New Zealand records below expectation online gambling tax revenue

Jenny Ortiz March 15, 2024

SiGMA news

New Zealand records below expectation online gambling tax revenue

The New Zealand Inland Revenue Department (IRD) has released estimates indicating a significant shortfall in projected government revenue from online gambling compared to initial expectations outlined by the National Party before the election.

In a report by The New Zealand Herald, while the National Party anticipated annual revenue of around NZ$176 million (€98.5 million) through the closure of tax loopholes for online gambling, the IRD forecasts a much lower figure, with an expected NZ$35 million (€19.5 million) annually, gradually increasing to about NZ$155 million (€86.7 million) over four years.

Difference in revenue forecasts

This substantial discrepancy, amounting to over NZ$500 million ($307.3 million) over the forecast period, underscores a notable difference in revenue forecasts between the pre-election projections of the National Party and the IRD’s assessments.

New rules for online gambling being considered

Finance Minister Nicola Willis acknowledged the lower-than-expected figures.

She, however, highlighted the government’s consideration of implementing a new regulatory framework for online gambling.

Such regulations could potentially generate NZ$118.6 million (€66.4 million) in revenue over the forecast period, thereby narrowing the gap between the National Party’s forecasts and the IRD’s estimates.

Tightened regulations as part of election campaign

The National Party’s election campaign primarily focused on tightening regulations surrounding offshore online gambling to bring it in line with in-person gambling, to boost tax revenue.

Proposed measures included mandatory registration and earnings reporting for online casino operators, along with IP ‘geoblocking’ for non-compliant services.

A flat 12 percent duty was among the preferred options discussed by officials.

Addressing unregulated online gambling

Despite the revised revenue estimates, Minister Willis expressed confidence in the proposed regulatory scheme, stressing the importance of addressing the unregulated nature of online gambling.

She maintained that establishing a regulatory framework was crucial, even if the resulting revenue might not meet initial expectations.