Online in New Zealand Public Discussion Document in New Zealand – Public Discussion Document

Contents

Message from Hon Tracey Martin, Minister of Internal Affairs...... 4 Executive Summary...... 5 Background...... 5 Online Gambling in New Zealand...... 5 What are the issues and opportunities?...... 6 Online gambling by New Zealanders is growing...... 6 Overseas online gambling can harm New Zealanders while providing no community benefit or harm minimsation funding...... 6 An opportunity to safeguard New Zealanders against future gambling-related harm...... 8 The current review of the racing industry will align with this work on online gambling...... 8

Setting a framework for the future of online gambling in New Zealand...... 10 How this section works...... 11 Online gambling operators and products...... 12 Some things to think about as you consider the options...... 12 Range of possible options...... 12 Implications for the regulatory approach...... 13 Implications for taxes, levies, grants and charges...... 13

Key to Possible Impacts of the Options...... 14 Option 1 – Lotto and TAB offer existing gambling products (status quo)...... 15 Option 2 – Extend the gambling products Lotto and TAB may offer...... 17 Option 3 – Licensing of domestic operators...... 18 Option 4 – Licensing of domestic and/or overseas operators...... 20 Tools for restricting New Zealanders’ access to online gambling...... 22

Minimising harm from online gambling...... 24 Some things to think about as you consider the options...... 25 “Menu” of possible options...... 25 Implications for different members of New Zealand society...... 26 Option 1 – Education and influence (partial status quo)...... 27 Option 2 – Gambling harm reduction services...... 28 Option 3 – Gambling industry and individual self-regulation (partial status quo)...... 29 Option 4 – Prohibition or tight control of gambling-related advertising (partial status quo). 30

Option 5 – Government regulates industry conduct...... 32

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Option 6 – Regulator enforcement powers...... 33

Other Issues and Opportunities...... 34 Convergence between gaming and gambling...... 34 Online for charitable purpose...... 34 What is important to you?...... 34

How to have your say...... 35

Publishing submissions...... 35

What happens next?...... 36

Appendix A – Glossary...... 37

Appendix B – International regulatory approaches to online gambling...... 38

Appendix C – Gambling duties, levies, grants and charges paid by New Zealand gambling operators...... 43

Appendix D – Submission Form...... 44

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Message from Hon Tracey Martin

Minister of Internal Affairs

Our current Gambling Act is from 2003. Since then, the world has changed rapidly. New technology, especially digital technology, has influenced society and changed our behaviour immensely. How New Zealanders gamble has changed as well.

In 2003 internet technology was still developing. Social media was in its infancy. Cell phones weren’t yet smart and people connected to the internet using cables.

Since then, the internet has become part of the fabric of everyday life for most New Zealanders. Laptops, tablets and smart phones have changed how we communicate and get information at home, at school and at work. Young people these days don’t know a world without Facebook, YouTube or video gaming. The gambling sector, like other sectors, has embraced this technology.

It is now possible to gamble from the comfort of your living room or while you’re out and about, at any time of the day or night. You can check online gambling sites in the same way you check social media. The or betting shop is now in your pocket.

We need to ensure that New Zealanders are safe if they choose to gamble online. We need to look out for our young people especially, because they are online so much, as well as others vulnerable to gambling harm.

This document outlines what we think some of the issues and options for the future are. I’m keen to open a conversation with you about what you think is important. Over the coming weeks, we’ll be seeking the opinions of a wide range of kiwis about the future of online gambling in this country.

And this is just the start of the process. As new laws are developed there will be further opportunities to make submissions. I invite you to take part. Make your voice heard.

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Executive Summary Background

An increase in online gambling challenges New Online Gambling in New Zealand Zealand’s traditional approach to gambling In New Zealand, operating online gambling1 is regulation. Unlike domestic gambling operators, illegal, except for authorised providers. It is also offshore online gambling operators do not pay to illegal for overseas online gambling operators to mitigate the harm their industry causes, nor do advertise to New Zealanders. they contribute to the community through funding grants. Section 9(2) of the Gambling Act 2003 states that “remote interactive gambling” (online and phone While many offshore gambling operators are gambling) is illegal in New Zealand unless it is reputable, with gambling harm minimisation authorised under the Act. The ban includes selling practices in place, New Zealand has no say in tickets on the internet and selling casino-type what those practices are and no ability to enforce online gambling to New Zealanders. compliance on behalf of New Zealanders. There is also an unknown, but significant, number of overseas online gambling providers whose harm The only providers authorised to offer online minimisation practices are insufficient, which are gambling products in New Zealand are the risky for New Zealanders to use. Lotteries Commission (Lotto) and the Racing Industry Transition Agency (TAB).2 It is timely that we assess our current framework given the growth of the online gambling market. The ban on operating online gambling does not This Discussion Document seeks your feedback on a stop New Zealanders from gambling online with framework for online gambling in New Zealand. operators based outside New Zealand (e.g. casino websites, applications). In the last The government is interested in what you think 18 months, New Zealanders spent approximately it should take account of as it develops its official $381m million with offshore gambling providers. policy on online gambling, as well your reaction to This is not illegal. the specific options set out in this document. New Zealand takes a unique approach to the Part of the purpose of this consultation is also to regulation of gambling. We focus on minimising test our assumptions and to gain more information the harm of gambling and on ensuring that the and evidence to assist us to develop final policy industry that benefits from gambling pays for the proposals. The information you provide us can harm it causes through the problem gambling levy. be anything you think supports your position – Gambling providers in New Zealand must also make 3 personal anecdotes, data, or simply an explanation returns to the community. Gambling operators of your perspective and why you care. must also be trusted providers. It means that we are traditionally cautious in determining what gambling The closing date for submissions is Monday 30 September 2019. There are a number of ways to have your say (refer to Appendix D at the end of this 1 Gambling is paying or staking consideration, directly or document to see the submission form). See page indirectly, on the outcome of something seeking to win 35 for more information on how to take part, how money when the outcome depends wholly or partly on chance. The definition of remote interactive gambling to opt to keep your submission private, and what includes “gambling by a person at a distance by interaction happens next. through a communication device”. (Section 4 (1) of the Gambling Act 2003). 2 The Racing Industry Transition Agency (RITA) is a reconstitution of the New Zealand Racing Board (NZRB). This change took effect on 1 July 2019 under the Racing Reform Act 2019. 3 See p.9 for an overview of this.

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operators and products we allow to enter the mobile devices makes gambling online increasingly market. easy and accessible.

Online gambling presents challenges for the New The scope of this document is based on the Zealand gambling regulatory system, for example by assumption that online gambling will always take cutting across domestic jurisdictions. Historically, place and that it can cause harm. We also consider gambling has involved identifiable individuals that regulating the sector appropriately and engaging in known gambling activities in fixed adopting harm minimisation strategies are the best physical locations. Consequently, regulating approaches to dealing with it now and in the future. gambling has focused on licensing gambling operators and gambling premises, ensuring Overseas online gambling can harm New compliance with New Zealand domestic gambling Zealanders while providing no community legislation. Online gambling will require new and benefit or harm minimisation funding innovative regulatory approaches. It is therefore Many New Zealanders like to gamble for timely to consider online gambling in the context of entertainment and relaxation. About 70% of the existing gambling infrastructure. New Zealanders over the age of 15 have gambled (whether online or land-based) in the past year. For most, their gambling does not cause a problem. What are the issues and opportunities? Approximately 5% of New Zealanders gamble to the Online gambling by New Zealanders is extent it harms them and the people around them.5 growing There is evidence that online gambling is growing in New Zealand. Global trends certainly suggest products in (2017/18). See p.9. that online gambling is sharply on the rise. New 5 Problem gambling is measured on a continuum by the Zealanders have embraced new online products Problem Gambling Severity Index (PGSI), which is a offered by Lotto and the TAB.4 The proliferation of standardized measure of at risk behaviour in problem gambling. Approximately 5% of New Zealanders fit the criteria for mild, moderate or severe problem gambling. Source: Strategy to Prevent and Minimise Gambling Harm 4 Lotto NZ reported a 26% sales increase on its My Lotto 2019/20 to 2021/22: Consultation document.

