NZ to impose fee on $1 bln a year bet offshore on local racing, sports, widen scope of TAB

Tuesday 24th November 2015

The government is planning to impose a fee on offshore gaming companies which take in $1 billion a year in bets on New Zealand racing and sports, and may allow the TAB to widen its product range to stem the flow of Kiwis betting online with offshore operators.

The proposals from the Offshore Racing & Sports Betting working group were announced today by Minister of Racing Nathan Guy at the annual meeting of the New Zealand Racing Board (NZRB), which operates the TAB. The working group estimates $58 million of gross betting profit is lost offshore every year, with the number of New Zealanders betting online with the TAB's foreign competitors doubling since 2010 to 40,000.

The group said New Zealanders were betting offshore because foreign gaming companies had a wider product range, offered better odds and were more aggressive in acquiring customers. The TAB has fought back with the launch of a mobile app, which has become its fastest growing channel, but the group said the betting agency needs to do more to compete, including the introduction of better technology.

It suggested ending the current prohibition on in-race betting, which "would make in-race betting consistent with in-play betting on sports matches", allowing bets on sports that don't have a national body such as mixed martial arts, and permitting the NZRB to bring new products to market, such as betting on events other than sports or racing.

It also recommended legislating for an intellectual property fee, which offshore gaming businesses would have to pay when they accepted bets on racing and sporting events taking place in New Zealand. The fee could generate $16.6 million revenue in its first year, if set at 2 percent. About $1 billion a year is currently bet offshore on New Zealand racing and sport without the TAB getting a cut, the group said.

Guy said offshore betting on events taking place in New Zealand was undermining investment and employment in the racing industry.

"Many offshore providers make no contribution to the local racing industry, to the New Zealand economy, or to the problem gambling levy," he said. An offshore bookmakers fee would be challenging to implement, but would be his priority. "The reality is we are trying to create a legislative tool with an extra-territorial reach, which is by no means simple," he said.

Australian states have adopted domestic legislation which prevents the use of racing information by corporate bookmakers other than licensed TABs, unless the bookmaker pays a fee to the state racing board. The New Zealand working group said compliance was high, and similar legislation had been adopted in France and was about to be adopted in the UK.

The group was also supportive of Inland Revenue's recently released consultation document which would impose GST on "cross-border services" such as online betting.

NZRB posted a profit of $144 million for the year ended July 31, 5.1 percent up on 2014. Profit included $4.9 million from the sale of its former head office building in Petone. Betting turnover was 4.4 percent, or $87.2 million, above budget, but overall revenue was 1.5 percent lower than budgeted at $267.2 million.

The board said this was primarily driven by a shift in sports fixed odds betting turnover towards lower margin in-play betting options.

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