A brewing dispute is unfolding in New Zealand over the government’s decision to deny TAB New Zealand’s offer for an online casino license, potentially altering the landscape of online gambling. The TAB, a statutory entity responsible for New Zealand’s sports and race betting, recently proposed a significant $150 million upfront payment to secure one of the 15 online casino licenses being auctioned by the government. This proposal, however, was swiftly rejected by Internal Affairs Minister Brooke van Velden, who has expressed strong opposition to government involvement in casino gambling.

TAB seeks online casino license amid regulatory shifts:

In late 2023, the TAB submitted its offer to Minister van Velden in an attempt to gain one of the licenses under the new regulatory framework for online gambling. The TAB argued that its proposal would help meet the government’s fiscal goals while securing a more competitive position for the entity in an increasingly crowded market. According to documents released under the Official Information Act, the TAB estimated that $150 million could be generated from an exclusive market where only one or two operators dominate. This capital infusion would be in exchange for a 10-year license to operate an online casino, a move that the TAB insisted would support both its viability and its mission to fund New Zealand’s racing and sporting sectors.

Despite the proposal’s appeal in financial terms, van Velden was unequivocal in her response, stating, “Not under my watch,” when asked if she would entertain the TAB’s request. As RNZ reports, the minister made it clear that the government should not engage in the online casino business, emphasizing that her focus was on addressing core public services rather than expanding the reach of gambling. “I don’t believe that the government should be involved in casino gambling,” she added, citing her commitment to public welfare over commercial gambling interests.

Although the TAB’s initial proposal was denied, the organization has not abandoned its pursuit of an online casino license. In its ongoing push, the TAB has requested a review of existing legislation to reconsider its position. The TAB stated it “would like to be considered for a licence” and remains hopeful that changes to the law could eventually open the door for it to participate in the online casino market.

Adding another layer of complexity to the situation is the TAB’s 25-year partnership with the UK-based gambling giant, Entain. This lucrative agreement, which began in 2023, guarantees the TAB $900 million over five years and includes a 50-50 revenue-sharing arrangement. With Entain’s operational expertise and financial backing, the TAB believes that securing an online casino license would provide the financial stability needed to address rising costs, capital constraints, and increasing competition from offshore operators. The TAB has warned that delaying the establishment of a near-monopoly for online betting could cost the organization as much as $1.5 million per month, a significant sum in the context of a highly competitive market.

The controversial monopoly and political backlash:

One of the primary sticking points in the dispute is the TAB’s desire for a monopoly over online gambling, which would effectively restrict the number of competitors in the market. Critics, including some government officials, have raised concerns about the ethics and implications of granting such a monopoly. A briefing from the Internal Affairs Ministry warned that providing the TAB with an exclusive license could be seen as favoring a “for-profit” offshore operator, as Entain stands to benefit from any monopoly arrangement. The briefing also highlighted compliance issues faced by Entain in Australia, raising concerns about potential reputational damage to New Zealand’s gambling regulations.

Despite these objections, TAB NZ insists that the change in legislation is essential to its financial future. The organization claims that implementing the “legislative net” by April 2024 would secure $100 million in additional funding from Entain, along with a yearly minimum guarantee of at least $15 million. These funds would be reinvested in the New Zealand racing and sports industries, offering substantial benefits to local stakeholders.

In addition to its online casino ambitions, the TAB has also secured a victory in its battle to retain its Class 4 license for pokie machines, which had been slated for removal under previous government plans. The TAB successfully argued that relinquishing its pokie operations would result in a loss of $18.5 million in annual revenue. Minister Winston Peters ultimately sided with the TAB, allowing it to maintain its pokie operations and continue contributing to New Zealand’s sports and racing sectors.

Peters defended the decision, stating that the TAB has demonstrated its ability to use proceeds from its pokie machines responsibly and effectively to support its commitments to the sports and racing industries. As a result, the TAB will be allowed to continue operating its 415 pokies despite previous moves to phase out the operation.