SkyCity warned by Department of Internal Affairs for online gambling advert

The regulator has warned SkyCity about an email sent to customers. Photo / Getty Images

Casino operator SkyCity has been issued a formal warning over an email sent to customers during the lockdown.

In March, SkyCity sent an email to its mailing list of customers informing them of the measures taken in regard to social distancing and other rules at its Auckland, Hamilton and Queenstown locations.

Under the "Things to note" section in that email, SkyCity informed customers that SkyCity's Online Casino is still operating as usual.

The SkyCity Online Casino is run by SkyCity Malta, which in turn means it qualifies as an offshore gambling business.

Section 16 of the Gambling Act of 2003 prohibits the promotion of overseas online casinos in New Zealand.

While the overall email was not an overt advertisement for online gambling, the regulators at the Department of Internal Affairs determined that the inclusion of this information constituted a promotion of overseas gambling in New Zealand.

The legislation provides a fine of up to $10,000 for contravention of this rule, but the Department of Internal Affairs stopped short of this and issued only a warning.

"We have assumed that SkyCity did not intentionally set out to breach the Act, so a formal warning is appropriate and proportionate," said Chris Thornborough, acting director of regulatory system at the Department of Internal Affairs.

The regulator sees education as the first step when it comes to breaches of the rules outlined in the legislation but will take further action in the event of further breaches.

"We expect SkyCity to exercise a high level of caution in future to avoid breaching the act," Thornborough said.

A SkyCity spokeswoman said the company accepted the regulator's view but does not believe the email broke the rules.

"The purpose of the email was to advise customers of the overall impacts of the Covid-19 pandemic on SkyCity's operations and SkyCity believes that it did not contravene the provisions of the Gambling Act," the spokeswoman said.

"SkyCity respects the view of the department however and will take into account the feedback received."

Rise of online gambling

SkyCity launched its online casino in August 2019, taking its first foray into this space in an effort to diversify its earnings.

At the time, SkyCity described it as a conservative first step and said it would be willing to work with regulators on a local licensing regime, appropriate taxes, and host responsibility obligations.

The company said New Zealanders are estimated to spend about $160 million a year at online casinos currently provided by international platforms.

While SkyCity's most profitable arm has long been its flagship Auckland casino, it saw a strong increase in online gambling during the lockdown.

In May, SkyCity said it had more than 15,000 users registered on its site.