New Zealand has joined the list of countries in introducing a regulatory regime that will require offshore gambling operators to pay fees in respect of both gambling services provided to New Zealand residents and bets taken in respect of New Zealand racing and sporting events.
Racing Reform Amendment Act
Various online gambling operators have received a letter from the Deputy Prime Minister of New Zealand, informing them of the introduction of the Racing Reform Amendment Act 2019 (NZ) (“the Act”).
Introduction of Point of Consumption Tax and Product Fee Regime
This Act (which came into force on 1 July 2019), requires offshore betting operators to:
a) before using New Zealand racing and sports betting information:
i) obtain permission from the Department of Internal Affairs (DIA) (or its delegated authority); and
ii) enter into a betting information use agreement under which the operator pays an information use charge (NZ product fee); and
b) pay a point of consumption charge for bets taken from people resident in New Zealand (NZ POC charge).
The NZ product fee and the NZ POC charges are yet to be decided, and no agreements are available. These charges and penalties for non-compliance are to be set out in regulations.
The Deputy Prime Minister’s letter indicates that:
- the DIA is commencing the drafting of the regulations and offshore betting operators are expected to be consulted in the process; and
- offshore betting operators which commenced negotiations with the Racing Industry Transition Agency (RITA) (formerly the NZ Racing Board)
- before 1 July 2019 have a limited period of time to finalise these agreements.
It is not clear what steps offshore betting operators which have provided services to NZ customers can do to put in place formal arrangements with NZ authorities to enable them to provide these services in accordance with New Zealand law. However, this is likely to be clarified once the regulations are released.
One of the key issues that will require clarification is how the New Zealand authorities will enforce the obligations of offshore gambling operators to pay NZ product fees and NZ POC charges. This difficulty was highlighted in the course of the review of the proposal to introduce a NZ POC charge (and indeed it was recommended that no such charge be introduced until this difficulty was considered further). We note that this difficulty has not limited the implementation with effect from 1 July 2018 of the requirement for offshore gambling operators to pay GST in New Zealand in respect of gambling services provided to NZ customers.
Consultation Paper – Online Gambling Licensing Regime?
Further, NZ has released a consultation paper relating to the manner in which online gambling should be regulated. The consultation paper here, sets out four potential options, one of which involves a potential online gambling licensing regime. The consultation period closes on Monday 30 September 2019.
If you have any queries relating to the NZ position relating to online gambling, and particularly if you are interested in making a submission in respect of the consultation relating to online gambling in New Zealand, or have any queries relating to the letter from the Deputy Prime Minister, please do not hesitate to contact us.
Addisons’ Media and Gaming team will continue to monitor the New Zealand online gambling reforms closely and will keep you updated on any further developments. If you have any queries, please do not hesitate to contact us.
Thanks to Joe Edwards of Russell McVeagh, Auckland for his comments in relation to this Focus Paper.
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