New Zealand launches plan to revitalise racing industry

17 April 2019

The New Zealand government has announced a series of measures to revitalise the country’s horse racing sector, with a point of consumption tax to be levied on offshore bookmakers for the first time.

The country’s deputy Prime Minster Winston Peters, who also holds the Minister for Racing portfolio, is to introduce two pieces of legislation in response to a review of the New Zealand racing industry by Australian racing expert John Messara.

“The New Zealand racing industry is in a state of serious decline,” Peters said. “The Coalition Government supports the overall intent of the Messara Report and is committed to reforms.

“We know we have the grass, the race animals, and the people to help the industry achieve its potential.”

The first bill will see the New Zealand Racing Board (NZRB) replaced by Racing Industry Transitional Authority (RITA), which will take responsibilty for developing a new governance structure for the sector.

“It is essential to have this transitional governance in place,” Peters explained. “RITA will have a legislative mandate that encompasses change management as well as the current business-as-usual functions and powers of the NZRB.”

To help improve the New Zealand racing industry’s finances in the short-term, the bill also sets out a range of new taxes, including the new point of consumption levy and race field fees.

This bill, which Peters aims to implement by July 1, 2019, does not set out a point of consumption tax rate, though a policy document on the measure noted that a 2% turnover tax could raise up to NZ$24m for the country’s horse racing sector.

However it does not go as far as to introduce a licensing system. The policy paper says that doing so would “effectively be a formal opening-up of the New Zealand online bookmaking market, which would threaten the NZRB’s statutory monopoly”.

New Zealand’s 2003 Racing Act will be amended to make the point of consumption tax a legal requirement for all operators targeting players in the country. The Department of Internal Affairs, which oversees horse racing in the country, will work alongside the Finance Ministry to enforce and collect the tax.

This may prompt push-back from the betting industry, with operator associations previously warning the New Zealand government against plans to enforce the tax without a licensing regime in place. ESSA has previously argued that opening up the market would be much more effective in channelling players to legal forms of gambling. 

The point of consumption tax will be accompanied by race field fees, which will see operators charged for using racing and sporting data from New Zealand, similar to copyright charges for use of intellectual property.

“The Racing Board has always championed the need for race fields legislation in New Zealand, and so it is great to see a new bill being introduced through Parliament,” NZRB chair Glenda Hughes said. “Race field [fees are] more than just revenue for the racing industry, it goes to the heart of the structure of our gambling regulation.

“Achieving race field [fees] and the estimated $1m a month it will deliver for racing has been a priority under the current board of directors over the past six years and it is positive news for the industry that an outcome is now within sight.”

In addition, the New Zealand Racing Board (NZRB) will be permitted to offer betting on sports that are not represented by a qualifying national sporting organisation. This will significantly expand the range of sports on which NZRB entities can offer odds.

The second piece of legislation is due to be published later this year, and will finalise a new governance structure for the market.

This may see the NZRB replaced entirely, with Wagering New Zealand (WNZ), a new entity established to oversee betting. Racing New Zealand (RNZ), meanwhile, would handle all racing and integrity-related manners alongside the country’s racing codes.