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It can be difficult to predict the extent to which an increase in online gambling may result in an increase in problem gamblers and gambling- related harm.6 We do know that several forms of online gambling are inherently addictive and often harmful.7

Young New Zealanders may be especially at risk as they spend more of their lives online. Because the parts of the brain that control impulsive behaviour don’t fully mature until a person is in their twenties, risk-taking behaviour in adolescence is normal. Māori and Pacific young from and secretive with loved ones, or may face people have been identified as being particularly serious mental health issues. Like other addictions, at risk. problem gambling can also affect the gambler’s whānau and wider community. A gambler’s family may not be able to make ends meet, and need help A recent consultation by the Ministry of Health on a paying for food, clothing and household expenses. new strategy to address gambling harm identified Children and young people may experience other unregulated online gambling as a significant threat, negative effects of problem gambling. Increased particularly for Māori and Pacific young people. strain on family relationships, stigma and mental Anecdotal evidence suggests that Asian and migrant health issues, and children missing out on activities communities are also negatively affected.8 that their peers enjoy are some examples.9 An increase in crime, whether from theft or fraud to The pathways an online gambler could follow fund a gambling habit or through an increase in which lead to harm could be the same as for land- domestic violence brought on by stress, harms both based gambling or entirely different. For example, individuals and wider society. economic deprivation or loneliness might lead to unhealthy gambling behaviour. It is also possible that some groups in society, people who otherwise Māori as a population have have not had major gambling interests or problems, disproportionally high current gambling may be attracted to the online market due to its rates compared to non-Māori.10 accessibility and anonymous nature. For example, Māori who live in areas of high deprivation a recent migrant to New Zealand who is feeling are far more susceptible to problem isolated and stressed may be at risk from online gambling, which can compound other risk gambling harm. factors.

When gambling does become a problem, it can harm New Zealand gambling operators are required to New Zealanders in a number of ways. A problem minimise the potential harm to their customers. gambler may go into debt, may become isolated For example, they may do so by identifying and preventing problem gambling or through setting gambling spend limits. Reputable overseas 6 Overseas experience suggests there may be higher rates operators also operate harm minimisation practices of gambling harm amongst online gamblers compared and will act on complaints from New Zealanders. to offline gamblers. This was one of findings from the UK Review of Gambling from 2018. 7 Several forms of online gambling, such as online pokies, can be described as “continuous” gambling which means any 9 From the Working Paper no.13: Problem Debt and Poverty winnings can be immediately reinvested. by the Expert Advisory Group on Solutions to Child Poverty 8 See the Ministry of Health’s ‘Submissions on the Strategy August 2012. consultation document: a summary of key themes and 10 From the NZIER report Quantifying Māori spend on tobacco, Ministry of Health’. alcohol and gambling 2018.

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However, not all online operators are reputable An opportunity to safeguard New Zealanders and New Zealand regulators cannot enforce our against future gambling-related harm standards or intervene overseas. The growth of online gambling makes it timely to assess our current framework. We need a gambling Although the advertising of online gambling in framework that is resilient and fit for purpose. New Zealand is not allowed (except for Lotto and We need to create a system that New Zealanders the TAB), some overseas operators get around this prefer using which gives them safe and competitive prohibition. They attract players onto “free-play” options if they choose to gamble. We also need to websites or to gambling sites through ads on social ensure that our domestic gambling market and media. These free-play games can be a gateway regulators can continue to effectively respond to an to actual gambling (for money). In a recent North everchanging environment. American study, one in four people (who didn’t previously gamble) ended up playing real casino- The current review of the racing type games online within six months of playing free, 11 industry will align with this work on simulated casino games on social media. online gambling A review of New Zealand’s racing industry was Overseas gambling websites do not carried out by John Messara in 2018. He found contribute to or benefit New Zealand that the industry is in a state of serious decline, communities.12 and made several recommendations to address the decline. This includes changes to industry governance and proposals for letting the racing New Zealand operators contribute to the industry provide new wagering products to increase community, including through community grants, its income. via gambling duties and by funding gambling help services, harm prevention and minimisation The Government is currently in the process of programmes and research.13 Appendix C notes the responding to the Messara Report. It recently current duty and problem gambling levy rates paid announced it will introduce two new pieces of by New Zealand gambling operators. This is on top legislation this year to revitalise the domestic racing of the payment of income tax, GST and voluntary industry. charitable contributions.

On the next page you will find A Snapshot of The Department of Internal Affairs, where practical, Gambling in New Zealand which provides: will seek to align this online gambling work with • more information about New Zealand’s proposals being developed for reforming the racing current gambling framework (including industry. current operators, and a summary of harms and benefits) • data on the current and emerging online gambling market.

11 Kim, H.S., Wohl, M.J.A., Salmon M.M., Gupta, R., Derevensky, J., (2014). Do Social Casino Gamers Migrate to Online Gambling? An Assessment of Migration Rate and Potential Predictors. Springerlink.com, Department of Psychology, Carleton University, Canada. 12 Cabinet has agreed to amend the Racing Act 2003 [enacted in June 2019] to require offshore operators to pay a charge to use New Zealand racing and sports information in their betting products, and/or pay a charge for the bets they take from New Zealand residents. 13 The main forms of gambling contribute through providing community grants (e.g. Lotto, Class 4 “pokies”) or charitable trusts (e.g Sky City).

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over 18 months). was spent online by was $381 million $15-50 million Harm from gambling Harm from Figures available paint a conflicting picture of how much picture a conflicting paint available Figures gambling. online spend on offshore New Zealanders (from data Gambling Study National recent Our most that 2015) suggests New Zealanders. the spend indicate industry estimates recent However, ( be much larger could of the population are non-gamblers are of the population people received treatment for problem problem for treatment people received of the population are non-problem gamblers non-problem are of the population of the population are ‘low-risk gamblers’ gamblers’ ‘low-risk are of the population of the population are ‘problem gamblers’ gamblers’ ‘problem are of the population gamblers’ ‘moderate-risk are of the population of people who seek help do so for “non-casino” pokies “non-casino” of people who seek help do so for 10,555 (2017/18) gambling 50% 0.5% and consequences with negative (who will be gambling possible loss of control) 1.3% negative to some harm leading experiencing likely (who are consequences) 3.1% of harm or negative some degree (who may be experiencing their gambling) from consequences 65.3% 29.9% *** low To date, the number of date, To people who attended help servicesgambling citing online gambling them for as a problem is Lotto Class 3 $17m TAB

$561m $350m $895m of New increase in increase 2.7 million $49 million $578m $2.401 billion total gambling gambling total New Zealanders New Zealanders gambled in 2016 gambled expenditure (2017/18) expenditure expenditure in 2017/18 expenditure 13.2% surveyedZealanders in any kind participated of online gambling TAB/ games, (internet eventSports online (2018 HLS) Pokies Gambling expenditure O T T O growth rate rate growth L

Opportunities ininclude gamble New Zealand to 84% online of offshore annual spend gambling $132 million (2015) from $243 million (2017)*** to A snaphot of gambling in New Zealand in New gambling of A snaphot sales increase on sales increase 26% in the previous year (NZ products My Lotto Commission Lotteries (2017/18) Annual Report are are TAB of gambling proceeds of gambling funding of community the purposes by community to allocated to Board the NZ Racing by allocated paid by casinos to their community trusts their community to casinos by paid and the Online gambling Lotto the only two state- of authorised providers in NZ online gambling (including Housie) of Class 3 expenditure estimate Affairs of Internal * Department Survey and Lifestyles the 2012, 2014, and 2016 Health (HLS). from ** meta-analysis TAB. NZ and Lotto ReviewExcludes Gambling NZ Offshore 2018. Lotto for NZ figures *** Datamine Community grants from gambling from Community grants In 2017/18 $749 million the community to returned $341 million Class 4 pokies from $243 million Board Grants Lottery $161 million and infrastructure club activites racing (mostly) $4 million

9 Setting a framework for the future of online gambling in New Zealand Online Gambling in New Zealand – Public Discussion Document

This consultation will help set the direction for How this section works the future of online gambling in New Zealand. We are interested in what you think the Government should consider as it develops its official policy on This section has three parts: online gambling, as well as your reaction to the specific options set out in this document. At the • Online gambling operators and products same time as this consultation process, we are (WHO can run online gambling in New carrying out additional research on online gambling Zealand and WHAT online gambling they can in New Zealand and holding discussions with key operate) • Minimising harm from online gambling (HOW stakeholders and experts. we can use regulatory and non-regulatory tools to further minimise harm arising from The Government wants to make sure that online gambling) regulating online gambling policy remains • Other issues and opportunities (convergence consistent with the three principles of the New between gambling and gaming, lotteries by Zealand gambling framework: Class 3 operators, and what matters most to you). • Harm from gambling is minimised and the cost of mitigating harm is borne by the The first two sections relate to one another. The industry first section considers options for a possible New • Gambling is authorised and conducted by Zealand online gambling market. The second trusted and reputable operators section considers how we might minimise any • Communities should benefit from the profits remaining gambling-related harm, depending on of gambling which market is chosen.

