ESSA calls for NZ licensing system

18 April 2019

Sports betting integrity body ESSA has called for New Zealand to introduce a licensing regime for offshore operators alongside its planned point of consumption tax.

ESSA secretary general Khalid Ali said it was difficult to see how race field fees or a point of consumption tax, proposed in a new bill from Deputy Prime Minister Winston Peters, could be enforced without bringing operators onshore by offering licences.

Furthermore, he added, the lack of a proper regulatory structure could harm efforts to uphold sporting integrity.

Peters' bill is part of an effort to revitalise New Zealand's horse racing industry, with the Minister saying yesterday (March 17) that the sector was "in a state of serious decline".

The point of consumption tax, and fees for using racing and sporting data from New Zealand, are designed to boost industry finances in the short term. The bill also aims to replace the New Zealand Racing Board (NZRB) with the Racing Industry Transitional Authority (RITA), a new body that fulfils the board’s current duties, while also helping develop a new governance structure for the sector.

When plans to introduce the measure were first proposed in 2017, ESSA warned that offshore operators would most likely continue to use New Zealand’s racing products and offer betting to consumers without complying with the new controls.

“A market opening, as we are seeing in other parts of the world such as Sweden, the Netherlands and the US, would deliver a far more favourable regulatory and fiscal framework,” Ali said.

While the tax rate is yet to be set, a policy paper suggested that a 2% turnover tax could raise up to NZ$24m. Current NZRB chair Glenda Hughes also said race field fees could generate up to $1m a month for the horse racing industry.

However the policy paper said there were no plans to introduce a licensing structure as this would “effectively be a formal opening-up of the New Zealand online bookmaking market, which would threaten the NZRB’s statutory monopoly”.

Ali said that the insistence on maintaining the NZRB’s statutory monopoly would not only make it more difficult to collect taxes, but could have implications for efforts to maintain the integrity of sporting events in the country.

“An increased risk to the integrity of the racing and sporting sectors was a key issue influencing the policy and legislative position when this issue was previously put before Parliament,” he said. “As we explained then, the maintenance of a monopoly provider for betting will not address these concerns and will in fact serve to weaken the integrity position of New Zealand’s racing and sporting events.”

Peters is aiming to implement the plans set out in his bill from July 1. A second bill, due to be filed later this year, will set out proposals for implementing the new governance structure developed by RITA and the government. This is likely to see the NZRB replaced by a dedicated wagering reguatory body, with a separate entity to take up responsiblity for industry governance.