health & science

Why do bureaucrats want online gambling?

Public health advocates say the Department of Internal Affairs is prioritising the profits of Kiwi gambling companies over the health of Kiwi gamblers, Marc Daalder reports.

New Zealand spends hundreds of millions of dollars on online gambling every year, but only two Kiwi organisations are earning anything from it. The rest is flowing to overseas websites - and domestic companies want in.

To deal with the thorny issue, the Department of Internal Affairs has launched a probe to discover what it should do about gambling websites. In August, DIA released a discussion document presenting four options, as well as a set of "add-ons".

Public health advocates like the Problem Gambling Foundation's Andree Froude say the document prioritises the profits of gambling companies over the health of gamblers.

Is DIA focused on the right issue?

At the moment, only two New Zealand companies are allowed to operate a gambling site in the country: the TAB and Lotto.

In the discussion document, DIA lays out four main proposals: maintain the status quo; allow TAB and Lotto to market more online gambling products; open up the market to all domestic companies under a licensing scheme; or open up the market to all domestic and foreign companies under a licensing scheme.

Notably, none of the proposals detail winding back online gambling or engaging in harm minimisation - these suggestions are left to the side as potential "add-ons".

"Our concern is always going to be around the harm," Froude says. "We don't want to see a whole lot of different gambling operators offering online products to New Zealanders. More importantly, we want to make sure that the online operators are going to be regulated in such a way that consumers are protected."

Max Abbott, a professor of psychology and public health at AUT who specialises in gambling, said that all the options were worth discussing. Nonetheless, he said, "my preference, frankly, would be option one. I'd actually suggest that we even look seriously at blocking access to international sites because many of them aren't safe."

What can be done?

This online idea blocking was also floated by DIA in the "add-ons" section, but in a confused manner that made it seem like an afterthought. It proposed censoring the internet in a way that New Zealand doesn't even reserve for extremist content or child pornography.

Other "add-ons" rely on the goodwill of gambling operators, including overseas companies which aren't subject to New Zealand regulations or tax laws. DIA suggests that "gamblers could self-exclude themselves from using particular gambling operators or products (if this function was offered by the operator)".

Alternately, DIA has proposed geo-blocking, which is the technology that companies like Netflix use to restrict content to different countries. In other words, DIA wants to ask offshore operators to voluntarily block New Zealanders.

Another suggestion involves working with domestic credit card companies to block Kiwis from using credit cards on gambling sites. This is being investigated in the UK and is already in place in Australia.

Abbott also suggested placing compulsory caps on the amount of money that New Zealanders could lose to a given site. This would require a licensing and regulatory scheme with participation from operators, but would work with domestic companies.

Online gambling's scale

Seven percent of New Zealand gamblers are problem gamblers, according to DIA. While these gamblers are disproportionately concentrated in real-life gambling, that could change as online gambling grows more popular.

The amount of money spent on offshore gambling sites nearly doubled between 2015 and 2017, and Lotto NZ's own online gambling programme saw a 26 percent increase in sales last year.

It still represents a small proportion of the $2.4 billion that Kiwis spend on gambling every year, but the astounding growth rate of online ventures leaves little doubt that it could be the future of the industry in the country.

However, Kiwi gambling companies aren't waiting around for DIA to reform the system. SkyCity, the Auckland-based casino operation, has launched a Malta-based online casino in a bid to win a share of some of the hundreds of millions of gambling dollars that flow overseas annually.

SkyCity did not respond to a request for comment.

Internal Affairs Minister Tracey Martin said the Government was "after peoples' views" with the discussion document.

"There are four general ‘options’ to guide that discussion, but people are free to put in any views or proposals they have," she said.

"All of these will be considered in the policy work that will occur after submissions close at the end of September."

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