The Essence of the New Duty

The National Party has described this new tax as a crucial measure to “close a tax loophole” that previously allowed offshore gambling operators to avoid paying certain local taxes. While these offshore entities were required to pay Goods and Services Tax (GST) in New Zealand, they did not face the same tax obligations as domestic operators, who are also subject to company tax, casino duties, gaming machine duty, problem gambling levies, and employment taxes.

Financial Implications

According to estimates provided by the National Party, this new duty is expected to generate NZ$716 million in revenue over the next four years. However, a more conservative forecast from the Inland Revenue’s Regulatory Impact Statement suggests that the actual figure might be closer to NZ$145 million.

Operational Details of the Duty

The newly introduced offshore gambling duty, also known as the Duty, is designed to work in tandem with the existing GST framework for remote services. This design allows for the use of current systems to administer the Duty efficiently. Remote gambling operators, or Operators, providing services to New Zealand residents exceeding NZ$60,000 in a 12-month period, must register for and file GST returns.

The Duty is imposed at a rate of 12% on the profits from offshore gambling. These profits are calculated after deducting any amounts already subjected to a 10% consumption charge on offshore betting, as well as prize money paid back to bettors. The legislation provides mechanisms for carrying forward losses, allowing operators to offset these against future profits, which can be particularly relevant in the volatile gambling industry.

Verification and Compliance

Operators are required to verify that users are physically located in New Zealand using at least two forms of evidence, such as billing addresses, IP addresses, bank details, or mobile country codes. Compliance with these rules is essential as the Duty applies to services provided from July 1, 2024, onwards. Operators must file reports and payments quarterly, adhering to strict deadlines set by the Inland Revenue.

International Context and Future Outlook

During the announcement, Revenue Minister Hon Simon Watts pointed out that New Zealand was lagging behind other developed countries in regulating online gambling. Unlike in Australia, Canada, the United States, and Singapore where offshore gambling is illegal, New Zealand aims to regulate and tax such activities. This approach aligns more closely with European countries that have established gaming duties to manage and tax online gambling with Italy, Sweden, Spain, the UK, Denmark, and the Netherlands all applying gaming duty rates on online gambling of between 19% and 29%.

The implementation of this 12% Duty, combined with existing GST, sets the total tax burden for offshore operators at about 25%. This rate positions New Zealand mid-range compared to other countries with similar taxes, promoting fairness and competitiveness in the international gambling market.

As the legislative process continues, the impact of these changes will be monitored closely, with adjustments likely as the industry, stakeholders, and regulators align with the new requirements. This tax reform is a significant step towards ensuring that offshore operators contributing to the local economy through online gambling are taxed appropriately, enhancing revenue and ensuring a level playing field for all gambling entities operating in New Zealand.

The post New Zealand Targets Offshore Online Gambling with Tax Amendment in 2024 appeared first on Plex Gaming - Serving the iGaming World since 1999.

Background of the Casbit Case

Casbit Group, operating through its Lala.bet website, has been active in the Dutch market without the requisite licensing. KSA has previously issued multiple warnings to the company regarding its operations. In response, Casbit initially made its website inaccessible to Dutch players. However, subsequent checks by KSA revealed that access was still possible from the Netherlands, prompting the regulator to proceed with a penalty order.

The Imminent Penalties

Should Casbit fail to fully cease its operations in the Netherlands, it faces a hefty penalty of €280,000 per week. This fine can accumulate up to a maximum of €840,000, covering a period of three weeks of continued illegal activity. These fines are part of KSA’s broader strategy to ensure that all gambling activities within the country adhere to strict regulatory standards. These standards are primarily aimed at safeguarding players by ensuring fair play and protecting them against the risks of gambling addiction.

Broader Implications for the Gambling Industry

Casbit is not the only operator to have felt the wrath of KSA. In March, KSA issued its largest ever fine of €19.6 million to Gammix Limited for similar violations. Gammix was also subject to an order to cease operations in the Netherlands, followed by a fine of €4.4 million for non-compliance in March of the previous year.

Additionally, this week, KSA has taken actions beyond direct gambling operators. The regulator instructed the hosting provider DigitalOcean to stop offering services to illegal affiliate gambling sites. This move is part of a comprehensive approach to clamp down on all facets of unregulated gambling activities.

Growth and Regulation of the Dutch Gambling Market

Amidst these strict regulatory measures, the Dutch gambling market is poised for expansion. KSA’s bi-annual report highlighted a significant growth in the sector, with gross gaming revenue increasing by 28% to €1.39 billion in 2023. The total number of player accounts rose from 970,000 in December 2022 to 1.1 million by the end of 2023, indicating a robust participation rate.

Forecasts by H2 Gambling Capital suggest that the market will continue to grow at an estimated rate of 8% annually over the next five years. This growth is supported by the legal framework that KSA continues to strengthen, ensuring that expansion does not come at the cost of consumer safety and ethical gambling practices.

Conclusion

The actions taken by KSA against Casbit and other operators highlight the challenges and complexities of regulating a burgeoning online gambling market. As the Dutch market grows, so does the need for rigorous enforcement of gambling laws to protect consumers and ensure fair play. The case of Casbit serves as a cautionary tale for other operators in the industry, emphasising the importance of compliance with local regulations to avoid severe penalties and legal challenges.

The post Dutch Regulator Issues Steep Penalties to Casbit for Unlicensed Online Gambling appeared first on Plex Gaming - Serving the iGaming World since 1999.