It will also assess the effect of options on the We recommend you read through both sections overall growth of gambling in New Zealand. before you finalise your comments. Control of the growth of gambling is a purpose of the Gambling Act 2003. This doesn’t mean These sections contain a range of different gambling can’t grow. It means the government options and an initial assessment of the possible has a good understanding of how gambling impacts that may result from them (benefits and might grow and the impact that would have. Another consideration will be preventing opportunities, risks and costs). In some cases, misuse of the system by criminals (e.g money the impacts are uncertain and the assessment laundering). may appear to be contradictory. Any apparent contradiction is explained.

Part of the purpose of this consultation is to test our assumptions and to gain more information and evidence to assist us to develop final policy proposals. The information you provide us can be anything you think supports your position – personal anecdotes, data or simply an explanation of your perspective and why you care.

Comparisons with other countries’ online gambling frameworks appear throughout this document. A summary of the arrangements in the United Kingdom, Australia, Singapore, Sweden and Belgium is also attached as Appendix B. These countries represent a variety of approaches to regulating online gambling.

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This means that our basic options are to: Online gambling operators and products • keep our existing online gambling operators (i.e. Lotto and the TAB) and then This section discusses who could run online either limit or expand their online gambling gambling in New Zealand and what type of online product range (i.e. into -type gambling they could operate. games); or • expand our online gambling operators (e.g. Some things to think about as you consider New Zealand casinos and/or major reputable the options overseas online gambling websites) and then to either limit their online gambling product range (e.g. limit casinos to the products • Keep in mind that technology is continually they already offer at their land-based changing, and gambling is likely to move establishments) or to let them expand their increasingly online globally. range. • Which option (or options) will keep New Zealanders safer from gambling-related Accordingly, four main options are summarised harm? below and then described in more detail on • Who do you trust to run online gambling in following pages. Some possible impacts (benefits New Zealand? Does it change depending on and opportunities, costs and risk) of each are also the gambling product (e.g. lotteries versus listed. casino-type games)? • How do you think the community should benefit from online gambling? Some of the options can be combined. If so, this • What would make you favour a regulated is noted. We suggest you consider these possible online market over an unregulated market? combinations as you consider your overall preferences.

Range of possible options Online gambling in New Zealand could be provided through a restricted or open market. The overall aim is to design a resilient online gambling framework which meets New Zealanders expectations, minimises gambling-related harm, manages misuse by criminals, and from which New Zealand communities benefit.

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Options Summary

1 2 3 4

Lotto and TAB offer Extend gambling Licensing of domestic Licensing of domestic existing gambling products Lotto and operators and / or overseas products (status quo) TAB may offer operators Operators: Operators: Operators: any NZ charitable or NZ Operators: Lotto and TAB Lotto and TAB commercial operation any NZ and / or overseas commercial or Products: Products: Products: charitable operation online lotteries, racing online lotteries, racing eg. online casino-type and sports betting etc and sports betting products or any online Products: etc, plus new varieties gambling product eg. online casino-type of online gambling product products or any online products gambling product.

Keep this page folded out to Tools for restricting New Zealanders’ access to online gambling view the icon glossary while Self-exclusion, credit card restrictions, public wifi restrictions, creation of an offence, and considering these options geo-blocking access.

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Implications for the regulatory approach Implications for taxes, levies, grants and Key to Possible Impacts of the Options For all the options, gambling-related harm would charges be minimised through the licensing model which Category Benefits and Opportunities Risks and Costs would limit who could enter the market and on Minimising Likely to decrease or maintain Likely to increase gambling what conditions. Licence conditions could include Payment of GST by offshore online gambling Harm gambling online and gambling- online and gambling-related requiring the operator to operate harm minimisation operators • Offshore online gambling service providers related harm (especially amongst harm (especially amongst the policies (see Minimising harm from online gambling who are selling into NZ have been required (Pillar of the the potentially vulnerable groups potentially vulnerable groups section below), to pay taxes or levies, and to comply to register and pay GST on New Zealand- Gambling including youth, Māori, Pacific including youth, Māori, Pacific with anti-money laundering legislation. Framework) and Asian communities, migrant and Asian communities, migrant sourced bets since 2016 communities and non-traditional communities and non-traditional • They are only required to register if they are A move to licence offshore operators would involve gamblers) gamblers) making gross betting profits over $60k on a different regulatory approach to that possible for sales into New Zealand Likely to decrease or maintain cost Likely to increase cost to New domestic operators. It is likely to rely on voluntary • The online service provider must work out to New Zealand society (societal Zealand society (societal and compliance and building relationships, for example whether the customer is resident in New and monetary) $ monetary) $ with overseas regulators. We would need to ensure Zealand. Indicators include: IP address, Note: two important indicators to consider when looking at possible rises in online gambling these operators had fair and safe business practices cell phone data, credit card issued by and related harm are the accessibility and visibility of gambling products. and no links to organised crime (e.g. for money New Zealand bank, billing address in New Trusted Likely to increase or maintain the Likely to decrease the proportion laundering) or to the financing of terrorism. The Zealand, winnings paid into New Zealand Operators proportion of trusted operators of trusted operators running Government will also need to identify the threshold bank account. running online gambling online gambling at which online gambling operators will need to • The Government intends to release a (Pillar of the meet obligations under the Anti-Money Laundering consultative document called Options for Gambling and Countering Financing of Terrorism Act 2009 taxing the digital economy in the near future. Framework) (whether as new licensees or as part of the online Community Likely to increase or maintain Likely to decrease community gambling product approval process). The approach The levels of taxes, levies, grants and charges paid Benefit community benefit (e.g. benefit (e.g. decrease funding of is likely to be more light-handed if we maintained by online operators will need to be considered as increase funding of community community programmes) our current operators (Lotto and the TAB). the government continues to develop its policy. (Pillar of the programmes) The funding needed for some of the options is likely Gambling to be quite significant (particularly when geo- Framework) In Sweden, licences are granted to those who: blocking in involved). This could be recovered from • Are deemed to have the knowledge, Controlling Likely to lower overall levels of Likely to grow/maintain overall the gambling industry (on the basis that it benefits gambling in New Zealand levels of gambling in New Zealand experience and organisation required to run the Growth from gambling) and/or by government. Things of Gambling the operation • Will run the operation in accordance with that could be funded by industry are addressed in the Minimising harm from online gambling section (Gambling statutes that govern the operation Act 2003) • Are deemed in other respects to be fit to run below. the operation. Other Likely to increase or maintain Likely to decrease consumer Impacts consumer freedom of choice freedom of choice and access to The Government recently agreed to amend the and access to online gambling online gambling (including access The challenges associated with implementing Racing Act to introduce a point of consumption (including access to potentially to potentially better rates and and maintaining restrictions (particularly a geo- charge. This is a charge which is like a tax on better rates and chances of chances of winning) block) will also need to be considered in greater offshore operators who are accepting (and winning) detail, especially given the huge number of online profiting from) bets from New Zealanders. This Likely to decrease or maintain Likely to increase compliance gambling operators and ability of less reputable charge recognises that the New Zealand racing compliance costs for government costs for government and/or operators to quickly re-brand and re-launch. industry and sporting codes are not benefitting and/or business (may include set- business in any way from this betting spend by New up and ongoing administration/ Zealanders. The options presented in this discussion document moderation ) focus on the important issue of which gambling Can be enforced in New Zealand Issues with enforcement (e.g. providers should be permitted to provide online unenforceable outside New gambling products and services to New Zealanders. Zealand, practical issues with They present a continuum from enabling limited communication of standards) existing domestic gambling providers to offer online products, through to potentially unlimited licensing of both domestic and international providers.

