The Department of Internal Affairs

The Department of Internal Affairs

Te Tari Taiwhenua

Building a safe, prosperous and respected nation

 

Services › Casino and Non-Casino Gaming › Remote Interactive Gambling and the Gambling Act 2003


What is the intent of the Gambling Act 2003 in respect of Remote Interactive Gambling?

The Gambling Act 2003 (the Act) is the first law in New Zealand to regulate remote interactive gambling. Under the Act remote interactive gambling is prohibited. Limited exceptions relate to the Lotteries Commission, the Racing Board and sales promotion schemes in the form of a lottery.



Is the Act intended to catch sales promotions?

Yes.



Why are online/electronic promotions and competitions included in the prohibition?

Remote interactive gambling is prohibited (except in those limited circumstances discussed above) because of the potential for harm from this form of gambling, particularly for young people. For example, the internet or cellphones can be used for continuous forms of gambling that offer rapid opportunities for investment.



"Instant win" and prize competitions appear to be illegal – is this correct?

"Instant win" (and also prize competitions) are now illegal if conducted as remote interactive gambling. They are not a lottery, which is the only form of sales promotion scheme able to be conducted as remote interactive gambling.


"Instant win" games and prize competitions (by their definitions) are caught by the prohibition on remote interactive gambling. Where there is no element of remote interactive gambling whatsoever involved, instant win games and prize competitions are still legitimate forms of sales promotion schemes.


What is a lottery?

A lottery is defined in the Act and part of the definition refers to "prizes … are distributed according to a
draw that takes place after all participants have entered". Only a sales promotion where this situation applies is excluded from the prohibition on remote interactive gambling. If any other element of chance (or skill and chance) is introduced, this will cause the activity not to be a lottery.


What’s the difference between online "instant win" and selling "scratch'n'win" tickets on the street?

A significant difference between online "instant win" and selling "scratch'n'win" tickets on the street is that the internet or cellphones can be used for continuous forms of gambling that offer rapid opportunities for investment. In addition, "scratch'n'win" tickets that are sold on the street are usually an authorised form of class 2 or class 3 gambling conducted by a society to raise money for a community purpose, not for commercial gain. Businesses cannot conduct lotteries, prize competitions, "instant win" games or other forms of gambling except in the form of a sales promotion scheme and they cannot make any commercial gain from sales promotions, except in the normal trading of the business’s goods or services – see the definition of sales promotion scheme in the Act. Only a sales promotion scheme that is in the form of a lottery and conducted in New Zealand can be conducted as remote interactive gambling.



Are we right in our understanding that 20c is the maximum additional cost for an online competition entry? If so, on what basis?

The definition of sales promotion in section 4 of the Act specifies that "the person is not required to pay direct or indirect consideration other than to purchase the goods or services promoted for a price not exceeding the usual retail price". The Department of Internal Affairs has, however, historically taken the view that the actual communication cost of the participant entering a sales promotion scheme (in addition to the cost of purchasing the item) is acceptable, as long as there is no extra charge to actually enter the promotion. Communications costs would include, for example, the cost of postage or the cost of a single text message (but not the cost of any aspect of administering the promotion). The cost of a text message should not be more than the actual, true cost of a one-way communication normally charged by the telecommunications company. It cannot include any administration cost or any amount paid to a service provider such as a business involved in technically processing the entries from the promotion. This may now, we understand, be less than 20 cents for a text message and should certainly not exceed 20 cents. (The communications costs for other media such as 0900 or the internet are likely to be different from txt costs, but in all cases the rules are the same.)


The participant must pay ONLY the actual true communication cost, not any additional charges that have been loaded onto the actual cost. For example, the promoters of text or on-line promotions must carry the cost of any response to the participant.

If an online competition involves any element of gambling (and it is not a sales promotion scheme that is in the form of a lottery and conducted in New Zealand) then it is illegal as it will be deemed to be remote interactive gambling. Even if the sales promotion is in the form of a lottery, it could be illegal gambling if there are additional charges. Any illegal gambling could result in action being taken under section 19 of the Gambling Act.


What, therefore, are the acceptable costs for mail and telephone entries?

The cost of a mail entry should not exceed 50 cents, which is the postage cost for economy mail. The same principle applies for text messages, 0900 numbers etc. This cannot exceed the true cost of communication. We understand that this is now 20 cents or less for a text message (which may be at an even lower cost for a bulk arrangement) and much less than 45 cents for an 0900 number (again special arrangements may reduce the price further).



Was it realised that some large charities would be affected?

Yes, it was realised that purchasing lottery tickets electronically (e.g. over the internet or by means of a phone call) would be caught by the prohibition.



