Bennett David; Ross Jami-Lee; Carter DavidRACING AMENDMENT BILLFirst ReadingHon DAVID BENNETT (Minister for Racing): I move That the Racing Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider the bill. This bill amends the Racing Act 2003. Racing in New Zealand has a long history. The industry includes around 5000 breeders 2000 trainers 27000 owners and the many staff employed by over 100 racing clubs. Racing is an important part of New Zealand's economy particularly in rural areas. The racing clubs and their facilities are often local focal points in a community playing an important role beyond the races themselves.Racing and betting have a long interwoven history. The Racing Board which operates the TAB is the only authorised bookmaker in New Zealand. The Racing Act requires the board to distribute the majority of its profits among the three racing codes. This was over $135 million for the 2016 financial year. The racing industry depends on this income from betting. It accounts for over 90 percent of the three codes' revenue. However not every bookmaker that enjoys profits from New Zealand betting makes a contribution.Although the Racing Board is the only authorised bookmaker in this country New Zealanders are free to bet with websites that are owned and operated by companies in other countries. Internet gambling is booming around the world and many of these online companies take bets on New Zealand racing and sports from people in this country. At the moment these offshore operators do not have to pay anything back to New Zealand in recognition of these profits. They are able to bypass the requirements that apply to the Racing Board's betting operations. In 2015 my predecessor the Hon Nathan Guy established the Offshore Racing and Sports Betting Working Group to investigate this issue.The working group estimated that Australian corporate bookmakers turn over approximately $300 million on bets placed on New Zealand racing and $60 million on New Zealand sporting events. The working group also estimated that around $58 million of gross betting profit per year goes overseas from New Zealanders making bets with offshore bookmakers. The working group made a series of recommendations designed to address this problem. The Department of Internal Affairs consulted publicly on these recommendations in 2016 and the officials have worked closely with the New Zealand Racing Board and with other Government agencies to develop the working group's recommendations into the Racing Amendment Bill.At the heart of the bill are provisions that require offshore betting operators to pay to use New Zealand racing and sports information in their betting products and pay when they take New Zealand - based bets on any racing or sports events. These charges are called the information use charge and the consumption charge respectively. With these charges New Zealand will be following a principle that is already well established in many countries around the world. As consumers purchase more products and services online remote betting operators should pay their share. For example many of the Australian states and territories have enacted race fields legislation which is designed to ensure that bookmakers pay for the racing information they use even if they are based in another jurisdiction.Although the Racing Amendment Bill follows these international precedents it is legislation designed from the ground up specifically to address New Zealand circumstances. Australia's race-fields regime is successful because of the scale of the Australian domestic betting market. New Zealand's approach must be more explicitly extra-territorial. This is not straightforward but we believe that the Racing Amendment Bill achieves the right balance to encourage compliance and enable enforcement. The bill names the Department of Internal Affairs as the body to administer these charges. The department may delegate some of its functions. Offshore betting operators will be required to seek the department's permission and enter an agreement to use New Zealand racing and sports information. The bill establishes that these agreements will be enforceable under New Zealand law. There are a range of penalties that may be imposed on offshore operators who fail to comply with the charging provisions in the bill. One group of offshore bookmakers the operators of TABs in Australia currently pay to use New Zealand racing information through a commercial agreement with the Racing Board.This bill will not affect this valuable contract and contains provisions to avoid double-charging. We believe that the principle of respecting and incentivising commercial solutions is an important one. The bill will therefore establish a process to obtain exemptions from the charges if new commercial deals can be struck in the future as long as the return to New Zealand is as good as the payment of those charges. The bill also contains two measures to remove statutory restrictions that prevent the Racing Board from offering some of the same products as their offshore competitors. First the bill will permit the Racing Board to continue to offer bets on the outcome of a race once that race has begun. This change will bring racing into line with sports where in-play betting is already permitted. Secondly the Racing Board will be able to offer bets on a wider range of sports. At the moment the Racing Board may offer bets on sports only where the board has entered into an agreement with the governing national sporting organisation or NSO. This can cause issues when there is no recognised NSO.In these cases the bill will allow the Racing Board to enter into a betting agreement with Sport New Zealand. Sport New Zealand will then distribute any betting commission payments for the benefit of sports organisations. The bill also presents an opportunity to update part of the Racing Act that is no longer fit for purpose. The Act contains a formula that sets out the payments the Racing Board must make to sports organisations from its sports betting turnover. Sports betting is one of the most dynamic parts of the wagering market so setting this formula in primary legislation is too inflexible. The bill will instead allow for the formula to be set in regulations in the future. Overall this bill supports the long-term viability of New Zealand racing and sports and will ensure that the offshore operators that enjoy profits from New Zealand betting pay their fair share. New Zealand racing has a very strong future ahead of it. We have a clean green product based on excellence.New Zealand racing represents the hours of work by volunteers and those involved in the industry from drivers trainers owners and breeders to those who actually bet on the product. We are fortunate to have a strong base to work from. The industry has long wanted this legislation and it is now being delivered. We thank the industry for its patience during that time. But this is just one step in taking the industry forward. There are other things that can be done to build this industry so that it achieves its full potential.Racing is part of the New Zealand story. It is part of our culture our history and our traditions. This is one way we can deliver some of that return back to that industry from the product that it delivers on a world stage. We now also have much more opportunity in that area to build a great industry that will deliver for all New Zealanders going forward and we support this bill as a first step in that process. I commend this bill to the House.JAMI-LEE ROSS (Senior Whip—National): I seek leave for the House to suspend for the extended sitting at the conclusion of the Brokering (Weapons and Related Items) Controls Bill or 10 p.m. whichever is earlier.Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is no objection.