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Impacts Uncertainties or assumptions OPTION 1 Uncertainty Maintaining the status quo could Lotto and TAB offer present limitations in obtaining statistics on online gambling, as existing gambling overseas operators aren’t obliged to products (status quo) report to the government or provide data. It is possible that a more Description regulated option would allow the government to gather more data. This option would keep the system the same. Lotto and the TAB would continue to be the Assumption only providers of online gambling products in • New Zealanders continue New Zealand, with a limited product range. to access offshore gambling Lotto and the TAB both operate online via websites websites and applications. Lotto’s online products are Lotto, Powerball, Strike, , Assumption Bullseye, Instant Kiwi, and Instant Play. TAB’s • no change means no additional online products are racing and sports betting. compliance costs With such a narrow range of options, New Zealanders are incentivised to use overseas Assumptions gambling operators. • not all overseas operators are reputable, exposing the public to potential harm from online gambling (& cost to society) $ • there is no financial return to NZ Possible Impacts (apart from GST)

Assumption $ • overseas operators do not contribute to New Zealand community The above assessment of impacts is based on the assumption that nothing else changes, as well as the Assumption following additional assumptions: • lack of regulation leads to an unintended growth in offshore gambling

Assumption • no change means New Zealand standards are unenforceable • changes to the status quo could lower the potential harm. For example, restrictions could be put in place to decrease access to non-licensed websites or applications (see Additional Option - Restrict access to online gambling below).

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Impacts Uncertainties or assumptions

Assumption • compliance costs are likely to be minor to moderate for Lotto, the TAB and Government.

Finland has a gambling sector similar to New Zealand’s.

There are three companies, each owned in large part by the government, who run different aspects of the gambling sector. They are allowed to offer online versions of their land-based products.

There are no laws banning Finns from playing on overseas gambling websites.

International gambling sites are forbidden to advertise in Finland.

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Impacts Uncertainties or assumptions OPTION 2 Uncertainty The impact of this model on the level of gambling-related harm and Extend the gambling the growth of gambling (& therefore cost to society) is uncertain at this products Lotto and TAB stage. On the one hand, a decrease may offer in harm may come from redirecting some gamblers to the regulated Description $ New Zealand market. On the other hand, an increase in harm could arise Lotto and the TAB would continue to be the based on the expanding visibility of only providers of online gambling products the online market to those currently in New Zealand but could be allowed to offer $ less likely to gamble. Also, research an expanded product range. For example, suggests that participation in multiple they could be able to offer online casino-type gambling activities can be a risk factor games. for problem gambling. This has a flow- on effect to the likely impact on the wider community.

Assumption Possible Impacts • most New Zealanders would prefer a regulated market if it offered the same benefits of the $ overseas market Assumption • Lotto and/or the TAB would be $ interested in offering an expanded product range Assumption The above assessment of impacts is based on the • an increase in profits for Lotto and following assumptions: the TAB increases the returns to the community Assumption • some restrictions would be in place to decrease access to non-compliant websites or applications (see Additional Option - Restrict access to online gambling below) which increases our ability to enforce the chosen option Assumption • compliance costs are likely to be minor to moderate for Lotto, the TAB and Government.

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The above assessment of impacts is based on the OPTION 3 following assumptions:

Licensing of domestic Impacts Uncertainties or assumptions operators Uncertainty The impact of this model on the level of gambling-related harm and Description the growth of gambling (& therefore Commercial and charitable operations cost to society) is uncertain at this based in New Zealand would be able to stage. A decrease in harm may come obtain licences if they could demonstrate an from redirecting some gamblers to established history of compliance with the the regulated New Zealand market New Zealand gambling framework and social $ while an increase in harm could arise responsibility. based on the expanding visibility of the online market to those currently There are options for the types of online $ less likely to gamble. Also, research gambling product the operator could be suggests that participation in multiple licensed to offer. One option is to limit them gambling activities can be a risk factor to online products not already licensed to for problem gambling. an existing domestic operator (for example, casino-type games). Another option is to Assumptions licence the operator to run any gambling • most New Zealanders would product, creating a more competitive prefer a regulated New Zealand environment. market if it offered the same benefits of the overseas market One example would be that existing land- Assumption based New Zealand casinos could seek • reputable domestic operators are licences to run online casino-type games interested in entering the online (slots, blackjack, etc). Another option market in New Zealand is to have a ‘Class 4’14 operator run online • the risk of non-compliance by slots. Class 4 gambling may only be conducted new entrants to the market is by a corporate society (e.g. NZCT or the Lion mitigated by the licensing process Foundation) and only to raise money for and likely to reduce over time as operator familiarity with expected an authorised (e.g. community and non- standards grows commercial) purpose. Assumption • operator profits from the expanded market increase the returns to the community Possible Impacts Assumption • New Zealanders would be offered comparable betting odds and $ promotions to those offered overseas $

14 Gaming machines in pubs and clubs (i.e. outside a casino) represent ‘Class 4’ gambling, which the Gambling Act 2003 classifies as high-risk, high-turnover gambling.

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Impacts Uncertainties or assumptions Assumption • some restrictions would be in place decreasing access to non-compliant websites or applications (see Additional Option - Restrict access to online gambling below) which increases our ability to enforce the chosen option Assumption • compliance costs are likely to be moderate for both operators and Government.

This option could be combined with Option 1 (the status quo). This would mean that Lotto and the TAB would continue to be the sole operators of their current product range, while other operators would offer other gambling products.

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Impacts Uncertainties or assumptions OPTION 4 Uncertainty As for Options 2 and 3, the Licensing of domestic impact of this model on the level of gambling-related harm and / or overseas (& therefore cost to society) operators is uncertain at this stage. A decrease in harm may come Description $ from redirecting some gamblers to the regulated New Zealand Any domestic and / or international market while an increase in commercial or charitable operation would harm could arise based on the be able to apply for a licence in New Zealand. $ expanding visibility of online The operator would need to demonstrate a market to those currently less history of compliance with the New Zealand likely to gamble. Also, research (or equivalent) gambling framework and suggests that participation in social responsibility (for example, an operator multiple gambling activities licensed by the United Kingdom’s Gambling can be a risk factor for problem Commission). gambling. Again, one option is to limit the operators Assumption to licences for online products not already • most New Zealanders would licensed to an existing domestic operator (for prefer a regulated New example, casino-type games). Another option Zealand market if it offered is to licence the operator to run any gambling the same benefits of the product. overseas market • a potentially large increase in gambling visibility and accessibility would lead to a growth in gambling This option could be combined with Option 1 Assumption (the status quo). This would mean that Lotto and • reputable operators are the TAB would continue to offer their product interested in entering range, while other operators would offer casino- the online market in New type products. Zealand • the risk of non-compliance by new entrants to the market is mitigated by Possible Impacts the licensing process and likely to reduce over time as operator familiarity with $ expected standards grows Assumption $ • operator profits from the expanded market increase the returns to The above assessment of impacts is based on the the community (including following assumptions: contribution of overseas operators through duties, taxes and/or the problem gambling levy)

20 Online Gambling in New Zealand – Public Discussion Document

Impacts Uncertainties or assumptions Assumption • increased international competition would ensure New Zealanders were offered good betting odds and promotions Assumption • some restrictions would be in place decreasing access to non-compliant websites or applications (see Additional Option - Restrict access to online gambling below) which increases our ability to enforce the chosen option Assumption • compliance costs are likely to be moderate to significant for both operators and Government.

The UK has the largest regulated gambling market in the world with a gross gambling yield of £4.7bn per annum.

There is an open licensing system in place. Online gambling operators, located in both the UK and offshore, must have a licence to provide gambling services to customers in Great Britain.

The UK is currently tightening its gambling laws. Amongst other concerns, the 2018 Review of Online Gambling raised concerns about young people being exposed to gambling advertising and about the high volume of gambling ads generally.

21 Online Gambling in New Zealand – Public Discussion Document

Virtual Private Network/VPN).

TOOLS FOR RESTRICTING In mainland China, gambling is illegal. In Macau, NEW ZEALANDERS' Hong Kong and Taiwan it is not illegal. ACCESS TO ONLINE Geo-blocking technology is used to restrict GAMBLING access to online gambling sites in China.

