The legislation, introduced to Parliament by Racing Minister David Bennett on Monday, would require online operators to pay an “information charge” for bets they take on New Zealand racing and sporting events.

New Zealand Racing Minister David Bennet introduces Racing Amendment Bill

New Zealand Racing Minister David Bennet believes that his Racing Amendment Bill will plug a $45 million hole in funding, but, in practise, who pays a ‘voluntary’ tax? (Image: AP)

They will also be charged a point of consumption levy that they take specifically from New Zealand players.

The exact amount of taxes and charges is to be decided at a later date by ministers, but Bennet believes his scheme will plug a $45 million hole in racing and sports funding.

That’s the amount it’s believed is lost each year in racing and sports funding to punters choosing to bet with foreign bookies rather than the New Zealand Racing Board (NZRB) and its monopolized TAB betting service.

Tax Would Be Voluntary

A government working group estimated that 40,000 New Zealanders placed bets worth $518 million through corporate sites last year.

These sites are not permitted to advertise their services to Kiwis, due to NZRB’s exclusive marketing monopoly, but there is no law to stop them taking bets.

“New Zealanders can bet with offshore websites but, unlike the NZRB, the operators of those websites do not contribute any money back to this country,” complained Bennett in an official statement.

But because the bill falls short of actually licensing foreign operators, it will rely to a large extent on their voluntary participation in the taxation scheme, which doesn’t sound like much of a plan.

Bookmakers who fail to comply with the regime will be fined up to $50,000, but if these bookies declined to pay the voluntary taxes, why would they agree to pay the fines?

No Solution Without Licensing

The problem is, without levying taxes the sensible way, by actually licensing the corporate bookies, there is little incentive for their compliance, and so hopes of a $45 million clawback is likely to be optimistic.

Licensing would ensure compliance from the big companies that engage with the New Zealand market because operating there without a license could endanger their permits in other bigger, more important markets.

The problem is the NZRB’s marketing monopoly, which would be illegal in most developed countries. Its TAB has only recently been forced to deal with any form of competition whatsoever, the lack of which has left its platform lagging behind the cutting edge offerings of foreign bookmakers.

New Zealand’s punters take their business elsewhere because foreign bookmakers offer a better product.