Online Casino Gambling Bill: PNZ’s Submission
This week, PNZ gave its oral submission on the Online Casino Gambling Bill (the Bill), highlighting the key points from our written submission. The big problem with the Bill is the absence of any requirement for online casino licence holders to contribute funds to the community - which is out of whack with the requirements that apply to class 4 gaming (pokies) and in-person casinos in New Zealand. This is likely to lead to a significant loss of funding in a short period of time and put pressure on funders, the funding system, and the community. We provided a case study showing this impact with data from DIA and Foundation North.
"The concern is that as online gambling grows, it will "cannibalise" the revenue from 'land-based' gambling, thereby eroding the community funding base without a replacement mechanism…. Every community in the country will be negatively impacted – including your electorates – with a loss of funding available for clubs, sport, environmental and other causes that your communities care about."
We strongly recommended that the bill be amended to include a requirement for online casino gambling licence holders to contribute to the community. This could be achieved through making it a compulsory licence condition, with a minimum amount or formula set out in primary legislation.
Read our submission below:
Oral Submission Notes - Online Casino Gambling Bill
1. Thank you for the opportunity to make an oral submission on the Online Casino Gambling Bill.
2. My name is Eva Hartshorn-Sanders and I am the Director of Policy and Advocacy Director at Philanthropy New Zealand - the peak body for philanthropy and grant-making in Aotearoa New Zealand.
3. We are a non-profit, independent membership organisation and we support generosity, effective giving, and a strong philanthropic ecosystem, and offer guidance for people with an interest in giving to make the world a better place.
4. We have over 200 members spread throughout New Zealand, including community trusts, community foundations, family foundations, corporate philanthropy members, donor-advised funds, high net worth individual members, professional advisory members, government agencies and local councils, iwi/Māori entities, and community / charitable organisations.
5. Philanthropic organisations, and the giving sector, are an essential part of our country’s infrastructure that are working with communities all over the country to support areas of human, social, economic and environmental development.
6. The philanthropic sector’s grant and donation-based funding is worth around $3.8 billion per annum.[1] Philanthropic funding is complementary to government funding and not positioned to fill core service gaps. It supports innovative initiatives and offers important “risk capital” for social change.
7. We have been speaking to Ministers Upston and Willis, and others in Government, about how the system can be improved to increase generosity, with the opportunity for significant growth, particularly given the current intergenerational transfer of wealth valued at over $1 trillion, and growing corporate generosity. There are also substantial sums of capital funds available for investment.
8. Ensuring that there are the right incentives and levers to increase philanthropy is even more important at a time when the Government is reconfiguring their own contribution to the community. We are currently ranked at number 17 on the World Giving Index 2024.[2] We have dropped 12 places over the past couple of years – we were number 5 globally in the World Giving Index 2022.
The Bill
9. First, we wanted to recognise the importance of introducing a licensing scheme for online casino gambling. This was a major gap in the regulatory framework and is both necessary and well overdue given the public health risks of problem and underage gambling, and particular risks that apply in the online environment (e.g. to make products more visible, attractive or addictive). Regulation that adopts a public health approach through a licensing scheme is welcome.
10. Our submission largely relates to the detail of that regime, with a particular focus on the impact it will have on funders, the funding ecosystem and communities. We also look at how the proposed scheme could be strengthened to give better effect to the purposes in section 3 of the Gambling Act – including the overarching principle of harm minimisation.
11. Like many other submitters, we are concerned that the Bill does not include a requirement for licence holders to disburse money to the community or any replacement funding mechanism.
12. This is a major gap, inconsistent with other licences for gambling in New Zealand and will give an undue competitive advantage to operators based offshore who are not contributing to New Zealand’s economic growth or community benefit.
13. New Zealand funders are supporting an increasingly fragile and complex range of community needs and causes and have advised us that there is more demand for support than they are able to meet. For example, the impacts of COVID are far-reaching, particularly for those who are most vulnerable in our society. In our written submission we highlight this with government statistics on increased mental health and food security needs. The charity tax proposals – if progressed - will also reduce the available funding for communities.
