PHOTO: New Zealand. Free CCO
When it comes to gambling, New Zealand is a bit of a paradox. On the one hand, it is estimated that around 80% of the population gamble in some form or another. On the other hand, there are only six licensed casinos in the whole country, and online casinos are not allowed to be based within New Zealand’s territory. The two sides of the equation do not seem to make sense until you take into consideration that a considerable number of those gambling participate in the lottery or get their thrills on pokies in bars and clubs. However, compared to many other countries, there is no denying that Kiwis love to have a wager.
According to Government data, the gaming machines outside of casinos account for the lion’s share of gambling expenditure. The latest figures show a turnover of $1,070 million compared to $604 for casino gambling and $654 on the lottery. TAB New Zealand, which runs sports betting in the country, accounted for another $380 million in 2021/22.
Looking at these figures, there could be a market for new brick-and-mortar casinos in the country, but there is a snag in the thinking. New Zealand’s gambling act only has provision for six casinos and they are already in existence. New casinos are prohibited, and unless there is a change in the law, no more can be developed. SkyCity, which runs four of the casinos – one in Auckland, one in Hamilton, and two in Queenstown does not seem to have any interest in selling up. In fact, they have recently increased the number of gambling products at its Auckland Casino to the upper levels allowed under The New Zealand International Convention Centre Project and Licensing Agreement. The country’s other two casinos – The Grand in Dunedin and Christchurch’s Casino – are also popular venues featuring live music and hosting poker tournaments.
While there might be a market for another casino, there is not the political will right now. Anyone wanting to enter the gambling market in New Zealand might have to consider other opportunities or invest in another area of commercial property.
Online gambling is incredibly popular amongst Kiwis. Revenue in the sector is projected to reach US$2.15 billion in 2024, growing to US$1.64 billion by 2029. Online casinos alone will account for US$0.64 billion this year, with just over 10% of the population gambling online. They are attracted by the sophistication of gaming opportunities available, including an enormous range of online slots, live dealer games and unbeatable offers. Players can sign up for a bonus when playing at a large selection of sites. However, anyone wanting to set up a business in online gaming needs to be working outside of New Zealand to comply with the current gambling regulations.
So, if you are thinking of a gambling real estate investment, that probably leaves a pub, bar, or other venue with pokies as the best possible option. However, while owning a pub or bar with pokies might seem like an attractive option, bear in mind that most of the profits from these machines get paid back to the community in grants. They are more about attracting customers to your venue rather than a profit source in their own right, although licensees are currently trying to get a better deal on the payouts.
They are trying to get changes to the current laws so that they are allowed to make a profit from the pokies and reduce the amount paid out to communities. However, this might not be a straightforward change as the Green Party is concerned it could lead to an increase in problem gambling. The trade body representing the industry sector, Hospitality New Zealand, has produced a policy paper calling for changes it claims would tackle: “unfair remuneration of operators and a bureaucratic, cumbersome operating environment with no flexibility or fairness”.
At present, venues are only allowed to take enough to cover their expenses, and they are pushing for a commission-based system that would enable them to retain 16% of profit from the pokies. They also want to be able to transfer their license to another site if they decide to sell up and move, and are calling for the removal of the requirement that 37% of profits are returned to the community. Instead, they are advocating for, “a cap on society expenditure”.
In addition, if venues merge, they want to be able to increase the number of pokies they operate and cut across the ‘sinking lid’ policy put in place by many local authorities, which means that when an existing venue closes, another will not be allowed to open.
Reg Hennessy of Hospitality NZ gaming is reported to have said that the changes would bring about “fairness, transparency, and probity”. He claimed these are “critical to ensure that the sector was fairly remunerated for raising significant funds for the community”.
The industry body intends to lobby political parties and MPs to adopt their proposed changes, but there are concerns that if hosts make a profit from the machines, they would be incentivized to encourage more gambling, which could, in turn, create more problem gamblers.
It seems that anyone wanting to get involved in prospecting in gambling in New Zealand might do as well to visit a casino or other establishment and try their chances out against Lady Luck. While the chances are the house will win, you might have some fun and entertainment along the way. The business side of gambling in the country seems considerably more complicated.