SkyCity has entered the online gambling fray, announcing a deal to open an online casino later this year. 

SkyCity has signed a landmark deal to offer online gambling to New Zealanders, partnering with a Malta-based company just weeks after minister for internal affairs Tracey Martin said she was “disappointed” SkyCity would forge ahead.

The online casino will be operated by SkyCity Malta, a SkyCity subsidiary, with technology provided by Malta’s Gaming Innovation Group.

Andree Froude from the Problem Gambling Foundation said the move puts New Zealand users at risk, as there are no legal protections for online gamblers on any site.

“New Zealand gamblers are not going to understand that they’re not protected by New Zealand law. This casino is based in Malta and SkyCty are an international company. They’re saying ‘SkyCity is a brand name New Zealanders can trust’, well, Kiwis wont be getting the message that they’re not protected by our law.”

“We have real concerns. We aren’t anti-gambling but we are anti-harm. It will be the vulnerable that fall victim to this.”

Studies have shown online gambling to be more addictive than regular gambling due to the convenience, round-the-clock availability of games, ease of deposit, lack of harm reduction strategies and loose regulatory environment.

Through a spokesperson, SkyCity said they are voluntarily instituting harm reduction strategies equal to those in any of their physical casinos.

Graeme Stephens, Chief Executive Officer of SkyCity said SkyCity was “delighted to be partnering with GiG to establish an online casino offering, based in Europe.”

“Growing and diversifying our earnings is a key component of our group strategic plan and developing an online presence to complement our existing land-based casinos in New Zealand will enable us to offer an enhanced gaming proposition for customers.”

Gaming Innovation Group CEO Robin Reed said they were “delighted” to be partnering with SkyCity.

“With this landmark deal, we are also entering a completely new continent where we can build on our ambition as the global partner for strong brands in iGaming.

“We look forward to supporting SkyCity in its expansion into the online space, where our full suite of products and solutions all form part of a very competitive offering to its online customers. New Zealand is preparing for regulation of online casino gambling and we are there to support our partner further when it happens.”

GiG expects to launch the online casino in Q3 this year, with the deal expected to make “a significant positive contribution” to the company’s revenue from 2020 onwards. In March, SkyCity said the company would voluntarily pay as much as $40 million in “tax”, whether the government wanted the online casino or not.

Tracey Martin has said that while current legislation doesn’t prohibit such a deal, it was in contravention of the spirit of the law.

“This would likely put them on the same footing as any other offshore gambling operator and under current law, New Zealanders would be able to access those gambling products,” she said

“Our current legislation is based on three principles – of community benefit, harm minimisation and trusted providers – and gambling online with offshore operators disrupts that.”

In November last year, EU authorities reprimanded Malta for its lax money laundering laws, and Terry Boucher, writing for The Spinoff in March, said the partnership posed “huge tax risks” for SkyCity.

“If the servers are situated outside New Zealand does that even mean the gambling is happening in New Zealand? Can Sky City’s subsidiary even identify those gamblers if they use VPNs, which can hide a user’s location? And even if it can identify those gamblers located in New Zealand, there remains the most interesting ethical question of all: should SkyCity’s online betting subsidiary pay GST on an activity which is at present essentially illegal in New Zealand?”

The partnership comes at time of regulatory upheaval for the online gambling industry. Last month a new gambling advertising code was announced, closing a loophole through which offshore companies were advertising to New Zealand gamblers. A Spinoff investigation found JackpotCity, one of five online casinos operated by a shady ‘global gaming and entertainment group’ also licensed in Malta, had been getting around the law by promoting a free-to-play doppelganger site on prime-time television.

Andrée Froude said at the time the foundation applauded the Advertising Standards Authority’s decision.

“This is so important to protect children, young people and the vulnerable and lifts the bar for harm minimisation. We were so appalled by The Spinoff’s experience with JackpotCity that we cited the article in our submission to the ASA as evidence of how a ‘free to play’ website, which was advertised on TV3, exploits the law to entice people to a gambling site.

“Under the new advertising code, TV3 will not be able to advertise the ‘free to play’ website – this is a huge win for harm minimisation.”

The code will be effective for new gambling advertisements by the 5th August, and for all gambling advertisements on the 4th November.