General policy statement
This Bill seeks to amend the Racing Act 2003 (the Act) to implement a range of provisions that are designed to—
improve the competitiveness of the New Zealand Racing Board’s (the Board) betting operations; and
require offshore betting operators to—
pay to use New Zealand racing and sporting information in their betting products (an information use charge); and
pay when they take bets on racing or sporting events (or both) where those bets originate in New Zealand (a consumption charge); and
provide for regulations to be made to revise the formula that is used for allocating proceeds from sports betting between the racing and sports sectors.
The Board is the sole legally authorised provider of racing and sports betting in New Zealand. However, betting operators based in other jurisdictions may offer bets to New Zealanders over the Internet and may offer bets on New Zealand sports and racing to all of their customers, regardless of the location of those customers. Those offshore betting operators are not bound by New Zealand law, other than a prohibition on them advertising in this country. Unlike the Board, therefore, offshore operators are not required to contribute to the New Zealand racing and sports industries or to gambling harm services in this country.
The amendments in this Bill reflect recommendations from the Offshore Racing and Sports Betting Working Group (Working Group), which was established by the Minister for Racing in 2015. The Working Group was asked to review the issue of offshore gambling and its impact on the Board’s income.
The Bill provides for the information use and consumption charges to be inserted into the Act (as new Part 6AA). The Bill provides that the Department of Internal Affairs will administer the charges as the “designated authority”. The Department may delegate its functions and powers as designated authority to, without limitation, the Board, a Crown entity as defined in section 7 of the Crown Entities Act 2004, or another department.
The Bill requires offshore betting operators to seek the permission of the designated authority before they can use New Zealand racing and sporting information. Offshore betting operators must enter into agreements with the designated authority in respect of the information use charge. New Zealand law will apply in relation to any disputes that may arise in respect of those agreements and enforcement of those agreements, including recovery of outstanding charges and penalties. The designated authority may issue a penalty notice to an offshore betting operator if the betting operator has failed to get permission to use New Zealand racing and sporting information, failed to enter into an agreement in respect of the information use charge, failed to pay an amount owing under the charges, or provided the designated authority with false or incorrect information.
The Bill provides that the Minister must set the specified rate or rates of the charges, and that regulations may be made to specify the penalty rates and the minimum betting revenue that offshore betting operators must receive for a financial year from their betting operations involving New Zealand before becoming liable to pay the charges for that year.
The Bill provides that existing commercial agreements between the Board and offshore betting operators continue to have effect and are not affected by provisions of the Bill. The Bill also provides for the Minister to grant exemptions to specific offshore operators from the requirements to pay either or both of the charges when an agreement is entered into. This provision is intended to minimise the risk of double-charging in circumstances where offshore betting operators enter into separate commercial contracts regarding the use of New Zealand betting information.
The Bill has a safeguard in place to ensure that it does not target offshore betting operators unfairly. The total proportion of revenue or profit required to be paid by offshore betting operators should not exceed the equivalent proportion of revenue or profit that the Board pays to New Zealand racing and sports organisations.
The Bill provides that purposes for which any money received from the charges may be applied include the following:
promotion of the long-term viability of New Zealand racing and sports:
covering the cost of administering enforcement and collection of the charges:
funding measures to prevent and minimise harm from gambling.
In addition to providing for betting information use charges and consumption charges, the Bill also amends the Act to—
permit the Board to offer in-race betting; and
allow the Board to enter into betting agreements with Sport and Recreation New Zealand (Sport NZ) in circumstances where there is no qualifying national sporting organisation (NSO) for a particular sport; and
permit the Board to make rules declaring sporting events to be or not to be New Zealand sporting events for the purposes of new Part 6AA and attracting the charges.
These additional amendments, to enhance the TAB’s products and services, also came from recommendations of the Working Group. Permitting in-race betting would enable the Board to compete on a more even basis with offshore betting operators who may already offer this type of product.
The Bill will provide that in-race betting would apply only to bets on the final outcome of a race, as opposed to events within a race (for example, lead changes or horses retiring prematurely). It would therefore not permit new types of gambling and would align racing bets with in-play betting on sports events, which the Board is already allowed to offer.
Currently, betting is permitted on domestic and overseas sporting events only if the Board has a betting agreement with the relevant New Zealand NSO for the sport. The Board therefore cannot offer betting products for sports that may be popular internationally but have limited participation or formal organisation in New Zealand. The Bill will provide that, where sports are not represented by a qualifying domestic NSO, the Board can offer betting if the Board enters into an agreement with Sport NZ. Sport NZ would then determine the distribution of betting income.
The Bill also provides for a regulation-making power to update the formula by which proceeds from betting on New Zealand sporting events are allocated between the racing and sports sectors. Sport NZ and the Board believe that the current formula in the Act for allocating this money is no longer fit for purpose.