These tools are potential add-ons to any of Possible Impacts Options 1 – 4.

Under those options, without further $ intervention, New Zealanders would be free to gamble online using overseas websites not authorised and licensed under the New Zealand regime. Therefore, the next step is to consider what we do with the operators who These tools increase the effectiveness of options 1 are not authorised in New Zealand or those -4. It could be both a tool for minimising possible who are non-compliant with our standards. harm arising from online gambling and a tool to There are various forms of restricting access to increase operator compliance (both licensed and non-authorised online gambling platforms. non-licensed operators).

Description Any form of restriction would require cooperation by These tools could include one or more of a a third party. For example, Internet Service Providers number of mechanisms: would need to geo-block, and credit card companies • Gamblers could self-exclude themselves would need to place restrictions on the use of their from using particular gambling operators cards. or products (if this function was offered by the operator) The United Kingdom is considering banning all • Restricting credit card use on gambling use of credit cards on gambling sites. This would sites (either blocking their use on websites mean gamblers wouldn’t be able to go into debt not licensed in New Zealand or banning to gamble. their use entirely) • Use of free public wifi could be restricted to exclude online gambling websites15 The government geo-blocking or prohibiting • New Zealanders (and those residing in or access to gambling websites may raise issues of visiting New Zealand) could be prohibited censorship, especially if used too broadly. However, from visiting online gambling sites based only applying restrictions to unauthorised or non- overseas or domestically apart from those compliant operators would be unlikely to raise these authorised by law and licensed to operate issues, provided the public had sufficient choice of in the New Zealand market. A compliance gambling product. strategy and prosecution guidelines would need to be developed by the Department Compliance costs for government and business of Internal Affairs could be minor to significant depending on the • Unauthorised websites could also be option taken (for example, moderating a geo-block geo-blocked (meaning they couldn’t be would be likely to be at medium to high level of cost accessed from New Zealand without a to the government).

15 In Australia, the Light Project advocates restricting people using free wifi to access pornography in public spaces.

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Illegal offshore gambling is growing rapidly in Australia. While its gambling sector is heavily regulated, Australia is looking to strengthen the enforcement of its regulations.

The Australian Government has agreed to require Internet Service Providers to block offshore sites that are offering illegal gambling services to Australians , and will encourage banks and credit card providers to block payments to and from illegal offshore wagering businesses.

23 Minimising harm from online gambling Online Gambling in New Zealand – Public Discussion Document

This section discusses how we can use different internationally. Services have and will continue to be tools to further minimise harm arising from online evaluated, monitored and improved. For example, gambling. through the Preventing and Minimising Gambling Harm: Six Year Strategic Plan. Some things to think about as you consider the options Our gambling advertising laws will continue to be tested by the increase in online gambling. The Advertising Standards Authority recently added ‘free How do you think we can we protect people from to gamble’ activities into their definition of gambling harmful online gambling before they decide to so that they are required to comply to the same gamble? standards as other gambling providers.

Where online gambling has already caused harm, The TAB and Lotto NZ have developed their own how do you think we can best help with that? “host responsibility” measures, such as allowing a person using the product to set their own spending What tools do you think will help us best enforce limits. It is anticipated that strengthened “host our online gambling laws? responsibility” and other strategies and practices will be developed as part of this work, to specifically “Menu” of possible options cater to minimising online gambling harm. Whichever option you prefer in the previous section Six options are summarised and then described (Online gambling operators and products), there are in more detail below, along with possible impacts additional tools the government, gambling industry (benefits and opportunities, costs and risk) of each. and individuals can use to minimise the harm which It is likely a mixture of options would be used. could arise from online gambling. These tools might be non-regulatory measures which assist people and operators to minimise harm (like education on possible dangers or self-exclusion from gambling), or regulatory measures which require and enforce compliance with certain standards (such as penalties or licence cancellation for breaching standards).

When we evaluate our current regulation and harm minimisation strategies for online gambling there are some limitations. Online gambling is a recent, fast-growing development; therefore, it is hard to evaluate and measure the services and regulation we currently have. Most of what we know measures gambling generally, rather than gambling online specifically.

To date, low numbers of people have asked for help at problem gambling reduction services naming online gambling as their reason for seeking help. The Ministry of Health reports that their current services are working well for those who access face- to-face services; however the number of people who access their services in total is low. Relapse levels are high in the at-risk gambling population, which is in line with relapse rates with other addictions, such as alcohol and drugs both nationally and

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Options Summary

1 Educate public on potential dangers and harms of online gambling and influence operators to comply (partial status quo)

2 Industry funds online gambling problem gambling services

3 Gambling industry and individual self- regulates harmful online gambling behaviour (partial status quo)

4 Prohibition or tight control of online gambling-related advertising (partial status quo)

5 Government regulates industry conduct of harmful online gambling behaviour

6 Regulators get powers to enforce law and licence conditions relating to online gambling

Implications for different members of New Zealand society The government will need to consider the impact and effectiveness of harm minimisation options for different parts of New Zealand society (including different ethnicities and those who speak English as a second language). For example, access to harm minimisation, problem gambling support, and education initiatives might need to be targeted to different ethnicities or to new migrant groups. The Government will need to understand various cultural attitudes to gambling, to be culturally appropriate and to take account of different attitudes to seeking help. For example, a whānau-centred approach to preventing and minimising gambling harm is effective when working with whānau Māori. This analysis will be built into future policy development and informed by the research the government is carrying out as well as any relevant information gathered during this consultation process.

26 Online Gambling in New Zealand – Public Discussion Document

The above assessment of impacts is based on the OPTION 1 following assumptions:

Education and influence Impacts Uncertainties or assumptions Assumption (partial status quo) • preventative measures are effective in avoiding gambling– Description related harm The Government could develop consumer • operators would voluntarily education on the risks of online gambling and $ comply with requirements if they how to manage risky gambling behaviour. understood what they were and if Some education resources currently exist, there was a demonstrable benefit for the operator in complying (e.g. however it is likely that further resources maintenance of an operator’s would be needed to manage the potential good reputation, or access to the harm caused by the increased availability New Zealand market) of online gambling. In particular, targeting vulnerable populations and the youth Assumptions demographic. This could include accreditation • set-up and administration of websites considered “safe” for New of compliance costs for the Zealanders to use (i.e. fair and with good harm Government are likely to be minor minimisation practices). to moderate, however investing in preventative measures leads to an Programs would probably be delivered by overall reduction in compliance the Health Promotion Agency and non- costs over time governmental organisations (e.g. gambling • compliance costs for operators harm service providers) and funded by the new to the regulated market are problem gambling levy on operators and/or likely to be moderate and reduce from taxes. over time.

The Government could also more actively influence overseas gambling operators. For The government collects a problem gambling instance, the government could seek direct levy from the profits of New Zealand’s four main compliance with New Zealand requirements forms of gambling: gaming machines in pubs and around harm minimisation and seek payment clubs, casinos, TAB, and Lotto. of taxes, duties and levies (even where the operator is not licensed in New Zealand). The levy funds: • measures to promote public health by preventing and minimising the harm from Possible Impacts gambling • services to treat and assist problem gambling (the gambler and their whānau) $ • independent scientific research associated with gambling • evaluation

This approach is not one of enforcement, but of Currently, choicenotchance.org.nz provides compliance. This means assisting and influencing some tools to address the risks of online gamblers and operators to reduce the possibility gambling. that online gambling-related harm will occur.

27 Online Gambling in New Zealand – Public Discussion Document

The above assessment of impacts is based on the OPTION 2 following assumptions: Impacts Uncertainties or assumptions Gambling harm Assumptions reduction services • helping gamblers in this way mitigates further harm to the gambler, their whānau and the Description wider community. Gambling harm reduction services help $ • may provide the opportunity gamblers and their whānau to address issues to gather more information on where gambling has become a problem. gambling harm, including the These would specifically target vulnerable impact that it may have on the populations and young people. family and children Assumptions Under this option, new (or more targeted) • compliance costs for the services would be developed specifically for Government and gambling harm the online gambling products available and service providers are likely to be the harm caused. The services would probably minor to moderate. be run by existing gambling harm service providers and funded through the problem gambling levy on operators and/or from taxes. The Ministry of Health is responsible for the prevention and treatment of problem gambling, including the funding and co-ordination of Possible Impacts problem gambling services.

