Sky City and TAB Express Concerns Over New Online Casino License System

Local gambling operators fear the government’s approach to online casino licensing could lead to market cannibalization and reduced community funding, as documents reveal behind-the-scenes lobbying efforts.

Key Takeaways

• SkyCity lobbied for just 5 licenses restricted to companies with domestic presence
• TAB NZ warned against “multinational domination” of the online market
• Community funding organizations criticized exemption from donation requirements
• Internal Affairs Minister dismissed protectionist approaches as unfair

Introduction

As New Zealand prepares to introduce its first-ever regulated online casino market, established domestic gambling operators are sounding the alarm over what they perceive as an unfair playing field. Documents obtained through the Official Information Act reveal that SkyCity Entertainment Group and TAB NZ have been actively lobbying the government to limit the number of licenses and prioritize domestic operators—efforts that have thus far been rebuffed by Internal Affairs Minister Brooke van Velden.

The controversy centers around the government’s decision to auction 15 online casino licenses starting in February 2026, with both international and domestic operators able to compete on equal terms. This approach has sparked significant pushback from New Zealand’s gambling establishment, which sees potential threats to their business models and the community funding streams they support.

SkyCity’s Secret Lobbying Campaign Revealed

SkyCity Entertainment Group, which operates New Zealand’s largest land-based casinos in Auckland, Hamilton, and Queenstown, has been particularly vocal in its opposition to the government’s approach. Documents reveal that the company engaged in extensive behind-the-scenes lobbying to shape the regulatory framework in its favor.

According to the released materials, SkyCity advocated for:

1. Limiting licenses to just five instead of the 15 proposed by the government
2. Restricting eligibility to companies with an existing domestic presence
3. Establishing preferential treatment for operators who contribute to the New Zealand economy

In a submission to the government, SkyCity argued that this approach would ensure profits from online gambling remained within New Zealand rather than flowing offshore to international shareholders. The company emphasized its role as a significant employer and taxpayer, suggesting that favoring domestic operators would protect these economic contributions.

TAB NZ Warns of “Multinational Domination”

TAB NZ, which currently holds a statutory monopoly on sports betting in New Zealand, joined SkyCity in expressing concerns about the proposed licensing system. Documents show that TAB NZ strongly advocated for limiting the number of licenses to between five and seven.

In its submissions, TAB NZ warned that allowing 15 licenses would enable “multinational domination over NZ’s existing operators,” potentially undermining the organization’s ability to continue its contributions to New Zealand racing and sports. The organization highlighted that its commercial success directly translates to increased returns for domestic sporting organizations—a model it fears could be threatened by international competition.

TAB NZ has also been running campaigns discouraging New Zealanders from using offshore gambling sites, emphasizing that money spent with TAB remains in New Zealand and benefits local communities—messaging that aligns with its lobbying position on the licensing issue.

Community Funding Organizations Voice Criticism

The debate extends beyond just commercial operators, with community funding organizations also raising significant concerns about the new licensing system. Martin Cheer, managing director of Pub Charity Ltd, has been particularly critical of the government’s decision not to require online casino operators to make community grant contributions.

“Effectively, in Class 4 [pokies], 100 percent all the profits have to be given away. Well, in this instance, none of it has to be given away,” Cheer stated, highlighting the disparity between the requirements for physical gambling venues and the proposed rules for online operators.

This criticism underscores a fundamental tension in New Zealand’s gambling regulation. Physical gambling operations—including Lotto, TAB, land-based casinos, and pokies—are required to contribute significantly to community causes. Under the new framework, online casino operators will only need to pay GST, a 12% gambling duty, and problem gambling levies, with no obligation to fund community initiatives.

Government Defends Market-Based Approach

Internal Affairs Minister Brooke van Velden has firmly rejected the protectionist approaches advocated by domestic operators. When questioned about SkyCity’s lobbying efforts, she made her position clear:

“I’m not here to look out for SkyCity. I’m not here to look out for any established particular casino or their brands. I’m here to ensure that we have a fair marketplace and a fair, regulated market.”