14. There are a growing number of New Zealanders who are engaging in online gambling, which is likely to reduce revenue gathered from other gambling sources over time. These other gambling sources contribute to both the economy and the community. Our members are concerned about both the lost opportunities that this funding stream will cause and the flow-on impact that it will have on the rest of the funding system and charitable sector – which is already under considerable pressure with an economic recession, high unemployment, a reduction in public spending/services, and the recent proposals on taxing charitable business activities. The concern is that as online gambling grows, it will "cannibalise" the revenue from 'land-based' gambling, thereby eroding the community funding base without a replacement mechanism.
15. One of our members, Foundation North, has provided data the shows an example of the withdrawal of funding at the regional level for Northland and Auckland. For the 2024 calendar year, class 4 gambling (pokies) funding for the region totalled $103,927,283 (down from the previous year), Lotteries funding totalled $54,027,295 and Sky City Community Trust disbursed $4,159,527 (down from the previous year). In the same calendar year Foundation North, which is a community trust for Auckland and Northland, funded $74,594,041 (up from the previous year of $54,058,842).
16. The reduction in funding from class 4 gambling and casinos has an impact on other funders like Foundation North, which currently intentionally co-funds with Sky City and separately funds organisations that rely on class 4 gambling money as one of their funding streams. The Bill makes those programmes and organisations more precarious.
17. The impact to the funding environment, funders and communities is not isolated to Auckland and Northland. Every community in the country will be negatively impacted – including your electorates – with a loss of funding available for clubs, sport, environmental and other causes that your communities care about.
18. An NZIER report from August this year estimated that the national funding to sport from Class 4 gaming trusts could be reduced by $43.3m after 5 years, equating to a 24.6% reduction in funding granted to community sport as at 2024 ($176m). This would lead to more pressure on other funders, particularly those funding regionally and supporting community infrastructure such as sporting and community venues and activities.
19. There is no clear or compelling evidence or justification provided in either the Bill or supporting documents from officials why online casino gambling should be exempt from providing funds to the community in the same way as Class 4 gambling licences or in-person casinos. We have not seen any evidence or modelling from the Department showing that online casino gambling increases because a certain amount is disbursed to the community.
20. Gambling licences are a privilege not a right, and one of the core elements of the Gambling Act 2003 (and other legislation regulating gambling) is that a portion of the funds made in profit is shared with the community. The harms of gambling to the individual, their family, workplaces and the community are well-known – and problem gambling is treated as a public health issue. As part of this well-established policy, our legislation adopts a harm minimisation approach to regulation. Harm minimisation includes, for example, prevention and mitigation requirements and accountability that are in the licensing system, a gambling levy to fund the licensing scheme and problem gambling research/initiatives, and a community contribution to help rebalance the harm to community. This is a longstanding principle that has led to hundreds of millions of dollars being granted annually for sports, arts, health, youth, and social services – and is essential funding supporting many charitable, community and volunteer-led organisations. This is not a dependency but a long-standing social contract.
21. We recommend that the Bill be amended to introduce a requirement for online casino gambling licence holders to contribute to the community. This could be achieved through making it a compulsory licence condition, with a minimum amount or formula set out in primary legislation.
22. It is unclear how the requirements in clauses 38-40 – i.e. ensuring gamblers are over 18, minimising harm, excluding problem gamblers – will be monitored and enforced in the online environment, and how much resource will be put into this activity. This includes, for example, advertising targeting young people or problem gamblers, sharing of data about vulnerable individuals for commercial gain and digital features that are designed to make gambling addictive.
23. The other areas that the Committee may wish to consider is strengthening the community consultation requirements when regulations or requirements are developed under the Act, and lowering the maximum number of licences (proposed to be 15 – which is 3x the amount of in-person casinos under a “sinking lid” policy approach in the Act).
24. Enforcement of the penalties in the Act will be easier if there is a requirement for a representative of the company to be domiciled in New Zealand.
25. Thank you.
[1] Those figures are from 2018, in the 2020 JB Were report: McLeod, J. (2020). The New Zealand Support Report: The current state and significance of giving in New Zealand and the outlook for recipients. [online] Available at: https://static1.squarespace.com/static/608a1a95d5087f40f9c2e366/t/6170561168036225f10f62fa/1634752022165/PNZ_JBWere_NZ-Support-Report.pdf [Accessed 7 January 2025].
[2] CAF (2024). World Giving Index 2024. [online] Available at: https://www.cafonline.org/docs/default-source/inside-giving/wgi/wgi_2024_report.pdf [Accessed 7 January 2025].