Gambling law changes in New Zealand if government changes

New Zealand’s gambling industry has a lot riding on the outcome of upcoming general elections on Sept. 20th, with opposition parties threatening major changes to the law, including tougher restrictions on pokie machines if elected.

New Zealanders spent more than $2 billion ($1.6B) on gambling in 2013, up just $7M ($5.6M) from the previous year, according to official figures.

Racing and sports betting, spending on lottery products and casino gambling all increased while spending on gaming machines in pubs and clubs dropped.

However, when adjusted for inflation total gambling expenditure in 2013 was down by almost 19 percent from the peak recorded in 2004.

Talk of changing the gambling laws stem from concern about the effect of pokie machines, which are mainly found in pubs and clubs in less affluent areas. There is one pokie per 465 people in wealthy areas but one per 75 people in poorer areas.

Prevalence studies usually put problem gambling at between one and two percent, according to the Problem Gambling Foundation, and Maori and Pacific Islanders are three to four times more likely to be problem gamblers.

The government currently funds a range of services to help problem gamblers including telephone counseling and has introduced tougher new obligations on operators to maintain “good host” policies.

Anti-gambling groups led by the Problem Gambling Foundation say non casino pokies are the biggest problem.

In 2013, the National government announced a review of harm minimization systems to enhance protections for problem gamblers. The review, which is not yet complete, is looking at the benefits and costs of pre-commitment systems and other types of harm minimization technology.

The main opposition Labour Party has promised a thorough review of gambling law, regulation, policy and provision, and to enforce gambling regulation more rigorously.

Levies are imposed on the gambling industry to fund services to problem gamblers; casino operators pay a 0.72 percent levy on casino winnings, and gaming machine operators pay a levy of 1.31 percent on gaming machine profits.

Labour has also previously said that it would prohibit New Zealanders from betting with any offshore gambling site, including sports betting and online casinos. That spending is estimated at between NZ$300 to $400 million per year. However that promise is not in the official policy on the party’s website.

The Green Party goes much further declaring the “proliferation of gaming opportunities and the associated increase in spending by New Zealanders on gambling (to be) socially and economically unsustainable.”

Under the rules governing the industry, a share of the profits has to be returned to the local community, and these are distributed through local gaming trusts. Many sports clubs, particularly for young people, and community organizations depend on the grants to provide services.

The Green Party is promising an independent regulator, a $150 million fund to replace grants from pokie machine profits, and “ultimately legislation to eliminate pub gaming machines.”

New Zealand’s only listed gambling and entertainment company, Sky City Entertainment Ltd, holds five of the six casino licenses granted in New Zealand before a government freeze was imposed. The other license is held by local tourism company Skyline Enterprises Ltd

In 2013, Sky City agreed to build a NZ$402 million ($320 million) convention centre capable of handling 3,500 delegates next to its hotel and casino in central Auckland in return for an extension of its license to 2048, and a 10 percent increase in gaming tables and machines, as well as other concessions.

The “convention centre for pokies” deal attracted a great deal of criticism at the time, and opposition parties strenuously opposed the passage of enabling legislation in Parliament.

The Green Party said at the time it might well repeal the law if it were part of the next government, and could refuse to pay any compensation to Sky City. However there is no reference to Sky City in the party’s policy statements on gambling this election.

Most analysts saw the deal as positive for the company, but others noted that casino revenue was growing at less than one percent per year in New Zealand. One analyst said, “we struggle to see growth in gaming outside the VIP area.”

Nachi Moghe, an analyst with Morningstar Research, said that because of the freeze on the total number of gaming machines allowed to operate in New Zealand, the extra machines given to Sky City would be at the expense of its competitors in pubs and clubs.

Labour’s spokesman on gambling issues, Trevor Mallard, has said Labour will relook at the deal to “determine ways to advance the development of an international facility, while reducing additional gambling availability and harm.”

Under the arrangement with Sky City, neither the government nor the local council contribute any capital to the cost of the convention centre, a facility which has long been sought after to attract more convention business to the city.

Broker Craigs Investment partners rate the company a “potential regulatory” target under a Labour-led government.

Up until this week it looked a comfortable win for NZ Prime Minister John Key and the National Party.

Going into the election the National Party (59 seats) and its partners had 64 seats in the 120 seat chamber. Labour had 34 seats, the Greens 14 and other parties and independents had eight seats.

However, the most recent polls have shown National losing support but still leading with between 59 and 64 seats, ahead of a possible Labour/Greens coalition with between 44 and 48 seats.

The centrist New Zealand First (6 seats currently) might well hold the balance of power after the election. Party leader Winston Peters has refused to say which grouping he would support. His party has previously worked with both National and Labour led governments.