Interview with Erik King: Insights on New Zealand’s Offshore Gambling Duty

The online gambling landscape in New Zealand is undergoing significant changes with the recent passage of the New Zealand Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Act on 28 March 2024. This legislation introduces a new offshore gambling duty, set to take effect on 1 July 2024, which aims to regulate and tax offshore online casinos more stringently. With this new duty, offshore operators providing services to New Zealand residents will face an additional 12% tax on gross betting revenue on top of the existing goods and services tax (GST). This brings their total tax burden to 25%.

To delve deeper into the implications of this new law, we have Erik King, a seasoned expert in the online casino industry and the Director of Zamedia N.V., with us today. Erik King claims that gambling sites in New Zealand, may be ultimately affected by these recent tax proposals. Erik’s extensive experience and leadership in notable projects like Templated.co, Zamsino.com, BetterBonus, and Kiwislots make him an ideal candidate to shed light on the impact of these regulatory changes. Join us as we explore the nuances of offshore gambling duty, its effects on operators and players, and the future of online gambling in New Zealand.

Interviewer: Erik, thank you for joining us today. While we normally cover topics like the upcoming Hades 2 or the recently released Animal Well, today we’re here to discuss the recent amendments to the Gaming Duties Act in New Zealand, specifically the introduction of the offshore gambling duty. Can you start by giving us your initial thoughts on this new legislation?

Erik King: Thank you for having me. The introduction of the offshore gambling duty is a significant move by New Zealand’s government to tighten its regulatory grip on offshore online casinos. This 12% duty, on top of the existing GST, effectively raises the overall tax burden to 25% on gross betting revenue for offshore operators. It’s a clear signal that New Zealand is serious about ensuring that all gambling operators contribute fairly to the economy, regardless of where they are based.

Interviewer: How do you think this new duty will impact the offshore gambling operators?

Erik King: The impact will be multifaceted. Financially, offshore operators will face higher costs, which could influence their pricing strategies and potentially the odds they offer. This might make New Zealand a less attractive market for some operators. However, the duty also brings a level of legitimacy and acknowledgment from the New Zealand government, which could be seen as a positive aspect. Operators will need to balance these costs against the value of maintaining access to the New Zealand market.

Interviewer: You mentioned legitimacy. The Act explicitly recognizes offshore sites associated with New Zealand’s casinos. What does this imply for the industry?

Erik King: This recognition is quite significant. It not only legitimizes these offshore sites but also imposes the same regulatory obligations on them as on other offshore operators. This move could encourage more transparent and compliant operations, fostering a more regulated and safer gambling environment for New Zealand residents. It also implies a level of trust and acknowledgment from the government towards these operators, which is a positive development for the industry.

Interviewer: The Act exempts sports and racing wagering from the offshore gambling duty, maintaining a 10% point of consumption charge instead. Why do you think this distinction was made?

Erik King: The distinction likely reflects the different nature and economic contributions of sports and racing wagering compared to other forms of online gambling. Sports and racing betting are deeply integrated into the local culture and economy, often involving local events and stakeholders. By maintaining a lower tax rate, the government may be aiming to support these industries and avoid deterring operators who contribute to local sports and racing events.

Interviewer: How do you foresee offshore operators adjusting to the new requirement of quarterly returns for the offshore gambling duty?

Erik King: Offshore operators will need to adapt their financial and administrative processes to comply with the new quarterly reporting requirements. This could involve updating their accounting systems and possibly increasing staff to handle the additional workload. Aligning these returns with their current GST returns should help streamline the process, but it will still require careful planning and resource allocation.

Interviewer: What challenges do you anticipate for operators dealing with negative offshore gambling profits, which can now be carried forward as offsets?

Erik King: The ability to carry forward negative profits is a beneficial feature, as it allows operators to offset future profits against past losses, providing some financial relief. However, accurately tracking and applying these offsets could be complex, especially for operators with volatile revenue streams. Ensuring precise accounting and compliance with local regulations will be crucial to avoid potential penalties or disputes.

Interviewer: With your extensive experience in the online casino industry, how do you think these changes will affect the competitive landscape of online gambling in New Zealand?

Erik King: The increased tax burden might lead some smaller or marginally profitable operators to exit the New Zealand market, potentially reducing competition. However, larger and more established operators are likely to absorb the costs and continue operations, possibly gaining a larger market share. Additionally, this could incentivize offshore operators to enhance their service quality and marketing efforts to maintain their customer base despite higher costs.

Interviewer: Do you see any potential benefits for players as a result of this new legislation?

Erik King: For players, the new legislation could enhance the safety and reliability of online gambling options available to them. With more operators adhering to New Zealand’s regulatory standards and responsible gambling, players can expect a higher level of fairness and transparency. The recognition of offshore sites by the government also means that players might have more recourse in case of disputes with these operators.