The New Zealand Government has agreed to include a “community fund guarantee” clause in the new Internet Lottery Bill to address concerns about the possible decline in community returns from online auctions. A Cabinet document published on 28 November indicated that the Government was considering allocating an amount equivalent to 4 per cent of the operator ‘ s gross lottery income (GGR) for community funding. It was noted that, based on the total GGR generated by the licensed network gambling market, this initiative was expected to provide community-based financial returns of between $10 million and $20 million in the first 12 months after 1 January 2027. This matter was the focus of a recent report issued by the Parliamentary Committee on Governance and Administration, which was first read in Parliament in July. The public consultation on its legal framework received more than 5,000 submissions, nearly 4,000 of which expressed concern about community feedback. Community feedback refers to the allocation of a portion of land-based lottery proceeds to sports clubs and community groups to support grass-roots activities, such as helping special Olympic athletes to participate in national competitions. Some are concerned that the legalized network fair splits the players and reduces their investment in the lottery project under the “tiger machine”, thereby reducing community feedback. It is noteworthy that the document indicates that the Community Guarantee Fund will be collected from 1 January 2027, indicating that the start of the New Zealand legal network lottery may be delayed for several months from the original July 2026. This extension was previously questioned by some legal experts, and Addison’s law firm indicated that the target date was “very tight” due to the longer consultation period.
The New Zealand Secretary of the Interior, Brooke van Velden, publicly acknowledged the issue in a statement issued on 4 December. She indicated that the bill would ensure that some of the proceeds of the online lottery feed back to the New Zealand community. Van Felden said: “Many groups are concerned that an increase in Internet games could lead to a decrease in bottom-up tiger games, thus reducing the funds available to community groups. Public consultation clearly indicates that New Zealanders want online lottery activities to bring community feedback to ensure that communities continue to receive the required funding. The Cabinet has agreed to provide this funding, and the Committee supports this decision.” She added: “We will assess, after two years of implementation, the impact of online gambling on tiger machine revenues to ensure that community and sports groups still receive adequate return funding. The Committee also recommends that the allocation of community feedback funds be undertaken by the Lottery Foundation. Other issues raised in the public consultation included the potential gambling hazards of legal network gambling. Some were concerned that “normalization” of the lottery would lead to more harm, and it was pointed out that more dense advertising could exacerbate the problem. In response, Van Felden stated that the bill would introduce measures to reduce the risk of gambling. She stressed that this was the “first goal” of the bill and noted that the new system would improve significantly in terms of public safety compared to the currently unregulated black market website. She said, “I have listened carefully to these comments. The regulatory measures in the bill are intended to reduce the risk of gambling in the first place, which would be a significant improvement over the current situation, i.e. black market gambling sites that lack any protection. This is an important piece of legislation that will for the first time integrate online lottery into New Zealand ‘ s legal regulatory system. I look forward to seeing the bill move forward in Congress.” If the bill is finally passed, up to 15 operators will receive a regulated online lottery licence, and other key provisions include a goods and services tax (GST) and an offshore lottery tax of 12 per cent. A compulsory fee of 1.24 per cent of the profits must be paid to finance gambling and harm prevention services. There may be limited advertising, but advertising of children is prohibited. All platforms must establish effective age validation mechanisms.