Sports Betting: New Zealand Government Opts For Flat Fee
The public consultation period in New Zealand regarding sports betting came to an end on 31 August 2019.
This was the first major move given by the current government on the way to starting the process of regularization of Fixed Odds Betting in the country.
Since then, national and international markets have been eager for new information.
And they came recently, by The Voice of Alexandre Manoel Ângelo da Silva.
Alexandre is National Secretary for Public Policy Evaluation, planning, energy and lottery of the Ministry of Economy.
The Secretary was at the New Zealand Football Expo, CBF's event that took place in the first week of September.
He said that very soon an official proposal will be presented to the market.
In this proposal there will be data obtained from studies carried out by the Ministry of Economy. The results of the public consultation will also be released.
NOTE: the consultation had around 1,849 suggestions given by members from all sectors involved.
What matters most in Alexander's speech, however, is that the first draft of the decree that will legalize sports betting in New Zealand has already been written.
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What does the draft say?
The text, according to Alexandre Manoel, will make it very clear that New Zealand will not commit the same mistakes of other markets .
This document, on the contrary, will present successful practices, such as some established by the United Kingdom.
The draft will reveal the rules that must be followed by the sector. She will establish penalties for offenders and taxation regime .
Authorisation Scheme
The Ministry will not limit the presence of bookmakers in the country. There was much speculation as to whether there would be a cap on companies operating in New Zealand.
According to the draft, we can expect a regime of free competition. Companies that want to operate in the country will have the flexibility to do so.
Single authorisation fee
The authorization fee given to companies that will exploit gambling will be one-time. They will pay once, and can act for 9 years.
This fee will be paid for companies to have a New Zealand license.
The amount of this fee will be $ 3 million , paid in a single installment. After 9 years, the license must be renewed. A new payment, readjusted, will be required.
This model is a mixture of what is practiced in the United States and Italy.
Monthly payments for each scheme
The Ministry of Economy will define 3 regimes for the exploitation of sports betting:
- Physical Regime
- Online scheme
- Mixed Regime (physical and online)
In addition to the single authorisation fee , companies will have to pay monthly according to the scheme they choose.
The fitness regimen will pay $ 20,000 a month. The online will have an expense of $ 30 thousand. Those who choose both will pay $ 45,000.
Mandatory financial reserve of $ 6 million
All companies must have a reserve of $ 6 million. It will be used in emergency cases, for premium payments.
This is mandatory, according to the draft. This measure will prevent the Bankroll from breaking and leaving without having to pay the bettors.
Taxation of 1% on turnover
The market will be satisfied with the taxation of 1% on total turnover .
But what does that mean?
The companies asked that the taxation take place on top of the Gross Gaming Revenue (GGR) . This is the gross revenue , withdrawing the awards.
The 1% rate on the turnover is the same as taxing 5% to 7% on the GGR.
This model is also a mixture of practices adopted in Italy and the United Kingdom. Both successful markets in the betting niche.
How will the collection be distributed?
Another concern of the market was the destination of taxes and fees collected from sports betting.
According to the draft decree, it will be as follows:
- 99% to cover operators ' maintenance costs;
- 0.1% for Social Security;
- 0.1% for educational institutions;
- 0.1% for the National Public Security Fund (FNSP);
- 0.7% for football sports entities.
Fines and imprisonment
Legal experts want to change the Criminal Code to extend punishment to those who work outside the law.
This, however, would only be possible if this change was approved by the National Congress.
If approved, business owners who exploit sports betting outside the law will be punished with up to 5 years in prison .
Manipulators of results, on the other hand, can be imprisoned for up to 8 years. In both cases there is a fine, which was not stipulated by the text.
Supervision and enforcement
Finally, the draft laid out some necessary changes in terms of oversight of betting activities.
First of all, we know that there will be an increase in the number of civil servants.
A duty scale will also be implemented. The shift will work in 3 shifts of 8 hours each.
Sports betting operators will need to periodically provide some information about the numbers of their activity.
They must be collected or produced by an internationally recognized association, entity, body or organization.
Companies will also need to give full support to gamblers in order to prevent the development of gambling addiction.
Bookmakers cannot refrain from reporting and combating fraud and manipulation in their games.
Finally, every validated bet needs to be reported to the supervisory authorities. And all software and hardware used must have certification.
To Finish
The Secretary of State for Social Communication and Political Affairs (SECAP) expects an increase in $ 20 billion in the lottery market in New Zealand.
That's more than double what New Zealand makes today with legalised betting.
The Federal Government hopes that Fixed-Odds Betting and the instant lottery (LOTEX) will represent an economic leap in the country.
The ratio of revenue to gross domestic product is expected to rise from 0.2% to 0.5% of GDP with the new gambling law.
SECAP further states that the goal is not to increase the Federal Government's tax collection.
The intention is curbing the illegality of the market and make New Zealand more open to foreign investment.
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