Van Velden also noted that limiting licenses to domestic operators could potentially breach New Zealand’s free trade agreements, adding a legal dimension to the government’s rejection of the protectionist approach. This stance signals that the auction process will proceed on equal terms for all potential bidders, without favoring established local interests.

The Community Funding Debate

The government has defended its decision not to require community contributions on practical grounds. A November 2024 Cabinet paper warned that imposing such requirements would make the New Zealand market less attractive to operators:

“By adding further financial requirements on top of tax, duties and levies, New Zealand would become one of the highest taxed jurisdictions for online gambling, making licenses less valuable and attractive.”

The paper argued that excessive financial obligations could drive operators away from the regulated market, potentially undermining the primary goal of channeling players toward safe, regulated platforms. Additionally, the government expressed concern that tying operator profits to community funding could create “perverse incentives” for increased gambling promotion.

Economic Impact Analysis

The debate over licensing structure touches on broader questions about the economic impact of gambling in New Zealand:

Local Economic Benefits at Risk?

SkyCity and TAB argue that their models ensure gambling revenues benefit New Zealand through:

• Employment of New Zealand workers
• Payment of corporate taxes to the New Zealand government
• Community grants and sponsorships
• Support for problem gambling services

They contend that international operators, even when licensed and paying gambling duties, may not deliver the same level of economic benefit to New Zealand communities.

Revenue vs. Regulation

While National had projected significant revenue from the new gambling duty, van Velden has provided more conservative estimates of about $13 million extra per year initially. This reflects the government’s stated position that the primary aim is increasing safety in online gambling rather than generating tax revenue.

Competitive Landscape Analysis

The opposition from domestic operators reflects realistic concerns about their competitive position in an open market. Several factors create challenges for local companies:

Resource Disadvantages

International gambling giants like 888, Bet365, and Betway (all of which have expressed interest in New Zealand licenses) have:

• Substantially larger operating budgets
• Established online platforms with advanced features
• Experience operating in multiple regulated jurisdictions
• Extensive marketing resources and global brand recognition

These advantages could potentially allow international operators to outcompete domestic companies despite the latter’s local knowledge and physical presence.

Regulatory Experience Gap

Most domestic operators have limited experience with online gambling regulation compared to international companies that navigate complex regulatory environments across multiple jurisdictions. This experience gap could affect their ability to quickly adapt to New Zealand’s new regulatory framework.

What’s Next for Local Operators?

Despite their lobbying setbacks, New Zealand’s domestic gambling operators aren’t giving up on their digital ambitions:

Adaptation Strategies

SkyCity has already signaled its intention to participate in the licensing process despite the rejection of its preferred regulatory approach. The company will likely leverage its brand recognition among New Zealand players and its understanding of local gambling preferences as it develops its online strategy.

Partnership Possibilities

Some analysts suggest that domestic operators might explore partnerships with established international platforms, combining local market knowledge with technical expertise and regulatory experience. Such arrangements could allow companies like SkyCity to participate in the online market while mitigating some competitive disadvantages.

Diversification Approaches

TAB NZ may focus on strengthening its sports betting offerings, where it maintains advantages through its established relationships with New Zealand sporting organizations and its deep understanding of local betting preferences.

Conclusion

The tension between domestic and international gambling operators highlights the complex balancing act facing New Zealand regulators as they establish the country’s first regulated online casino market. While local operators have legitimate concerns about protecting their businesses and the community funding models they support, the government has prioritized creating a fair, open marketplace that can effectively compete with unregulated alternatives.

As the February 2026 licensing date approaches, domestic operators face the challenge of adapting to a more competitive landscape while international companies prepare to formalize their entry into the New Zealand market. The outcome of this process will not only determine the future structure of New Zealand’s online gambling industry but may also influence how gambling revenues are distributed throughout the economy.

For players, affiliates, and industry stakeholders, the coming months will reveal whether domestic operators can successfully pivot to meet the challenge of international competition or if New Zealand’s online casino market will indeed be dominated by global gambling giants as Minister van Velden predicts.

Last Updated: December 20, 2024