The Health Promotion Agency leads the national $ problem gambling education and awareness campaign.

Hāpai te Haurora is the National Coordination Service, which acts as a central point for disseminating key messages and information across the problem gambling provider sector and assists collaboration among agencies involved in preventing and minimising gambling-related harm.

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Impacts Uncertainties or assumptions OPTION 3 Assumptions • helping gamblers in this way prevents or mitigates Gambling industry and possible harm to the gambler, their whānau, and the wider individual self-regulation $ community. (partial status quo) • preventative measures are effective in avoiding gambling– related harm Description • operators would voluntarily Operators could develop “host responsibility” comply with requirements if they rules which would be applied to online understood what they were and if gambling (either on an individual operator there was a demonstrable benefit basis or by type or class of operator). For for the operator in complying (e.g. example, the operator might automatically maintenance of an operator’s warn a person or stop them gambling where good reputation, access to the harmful conduct was detected, or after a New Zealand market) specified event (such as a specific period of Assumption time gambling, after a number of hits are • some restrictions are in place that made or at a spending ceiling). Alternatively, decrease access to non-compliant the operator could allow the person using websites or applications (see the product to determine their own limits. Additional Option - Restrict access These rules would be made by the industry to online gambling above) which and could be audited by regulators. The increases our ability to enforce the chosen option Government could provide guidelines to assist industry with developing the rules, including Assumptions guidelines that prevents or minimises • set-up and administration gambling harm to vulnerable populations and compliance costs for the Government are likely to be minor young people. to moderate; however, investing in preventative measures could lead to an overall reduction in compliance costs over time (e.g in Possible impacts the health sector) • compliance costs for the Government (i.e. audit) and $ operators new to the regulated market are likely to be minor to moderate.

Currently in New Zealand: The above assessment of impacts is based on the following assumptions: • You can ask the TAB to put a weekly limit on your account • You can set your own spending limits on My Lotto or block yourself from their online games • Lotto also has a monthly spending limit ($500) and a weekly spending limit ($150). Of the $150, no more than $50 can be spent per week on online instant play games

29 Online Gambling in New Zealand – Public Discussion Document

In Australia, advertising of gambling is not OPTION 4 allowed on TV programmes classified ‘G’ (or lower) at certain hours of the day, or during Prohibition or tight programmes aimed at children.

control of gambling- ‘Gateway gambling,’ (e.g. free-play websites or related advertising online games with gambling-like play) is also an (partial status quo) issue, particularly where they target children.

Description The Advertising Standards Authority’s recently Advertising for online gambling products addressed concerns raised about overseas ‘free could either be prohibited in New Zealand to gamble’ websites that lead consumers to or subject to tight controls. For example, gamble on overseas ‘pay to gamble’ websites. allowing advertising only after 9pm to The new Gambling Advertising Code includes avoid advertising to young people, entirely ‘free to gamble’ activities, products and outlets prohibiting the advertising of more harmful in the definition of a gambling advertisement. gambling products (e.g. casino-type This means that certain standards apply to those products), or prohibiting direct-to-customer advertisements: marketing (e.g. via text or push notification). • Gambling advertisements must be prepared and placed with a high standard of social This option targets the visibility of gambling, responsibility to consumers and to society which we know increases where advertised. (including that they must not target children This is intended to prevent harm or to mitigate or young people and that they must not further harm to the gambler, their whānau, portray or represent anything that will, or is and the wider community. A particular focus likely to, cause, condone or encourage harm of this approach could be limiting gambling from gambling) visibility for children and youth. • Gambling advertisements must be truthful, balanced and not misleading.

Additionally, the Government could ask for warnings about gambling to be placed on the portals In Belguim, strict rules apply to the advertising advertising ‘free-play’. of gambling. Changes last year mean that online casino games may not be advertised at all, while Possible Impacts sportsbooks are only allowed to advertise on TV after 8pm. $ During sports matches, gambling ads are not allowed to be shown, irrespective of the time of day.

Like alcohol advertising, gambling companies aren’t allowed to use sportspeople or celebrities The above assessment of impacts is based on the to promote their products. All ads must show following assumptions: warnings about problem gambling.

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Impacts Uncertainties or assumptions Assumptions • less advertising of online gambling products leads to less online gambling which means less problem gambling and gambling- $ related harm

Assumptions • compliance increases through use of licence conditions and through targeting communications to traditional media, as well as “shop-fronts” run by Apple, Google, Facebook etc • some restrictions are in place decreasing access to non- compliant operators (see Additional Option - Restrict access to online gambling above) which increases our ability to enforce the restriction Assumption • set-up and administration compliance costs for the Government are likely to be minor to moderate; however, investing in preventative measures could lead to a reduction in government compliance costs in other areas over time.

Advertising of gambling activities in New Zealand: • 55% of respondents had seen advertising or a promotion for gambling activities in the previous 12 months • Most common were internet games (27%), betting on horse or dog races (24%) and betting on sports events (24%) • 46% bought more as a result of seeing Lotto advertising or promotion for a big jackpot prize draw • 11% of gamblers reported advertising for Lotto products had led them to gamble or gamble more often on activities other than Lotto. 2016 Health and Lifestyles Survey

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The above assessment of impacts is based on the OPTION 5 following assumptions: Impacts Uncertainties or assumptions Government regulates Uncertainty industry conduct This option is intended to prevent harm or to mitigate further harm to the gambler, their whānau, and the Description $ wider community. In some ways, it is The Government could be given powers to a stronger option than self-regulation specify “host responsibility” rules which by the individual or industry (as 16 would be extended to all online operators. it focuses on harm minimisation It would also be able to conduct audits of any without other potentially conflicting operator to ensure compliance. Like Option 3 interests). In other ways, it is a (industry and individual self-regulation), this weaker option as regulators’ distance could require the operator to automatically from the reality could cause it to stop a person gambling where harmful make some decisions which have conduct was detected, or after a specified unintended consequences (for event (such as a specific period of time example, setting limits too low may gambling, after a number of “hits” are made cause some gamblers to seek better or at a spending ceiling). Operators would be odds offshore). required to keep records to assist in auditing of harm minimisation practices. Specific Assumptions guidelines could be developed to prevent • preventative measures are or minimise gambling harm to vulnerable effective in avoiding gambling– populations or young people. related harm • compliance increases through use of licence conditions Assumption Online gambling providers who hold a UK • some restrictions are in place to Gambling Commission licence or a Malta Gaming decrease access to non-compliant Authority licence must have a Responsible operators (see Additional Option - Gambling section on their website that is clearly Restrict access to online gambling visible. This must allow customers to easily: above), which increases our • self-exclude ability to enforce the restriction • set deposit and loss limits (requirements would be otherwise • set bet size limits unenforceable for non-licensed • set time-out limits overseas operators accessing the • instantly access information about their market) current and historical net wins and losses Assumption • access links/contact details of authorised • compliance costs for both problem gambling providers. gambling operators and the Government are likely to be moderate but to reduce over time. Possible Impacts Preventative measures could lead to a reduction in government $ compliance costs over time.

16 Regulators could set such conditions as part of the licensing of the operator. 32 Online Gambling in New Zealand – Public Discussion Document

The above assessment of impacts is based on the Option 6 following assumptions:

Impacts Uncertainties or assumptions Regulator enforcement Assumption powers • operator compliance increases through fair and consistent use of Description regulator powers Government regulators could be given a range of remedies to assist them in managing online gambling operator behaviour and breaches of licence conditions and/or the Assumption Gambling Act. This could include infringement • some restrictions are in place and compliance notices, enforceable decreasing access to non- undertakings, injunctions, and partial or compliant operators (see full licence suspension and cancellation Additional Option - Restrict access processes. Breach of licence conditions of to online gambling above), which the Gambling Act would be an administrative supports our ability to enforce penalty or an offence, with financial and other the rules (requirements would penalties applying depending on the severity be otherwise unenforceable for of the breach or offence. The principles of non-licensed overseas operators justice would apply to all processes accessing the market) (e.g. the right to be heard, the rule against Assumption bias). • compliance costs for both gambling operators and Enforcement powers are an important part government are likely to be of any online gambling framework. They moderate. allow regulators to act where operators act inconsistently with the standards set under the Gambling Act and to respond where harm The Belgian Gaming Commission blacklists and related to online gambling is being caused. blocks unlicensed online gambling companies. Unlicensed online gambling companies are also fined, as well as Belgian citizens caught playing on these sites. Possible Impacts

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Other Issues and Opportunities Initially free to play online slot apps are very Convergence between gaming and gambling popular. They are some of the most popular Some online gaming has the characteristics of downloads on Google Play. Customers play a gambling. These games use micro-transactions and range of “Vegas style” slots initially without in-app purchases, for example: charge. They provide customers with a free number of coins to play with. These sites do • Skins betting: Skins betting is using in-game not provide actual winnings and therefore items (such as weapons, skins, avatars, are technically not “gambling”. Players aim to currencies and spells) that have been bought progress to higher levels on the leader boards, inside the game and can be used as currency increase their status, unlock new slots, and win to bet with on e-Sports (for example). more free coins.