Is online voting affected? If not, why not?

Online voting is not affected as long as gambling is not involved.


Should the online voting be linked to a form of gambling as defined in the Act then it would be deemed to be remote interactive gambling and illegal by virtue of section 9 of the Act.

The exception to this is for a properly constituted "sales promotion scheme" which is specifically excluded from the definition of "remote interactive gambling" where it is in the form of a lottery and conducted in New Zealand.

The caveat to this is that the online voting in a sales promotion scheme must not result in the payment of any "direct or indirect consideration other than to purchase the goods and services". Were this to occur it would breach the definition of a sales promotion scheme.


Is a promotion where everyone wins, but there is a limited number of prizes / free stock, affected by the Act?

It is presumed that this example anticipates that everyone who enters "wins" a prize chronologically until there are no prizes left.


If there is only one form of prize then up until the point at which the prizes run out it would more properly be seen as a giveaway, as there is no element of chance to bring it under the notion of gambling. If there were a chance aspect in selecting different types/values of prize won by different entrants then that would satisfy the element of chance in determining an "outcome" and therefore the promotion would be gambling.

Similarly, if the winners are selected at random, rather than on a "first in first served" basis, there would be an element of chance and the promotion would be gambling.

There may also be Fair Trading Act issues. The Commerce Commission should be consulted in relation to this question.


Can you use the word ”FREE” for a free gift or product, or is the cost of the communication regarded as negating "free"?

This isa Fair Trading Act issue. Companies should seek advice from the Commerce Commission.



Does the legislation only apply to NZ-based promotions? We have a number of international members who run promotions from an off-shore base to NZ consumers.

Only the gambling that is conducted in New Zealand is subject to the provisions of the Act. If any element of the gambling is organised or conducted in or from New Zealand, it will be caught by the Gambling Act.


However, the Act does place a ban on advertising overseas gambling. The definition of "overseas gambling advertisement" includes a form of communication that "publicises or promotes gambling that is outside New Zealand or a gambling operator who is outside New Zealand". The effect of this is that the advertising that takes place in New Zealand should be limited to describing the promotion as it relates to New Zealand consumers.

There are numerous factual scenarios that could come under the Act and the Department would need to assess each example on a case-by-case basis.


Part of the Gambling Act's definition of a Sales Promotion Scheme is that "The person is not required to pay direct or indirect consideration, other than to purchase goods or services". Are communication costs, e.g. postage, toll call, txt fee not regarded as indirect costs?

The definition of "gambling" in section 4 of the Gambling Act 2003 includes para. (a) which refers to "paying or staking consideration directly or indirectly...". What constitutes consideration would be a matter of fact in each case. The Department cannot give any definitive interpretation. A situation where a person pays more than the usual retail price of a product to the promoter is clearly a breach of the Sales Promotion definition. It is within the scope of the definition of gambling because the extra cost must be consideration for entry into the gambling. But "direct" or "indirect" costs may also include other situations each of which would be a matter of fact. The promoters may need to seek legal advice on a promotion to see if the promotion involves indirect consideration.


The Department has taken a broad interpretation of "indirect consideration" in respect of communication costs so as to allow the actual cost of the communication. Having to pay any additional consideration over and above the cost of communication is likely to cause the activity to breach the sales promotion scheme definition.


What about a competition where contestants predict which team will win each game in a major sports tournament – no goods are purchased; entry is via website or txt. Is it legal?

The question relates to a competition run on the internet, although they can be run using 0800 or 0900 numbers. If any competition involves "gambling" and there is consideration paid to enter then it will breach the prohibition on remote interactive gambling. Where a competitor chooses or selects winners for future games or sporting events this generally involves some element of chance as well as skill. If entry is genuinely free it will not be caught by the Act. If there is some consideration or more than a true communication cost then this type of competition will be caught by the Act.



0900 games appear to be unaffected – correct?

This is incorrect. 0900 numbers can be affected by the new legislation in certain circumstances.


0900 gambling is prohibited under the Gambling Act except a sales promotion scheme in the form of a lottery. The definition of remote interactive gambling means that 0900 numbers cannot be used for gambling activities if there is more than an actual, true communication cost charged. A sales promotion scheme that is in the form of a lottery and conducted in New Zealand can still be conducted using an 0900 number but only if there is no direct or indirect consideration paid by the participant other than to purchase the goods or services promoted.

Where an 0900 competition does not involve any element of gambling and is purely a matter of skill, it will not be affected by the Gambling Act.


See also: Fact Sheet 27: Remote Interactive Gambling and Advertising Overseas Gambling

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