Internal Affairs Minister Tracey Martin says SkyCity Entertainment Group informed Government about its plans to launch an online casino but says the current rules around online gambling need to change.
SkyCity plans to launch an online casino in the middle of the year through a partnership between subsidiary SkyCity Malta and international gaming company Gaming Innovation Group, which will develop the website.
The website will be operated offshore in Malta to work around New Zealand law which only permits Government-owned Lotto and TAB to offer online gambling from within the country.
NZX-listed SkyCity has named the gambling platform "skycitycasino" and the company has estimated New Zealanders spend around $160 million each year on online casino platforms provided by offshore operators.
Martin told the Herald that SkyCity informed Internal Affairs about its plans for the online gambling platform. However, she indicated disapproval at the move.
"What they're doing is legal, but it shows that the current rules around online gambling do need to be sorted," Martin said.
"I'm hoping to get a discussion document on this issue out in the next couple of months."
The Gambling Act came into effect in 2003. A spokesman from Martin's office said the internet and the digital era had dramatically changed the landscape in the past 15 years which had made parts of the act hard to regulate.
Problem Gambling Foundation spokeswoman Andree Froude said the foundation was concerned by the risks associated with an online casino which would make gambling more readily available over the internet.
The foundation fears increasing addiction, similarly to how people have with video games, she said.
"It will be the vulnerable that fall victim to this and a real concern is that New Zealanders won't have the protection of New Zealand law," Froude said.
"While it is quite legal for them to gamble on overseas-based gambling websites, the advertising of online gambling isn't legal and our concern is SkyCity is going to get around this by targeting Kiwis and leveraging their brand."
Froude said online gambling was a "risky form" of gambling.
"The risks associated with online gambling include the fact that it can be hidden so easily, you can literally carry it around in your pocket and it's available 24/7.
"In terms of host responsibility what do SkyCity mean by 'first class in host responsibility' ... they've been found lacking in the provision of host responsibility in their land-based casinos so what are they going to be doing on this online very unregulated environment?"
The casino operator is expected to make online pokie and slot machines available through the website but Froude said New Zealand law needed to change to ensure Kiwis were protected.
"We have real concerns around what SkyCity is doing."
SkyCity chief executive Graeme Stephens said the company would be supportive of any future plans by the Government to regulate the New Zealand online casino market.
Stephens said online casinos were widely used by New Zealanders - a trend that the company expected to continue.
"We believe the skycitycasino online gaming site offers customers an opportunity to enjoy playing in a safe, secure environment with a brand they know and trust and we will be striving to set the benchmark for any regulation in the future," Stephens said.
In the New Zealand Stock Exchange announcement SkyCity said the company's move into the lucrative online gaming space would be "conservative" and that it did not expect to "monetise materially from this initiative".
"It should be seen more as a strategic entry into a space that we believe has long-term relevance."
A spokesman for the office of Associate Minister of Health Jenny Salesa said Salesa was unable to comment before discussion documents are released to the public.