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The iGaming sector in New Zealand had another strong year and is projected to rake in $1.25 billion by the end of 2024. For context, this is an 11.6% increase from the year prior, and it consists of combined revenue from online casinos, sportsbooks, and lottery. There are a number of factors that account for this growth, such as innovation in game design, increased accessibility, and a more competitive iGaming scene.
One thing’s for sure: this growth has significantly contributed to the New Zealand economy in a number of ways. However, it’s unwise to focus solely on the profit, as there are certain social costs of gambling that offset this progress. To that end, let’s see how the market truly faired in this corner of the world.
The Current State of the Online Gambling Industry in New Zealand
Back in 2017, the Lottery was the dominant form of online entertainment, but in 2024 online casino games have been doing the heavy lifting. Online casinos neted around $642.5 million this year, which is by all accounts a record-breaking gambling revenue. With the projected annual growth rate of 5% online casinos are poised to become a pivotal sector in the nation’s digital economy.
Casino promotions play a big role in user acquisition and market penetration. The undeniable user favorite is the no deposit bonus, a rare instance that allows players to gamble risk-free. Basically, you get $100 free no deposit, and so long as you meet playthrough terms, that money can be turned into withdrawable cash. Chances are you’ll also be getting free spins, which you can spend on slots.
It’s also worth pointing out that the majority of gambling businesses are offshore brands. Up until recently, the regulatory framework has failed to embrace these companies as allies to the local economy. As of July 2024, they’ve been allowed to offer their services so long as they pay a 12% offshore gambling duty, in addition to the 13% Goods and Services Tax (GST).
As far as user penetration goes, it is anticipated to reach 10.7% in 2024 and ramp up to 12.4% by 2029. Another surprising metric is that 70% of these users access gambling platforms via smartphones or tablets. In response to this expansion, the New Zealand government is currently working on implementing a regulatory framework by 2026. The proposed system will license up to 15 gambling operators, which will have to abide by strict regulations. Fines for non-compliance will be up to NZ$5 million.
Economic Impact: How Online Gambling Drives Revenue in New Zealand
For years the government has been struggling with legal loopholes that gambling brands managed to exploit. The recent changes managed to address the issue to an extent, but they aren’t an ideal solution. Even with a 12% tax on all offshore operators, the economic benefit leaves much to be desired.
According to the Inland Revenue Department, this campaign by National will actually bring in much less money than originally intended. Instead of the expected average of NZ$179 million a year, closing the offshore loophole will bring in only about NZ$35 million. Over 4 years, this is about half a billion dollars less than the original prognosis.
Luckily the sector contributes to New Zealand’s economy in several ways. For one, it creates demand for related jobs in tech, marketing, and customer support representatives. The introduction of a regulated gambling framework is also expected to boost these benefits. Once up to 15 operators are licensed, the government intends to create jobs, attract investment, and get a substantial share of the revenue.
The Main Factors Driving the Success of Online Gambling in New Zealand
There’s several key factors that drive the success of online gambling in New Zealand. We need to remember that this business model was technically around the early 2000s and businesses managed to improve over time. The data-driven innovations have led to more refined games, and to more user-centric promos.
A massive change in digital infrastructure is highly relevant as well. Currently, there are over 6 million smartphone connections in the country. This means that the number of active smartphones exceeds New Zealand’s population. To put it bluntly, there are lots of potential new customers in the gambling market. Furthermore, offshore operators use targeted advertising to tap into local markets. They capitalize on New Zealand’s regulatory gaps and a lack of competition from the local operators.
Lastly, there is the factor of disposable income. According to data from OECD Better Life, around 77% of the population is employed and an average household has around $39,000 of annual disposable income. So, kiwis can really afford this entertainment and aren’t exactly at risk even if they occasionally overspend. In fact the data from 2021 suggests that problem gambling prevalence is only around 0.2%.
The Future of Online Gambling in New Zealand
Clearly a lot has happened on this front in the past year, and the announced changes aim to capitalize on the economic potential of online gambling. Revenue wise the projected growth rate is 5.70%. In terms of market volume, this translates to NZ$1.6 billion by 2029.
While tech will surely continue to drive its success, we shouldn’t underestimate the importance of catering to user preferences and savvy marketing strategies. We also shouldn’t lose sight of how game-changing the 2026 regulatory framework will be once implemented. Revenue aside, the licensing of local operators will amp up player protection and add an additional level of legitimacy to the industry.
Considering that blockchain-based gaming is already a thing, you can bet that state-of-the-art technologies will completely revolutionize how people gamble. Think VR-powered casinos and personalized AI-driven experiences.
Conclusion
New Zealand’s online gambling industry is on an upward trajectory and doesn’t seem to be headed to a halt anytime soon. As technological advancements continue to reshape the industry, the balance between innovation and responsible gambling will be critical. With growth projections in place and new legislations on the horizon, the future of online gambling in New Zealand looks promising yet regulated.