• Loot boxes/prize crates: “Play-to-win” However, once the customer’s initial number consumable virtual item in a video-game of free coins has been lost constant pop-up which can be redeemed to receive a ads entice them to purchase more coins. randomized selection of further virtual items Depending on the number of coins purchased, (e.g. character customisation, equipment). the cost can range from $5 to several hundred Some popular games that include loot-boxes dollars. are Fortnite, Counter-Strike: Global Offensive and Overwatch. Online lotteries for charitable purpose There is concern that this kind of gaming could be Class 3 operators (e.g. Heart Foundation and a precursor to gambling by young people. Some Coastguard New Zealand) are currently licensed game-makers now allow players to download their to run larger-scale lotteries which have a prize games for free and make their money from in-game exceeding $5,000. These operators have requested transactions. the ability to run lotteries online or via phone as they are not able to do so under the current law. This There are limits to what gambling regulators can do would help modernise their operations and assist as New Zealand law is unenforceable overseas and with their continued financial sustainability. this issue cuts across several other portfolio interests (including classification, children, consumer affairs, The government supports this change as it considers health and social development). that this would be a minor change to the law with a likely minimal impact on potential gambling harms. There are some options in the gambling portfolio however. Regulators could: What is important to you? • influence online game makers to not include The government is interested in knowing what is gambling-like elements in future games most important to you when it comes to regulating online gambling in New Zealand. We also want to be sure we haven’t left anything important out. You • require warnings about to be placed on can tell us what you think about these things via the online games including gambling-like elements (to increase parental awareness) submission form (see Appendix D).

• ban games which demonstrate the characteristics of gambling.

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How to have your say Publishing The closing date for submissions is submissions Monday 30 September 2019. It is usual practice for all submissions made to the Department of Internal Affairs to be published on Fill in a submission form its website. Submissions may also be subject to a www.dia.govt.nz/onlinegamblingconsultation request made under the Official Information Act 1982. Email your submission to: [email protected] As your submission may contain sensitive information about your gambling experience(s), Send a hardcopy of your submission submissions from individuals will be made (see Appendix D) anonymous. This means we will remove any Online Gambling Team personal details or information that identifies you. Department of Internal Affairs If there is information in your submission that you PO Box 805 do not want released, please make this clear and Wellington 6140 explain why. For example, some information may be confidential because it is commercially sensitive or personal. You may also ask for your details to be withheld if your submission is requested under the Official Information Act 1982.

The Privacy Act 1993 governs how the Department of Internal Affairs collects, holds, uses and discloses personal information about submitters and the information they have provided. Submitters have the right to access and correct personal information.

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What happens next?

The Government will consider all submissions made through this process. After that, official government policy will be developed.

If the Government decides to change the law, a bill will be drafted. It will go through Parliament, including through a select committee process which opens the bill up to public comment before it becomes law.

This policy and legislative development process is likely to be quite time consuming, as good law can take time to get right.

If you are interested in being updated on the progress of this work, you can sign up for email updates at [email protected].

If you are interested in how a Bill becomes a law, see: https://www.parliament.nz/en/visit-and-learn/ how-parliament-works/how-laws-are-made/how-a- bill-becomes-law/‑

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Appendix A – Glossary

Term Definition Class 3 Larger-scale lotteries, housie, instant games and other forms of gambling such as gaming gambling sessions (also known as ‘casino evenings’) are common forms of Class 3 gambling’. For example, lotteries run by the Heart Foundation or Coastguard NZ.

Class 4 “Pokies” or gaming machines in pubs, clubs and TABs (not in casinos). gambling

Gambling Organisations that provide support (and sometimes counselling) to problem gamblers help service and those affected by problem gambling. providers E.g. Asian Family Services, the Problem Gambling Foundation, Mapu Maia, and Salvation Army Oasis.

Health A crown agency, which under direction from a government minister gives effect to Promotion government health policy. It conducts the Health and Lifestyles Survey. Agency

Health and A biennial monitor of health behaviour and attitudes, covering the areas of alcohol, Lifestyles tobacco control, sun safety, problem gambling and nutrition. Survey. (HLS)

Lotto NZ The Lotteries Commission trades under this name. Runs lotteries and other land-based games as well as a range of online games.

Non- A current non-gambler who may start gambling because of increased accessibility or traditional visibility of online gambling products. gambler

Online Defined in the Gambling Act as “remote interactive gambling”, ie. not in person. A gambling telephone, a device, or some kind of technology is involved in the transaction.

Open A licensing model whereby any operator may apply for a licence regardless of the location licensing of their operating system, with few restrictions.

Pokies Gaming machines operating in casinos, pubs, clubs and TABs

Problem A person whose gambling causes harm or may cause harm. gambling

Restricted A model of licensing where restrictions are placed on gambling providers. licensing E.g. a limited number of operators, standards of transparency / fairness, a requirement to have in-land servers etc.

TAB The trading name of the Racing Industry Transition Agency’s (RITA) betting operation. Takes bets on horse races or sports events at TAB outlets, or via website and application. RITA is an entity established under the Racing Act 2003.

37 Online Gambling in New Zealand – Public Discussion Document Other comments The UK is its tightening laws gambling due to (partly about concerns people young being exposed gambling to advertising) and restricting the use of credit on online cards sites. gambling How is the How of advertising online gambling managed? (on- and Operators who offshore) advertise wish to be licensed must the Gambling by Commission. media UK-based to permitted not are unlicensed advertise online gambling providers.

Do they restrict restrict Do they unlicensed operators? The UK does currently not block unlicensed providers. the However, UK Gambling Commission with works payment providers prevent to transactions being made by UK consumers unlicensed to providers.

How do they deal deal do they How with overseas providers? be They must the by licensed UK Gambling Commission. 15% of They pay gambling gross on all profits with transactions whose customers of usual place is the UK. residence as This is known betting a remote duty or point of tax. consumption If there is a If there system, licensing conditions what there? are licensing Three that objectives: crime should out of be kept it should gambling; in a be conducted and open way; fair and and children vulnerable other should persons be protected harm or from from exploitation gambling. What What are products legal? No specific on restrictions types. product approaches to online gambling to approaches How is the How market regulated? Open licensing on- for system and offshore providers. Online gambling with credit be to cards banned. Country United Kingdom Appendix B – International regulatory regulatory Appendix B – International

38 Online Gambling in New Zealand – Public Discussion Document Other comments The Australian government is currently on working shifting from a responsible gambling a to approach public health approach. How is the How of advertising online gambling managed? The advertising is not of gambling on television allowed programmes classified ‘G’ (or certain at lower) or of the day, hours during programmes children. aimed at Do they restrict restrict Do they unlicensed operators? The government block to is moving sites offshore offering are that gambling illegal services to It will Australians. also encourage and credit banks to providers card block payments illegal and from to wagering offshore businesses. How do they deal deal do they How with overseas providers? be They must to licensed services to provide Australians. If there is a If there system, licensing conditions what there? are a isn’t There single overarching regulating statute activities gambling It is in Australia. State/ at regulated and Territory level. Federal What What are products legal? Online slots, roulette, blackjack, and instant-win are scratchies illegal. Online racing and sports are betting with legal licensed Australian providers. Online are lotteries legal. In-play sports is betting illegal. How is the How market regulated? Licensing system is a There of register online licensed gambling providers. Country Australia

