financial transactions safe and secure.

iGaming Infrastructure and Technology Development

Like every other country where online gambling is legal and also a thriving industry, this would not be possible without having the necessary infrastructure in place to support and cater to the demand.

Considered to largely be an economically developed and westernized country, with average annual household disposable income estimated to be just shy of $88,000. This seems to suggest that the country is well-developed and has a number of thriving industries.

The highly sophisticated internet encompassing fast broadband and WiFi speeds and reliable connectivity is just another plus. All components are crucial for the success of the online gambling industry - certainly individual companies.

Indeed, New Zealand has one of the strongest and most robust telecommunications (telco) industries in the world, which is underpinned by a number of elements. Boasting full-service, fiber-optic broadband across the country, offered by three different providers, this is a significant indicator that New Zealand is considerably economically developed.

Of course, smartphone technology has played a major part in the rise of online gambling globally over the last decade, and the infrastructure that has been implemented in New Zealand to enable this is, of course, means that it is a considerable contributor.

In the online gambling industry, payment technology has become a driving force recently, with fintech emerging as a big influence on how customers transact with gambling sites - the two sectors effectively experiencing a crossover.

The Fintech sector in New Zealand is relatively well-developed, and the country's standing in this scene is rapidly on the rise. Of course, the payment options that are available for online casino players in New Zealand are as much in supply as in other countries. Supporting a wide range of Fintech payment options in the country, the infrastructure is well-equipped to cater to customers in the online gambling industry who prefer these banking options.

Reasons behind Gambling's Rise of Popularity

A recent survey found that 67 percent of residents in New Zealand are regular gamblers, with many classing this as a serious pastime. Many different reasons can be attributed to the growth in popularity of online gambling in New Zealand.

One reason for online gambling becoming so popular in the country is that there is no national lottery like in other countries, which often acts as a bridge between gamblers and non-gamblers. Instead, the availability of online gambling brands means that residents are instead turning to these as an outlet, and this could well continue in the absence of a lottery draw.

Curiously, there is a wide range of offshore online gambling brands that are available to residents in the country, many of them being particularly well-known in the global marketplace, such as bet365, Betway, and Ladbrokes. It is sites such as these which attract the bulk of interest from gamblers due to their history, size, reputation, and the fact that they are widely marketed - customers can align themselves with these.

Although not particularly known for football, New Zealanders do have an affinity with sports betting. Rugby often attracts the lion's share of the market - arguably being the country where the sport is the most popular in the world.

An increase in the availability and the marketing efforts associated with mobile gambling has also played a big part in the rising popularity of the industry, with this being the main form of gambling in the country, despite there only being three mobile phone providers.

Will eGaming Be the Next Big Opportunity for New Zealand?

Arguably a niche of the industry that is on the rise globally, but interestingly also in New Zealand, is that of eGaming and virtual sports - merging gamification with online gambling.

Despite being very much in its infancy, there is a huge opportunity for the South Pacific nation to become a leader in the market. An opinion that is very much shared. eSports, in particular, has witnessed a spike, and this is predicted to become even bigger over the next few years. Especially with more and more online gambling sites offering this.

"The potential is huge," says Chelsea Rapp​, chairperson of the New Zealand Game Developers Association (NZGDA).

eSports in New Zealand hasn't even started yet," added Tony Grose​, owner of Esports Gaming Whangarei. "We are a good 10 years behind any European country in seeing the value of eSports and the gaming industry, game development, and all other industries touched by eSports."

Meanwhile, Rapp spoke about how well the country is set up to make this sector a genuine force: "We have the talent, we have everything that's needed to create awesome powerhouse original IP, but we lack a lot of these key points in the eco-system that are needed to make sure people know how to get from point A to point B.

It is a sure-fire sign that the country is evolving its operations in the egaming space and is certainly one area of online gambling where it can almost get ahead of the curve.

How Is New Zealand Combatting Problem Gambling?

Like in most countries, gambling addiction does exist in New Zealand, and there has been some criticism about the measures implemented to prevent this - the popular opinion among experts is that more could be done to combat it.

Problem Gambling Foundation's Andree Froude stated: "We don't want to see an increase in online gambling opportunities because almost certainly that [would] lead to an increase in harm. Banning credit cards is a good start, as they're an easy way for people to get into debt."

Meanwhile, ​Haylee Koroi, a Māori public health advisor in gambling harm, added: "The Government has given us four options, and one of them focuses on expanding what already exists, and two are about opening the market. I don't think the harm aspect has been thought through."

Internal Affairs Minister, Tracey Martin, has perhaps been the most vocal on the subject, though, suggesting: "My personal view is that humans have done it since time immemorial. We're never going to stop it, so therefore, we have to manage it.

She also acknowledges the subject of gambling addiction and the regulatory changes that this could demand is a subject that has many nuances: "I'm hoping that people won't be stopped by what they've been asked to comment on, but suggest potential solutions themselves... I'm the last person to suggest I'm an expert on what is possible and what is the best way to minimize harm, particularly in offshore online gambling."

On the subject of potential legislative changes in the country's online gambling scene, she added: "I want trusted providers, community benefit, and harm minimization. If that happens, the Government could then look at introducing caps on how much people can spend, as well as getting a clearer picture of who is gambling on what."

It seems that the country still has not ironed out a clear solution to combat problem gambling, unlike other countries with strong measures in place.

Development of the Industry in the Following Years

One of the attractions for online gambling brands in relation to the market in New Zealand is that customers can gamble at offshore sites - in a similar fashion to how the Canadian market was set up until Ontario, the country's major province, regulated the industry.

This saw offshore brands such as bet365 and numerous US brands having to apply for a specific license, with many already being granted. It remains to be seen whether this could be the next step in New Zealand and whether the government should follow suit. However, the potential in terms of taxation and what this could contribute to the economy is huge.

Considering how much online gambling has grown here over the last couple of years, this feels like a logical step - there clearly is a demand for it, and it is unlikely that brands outside of the country would be put off from having to apply for a license and pay the requisite fees.

In addition, there appear to be more and more Europeans emigrating to the country, which could provide a regular source of revenue for these brands in New Zealand.

The population of the country could be a concern, though, in terms of the longevity of the marketplace and how big a revenue stream this could add to a brand's top line, and whether the associated fees justify the predicted financial forecasts.

Infrastructure is clearly in place, though, to cater to the market, and it could see an increase in native online casinos and sportsbooks, which are more familiar with the behaviors of locals and how they need to market to them. The egaming space, as referred to, could provide ample opportunity for growth here.

The economy in New Zealand is more than stable, especially based on the levels of disposable income that seem to be available to households, which could influence the decision to fully open up the industry in the country.

Overall, the possibilities in front of New Zealand are numerous. We have seen that things can happen very fast in this industry - Canada and the US being prime examples in recent years, so do not rule out New Zealand becoming the next big thing in the online gambling scene.