39 Online Gambling in New Zealand – Public Discussion Document Other comments is a large There online illegal and it market how is unclear the successful blocking of sites overseas is in deterring people from them. accessing How is the How of advertising online gambling managed? Marketing communications promote that not are gambling unless allowed approved. Do they restrict restrict Do they unlicensed operators? The Singaporean geo- government blocks overseas sites gambling and prevents payment being transactions them. made to How do they deal deal do they How with overseas providers? for It is illegal betting offshore to operators from bets take Singaporean and customers for an offence to Singaporeans with them. bet If there is a If there system, licensing conditions what there? are of All forms online gambling prohibited are of the outside authorised state duopoly. What What are products legal? Online casino-style not are games allowed. Singapore Club runs Turf racing horse and betting Singapore runs Pools online gambling existing for lotteries, and football racing. motor How is the How market regulated? State- authorised duopoly (Singapore Club and Turf Singapore Pools). Country Singapore

40 Online Gambling in New Zealand – Public Discussion Document Other comments new Sweden’s laws gambling effect into came on 1 January 2019. How is the How of advertising online gambling managed? by marketing Direct operators gambling no is prohibited: or emails, texts are phone calls allowed. Do they restrict restrict Do they unlicensed operators? does Sweden currently not access geo-block unlicensed to operators. How do they deal deal do they How with overseas providers? providers Overseas in may operate provided Sweden the they meet harm minimisation of the requirements Gaming Swedish Authority. overseas Licensed must providers a physical have and representative in server located Sweden. If there is a If there system, licensing conditions what there? are are Licences to granted those who: are have deemed to the knowledge, and experience organisation run to required will the operation; run the operation in accordance with statutes the govern that and are operation; deemed in other be fit to to respects run the operation. What What are products legal? no are There restrictions on the type of betting products available. How is the How market regulated? are Licences online issued to and casinos betting sports operators. Country Sweden

41 Online Gambling in New Zealand – Public Discussion Document Other comments to Changes advertising were regulation made in 2018. How is the How of advertising online gambling managed? All advertisements warnings show must about problem gambling. Online casino be may not games all, at advertised while sportsbooks only allowed are on advertise to 8pm. after television Gambling ads are be to allowed not during sports shown any time at matches of day. are Operators to allowed not use sportspeople to or celebrities their promote products. Do they restrict restrict Do they unlicensed operators? of Blacklisting sites unlicensed on is passed which Service Internet to Providers. How do they deal deal do they How with overseas providers? licences Foreign recognised not are can but operators with a operate holder of a Belgian licence. If there is a If there system, licensing conditions what there? are licences Separate for required are mobile gambling and media games. licences Separate online for only can operators by be obtained land-based existing operators. What What are products legal? No specific on restrictions types. product How is the How market regulated? Licensing for system online and land-based operators. Country Belgium

42 Online Gambling in New Zealand – Public Discussion Document

Appendix C – Gambling duties, levies, grants and charges paid by New Zealand gambling operators

Gambling operator Name and rate of duty or levy Class 4 gambling Gaming machine duty – 20% of class 4 gaming machine profits (non-casino Problem gambling levy – 0.78% of gaming machine profits gaming machine Grants funding to communities – minimum of 40% of net gambling proceeds operators)17 Casinos Casino duty – 4% of betting profits Problem gambling levy – 0.56% of casino wins Casinos pay income tax on their gambling profits.18 Lotto Lottery duty – 5.5% nominal value of all tickets represented in a lottery draw Problem gambling levy – 0.43% on turnover less prizes paid and payable Grants funding – 100% of profits (sales less prizes and costs) New Zealand Racing Gaming machine duty – 20% of class 4 gaming machine profits Board Totalisator duty (4%) for racing/sports betting19 Problem gambling levy – 0.52% on betting profits and 0.78% of gaming machine profits Point of consumption charge – 2% of turnover

17 Class 4 gambling pays higher duties, levies and grants because, under the Gambling Act 2003, they are required to pay for the harm that they cause. Class 4 harm rates are higher than those of other gambling types. 18 Gaming machine operators, the Lotteries Commission and the NZRB (TAB) are exempt from income tax because they are not for profit. 19 The totalisator duty will be phased out over three years from 1 July 2019.

43 Online Gambling in New Zealand – Public Discussion Document

Appendix D – Submission Form

About you (optional) From what viewpoint are you making this submission? You can select more than one option. Are you:

Someone who gambles online A representative of a community group

A representative of an online gambling operator Other

A representative of a gambling help service provider (Please specify. For example: someone affected by gambling harm, an ISP provider)

Your opening thoughts, interests and concerns

If New Zealanders are gambling online, what matters most to you? Rate in each box below from 1 to 5 (5= very important and 1 =not very important)

Consistent regulation of all online gambling Operators of online gambling return benefits and consistency between online and to communities traditional (land-based) gambling Access to a variety of gambling products Operators of online gambling pay for harm associated with their products Minimising online gambling-related harm

Reasons for your response

Minimising harm from online gambling

Which of the following options do you prefer? You can select more than one option. Tick only Yes or No for each option:

Yes OPTION 1 Yes OPTION 4 Education and influence (PARTIAL STATUS QUO) Prohibition or tight control of gambling- No Educate public on potential dangers and harms of No related advertising (PARTIAL STATUS QUO) online gambling and influence operators to comply Prohibition or tight control of online gambling-related advertising Yes OPTION 2 Gambling harm reduction services Yes OPTION 5 No Industry funds online gambling problem gambling Government regulates industry conduct No services Government regulates industry conduct of harmful online gambling behaviour Yes OPTION 3 Gambling industry and individual self-regulation Yes OPTION 6 No (PARTIAL STATUS QUO) Regulator enforcement powers Gambling industry and individual self-regulates No Regulators get powers to enforce law and harmful online gambling behaviour licence conditions relating to online gambling

Reasons for your response

44 Online Gambling in New Zealand – Public Discussion Document

Online gambling operators and products

Which of the following options do you prefer? You can select more than one option. Tick only Yes or No for each option:

Yes OPTION 1 (STATUS QUO) Yes OPTION 3 Lotto and TAB offer existing gambling Licensing of domestic operators No No products Operators: any NZ charitable or NZ commercial operation Operators: Lotto and TAB Products: eg. online casino-type products or any online Products: Online lotteries, racing and sports gambling product betting etc OPTION 4 Yes OPTION 2 Tick your preferred option: Extend gambling products Lotto and TAB may Licensing of domestic operators No offer Licensing overseas operators Operators: Lotto and TAB Licensing both domestic and overseas operators Products: online lotteries, racing and sports Operators: any NZ or overseas commercial or charitable betting etc, plus new varieties of operation online gambling products Products: eg. online casino-type products or any online gambling

Reasons for your response

Reasons for your response Yes Do you think New Zealanders should be prohibited or restricted from accessing online No gambling websites and applications that are not licensed under the New Zealand regime?

Do you support any of the following tools? Prohibiting New Zealanders (and those Yes Gamblers could self-exclude themselves from using Yes particular gambling operators or products (if this residing in or visiting New Zealand) from No No function was offered by the operator) visiting unauthorised online gambling sites based overseas or domestically Yes Restricting credit card use on gambling sites (either blocking their use on websites not licensed in New Geoblocking unauthorised websites No Yes Zealand or banning their use entirely) (meaning they couldn’t be accessed from No New Zealand without a Virtual Private Network/VPN). Yes Restricting use of free public wifi to exclude online gambling websites No

Reasons for your response

Reasons for your response Yes Should New Zealand-based gambling operators have different rules/ No expectations/requirements than overseas-based gambling operators?

45 Online Gambling in New Zealand – Public Discussion Document

Other issues and opportunities

How should gambling regulators respond to online gaming with gambling-like elements? You can select more than one option. Tick only Yes or No for each option:

Yes Influence online game makers Yes Require warnings about to Yes Ban games which to not include gambling-like be placed on online games demonstrate the No No No elements in future games including gambling-like characteristics of elements gambling

Reasons for your response

Reasons for your response Yes Do you think class 3 operators should No be able to run their lotteries online or via phone

Your closing thoughts, interests and concerns Did we miss any key options or impacts?

Did we make any wrong assumptions to get our initial assessment wrong somehow?

Is there anything missing from this document or anything else you’d like to say?

Please provide any evidence you have to support you views

Your personal details Your personal details will remain confidential

Name:

Contact details:

Date:

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