How an online casino is exploiting a legal loophole to prey on Kiwi gambling addicts
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Headquartered in a tax haven, JackpotCity is getting around legal restrictions to advertise on television with what critics call a ‘Trojan horse’ – then using aggressive sales tactics to keep vulnerable gamblers hooked. And according to the Department of Internal Affairs, it’s all totally legal. Don Rowe investigates.
Imagine yourself at home on your couch. Your feet are up. The television is set to Three – it’s James Cameron’s Avatar, say– when an ad appears.
“At JackpotCity.net, you can do amazing things with just one casino chip,” goes the booming American voiceover.
“Discover a world of incredible casino games, with over 300 high quality online slot games, including the world renowned progressive jackpot slot Mega Moolah,” it continues, as casino chips and cash run across the screen.
“Play for free at Jackpotcity.net, and get treated as a a VIP, 24/7. Jackpot City – a whole world of casino games.”
If you were to rush to your notepad, scribble down that URL in full, then type it into your browser, you’d end up in a free-to-play, no-risk virtual casino. But if you were instead to type Jackpot City into Google, or any other search engine, that site is nowhere to be seen.
Instead you’d likely find your way to a website with precisely the same colour palette and design, only this one operating purely as a pay-to-play, real-stakes gambling den. And once you start to spend, they’re incredibly eager to keep you playing – even if, as I found out, you tell them again and again that you are in the grips of a serious gambling addiction.
Online gambling is strictly regulated in New Zealand, and, with the exception of the state-owned lotteries and TAB, is illegal through New Zealand-based companies. While New Zealanders can gamble online through overseas operators, promoting the act or the operators in any form is in contravention of the Gambling Act – a document which reads largely as a harm reduction manifesto.
But Jackpot City, it seems, has found a way around those rules.
It works like this: while it might be illegal to advertise online gambling in New Zealand, for an activity to be defined as gambling the participant must pay something to take part. “Dot-net websites are free-play websites, and therefore not considered gambling under the Gambling Act 2003,” a DIA spokesperson told The Spinoff.
An October 2017 complaint to the Advertising Standards Authority about Jackpot City was dismissed on these grounds. The ASA chair even went so far as to say the advertisement “had been prepared with a high standard of social responsibility”. The ads have continued to run on Three.
But given the tens of thousands it costs to place advertising on television, how might Jackpot City be recouping that investment? Jackpotcity.net, the site explicitly promoted, contains no ads, no options to pay-to-play, and no other discernible monetisation strategy.
However, when you enter “Jackpot City” into Google, the version of the site ending with “.net” is nowhere to be seen. Search results return only iterations of the .com and .org addresses, both of which are the pay-to-play online casinos – and about five pages of glowing, keyword-heavy reviews, seemingly authored by people on the Jackpot City payroll. If you do click on one of those proffered links, the site you arrive at is essentially indistinguishable from the .net site you saw advertised. Come on in, the landing page urges, to get your free $1600.
Mediaworks did not respond to specific questions regarding Jackpot City. However, in a statement provided to The Spinoff a spokesperson said: “A limited number of Jackpot City advertisements have aired on Three which are broadcast during Adult Only-rated programming, between restricted hours. MediaWorks takes its responsibilities as a broadcaster very seriously and has taken steps to ensure that any advertisements that are aired are not in breach of New Zealand laws and guidelines around advertising.”
Jackpot City is one of five online casinos operated by Belle Rock Entertainment Group, itself a subsidiary of Carmen Media, a “global gaming and entertainment group” licensed in Malta, but one with no functioning website or verifiable online presence outside a sparse Wikipedia page. Attempts to be put in touch with management for comment were repeatedly rebuffed by Jackpot City salespeople.
The site offers slots, card games and casino games with matching bonuses and other incentives for new signees, as well as daily specials and “hot tips” – “we want to see you on the leaders board”, they say.
Signing up was a breeze. Just a couple of minutes, with no ID required, and your credit card details are logged for easy ongoing draw-downs. After depositing $30, matched by Jackpot City to bring my balance to $60, I hit the slots, losing $5 within a few minutes. I moved on to roulette, losing another $5 to a clunky roulette animation. I lost a further $20 playing blackjack, before shifting to poker where I had a little more luck. Up $40, bringing my total balance to $100, I decided to cash in. Thanks and goodbye, Jackpot City.
Not so fast. Withdrawals from Jackpot City remain pending for a full 24 hours, just in case you change your mind, though they are instantly reversible to the player’s account should you wish to continue playing. Further, “for your convenience”, withdrawals made after 5am Thursday morning will remain in your account available for reversal until 5am Monday morning. That means you can hoon the slots all weekend long, with only a three day mid-week window for withdrawals.
So I kept on playing.
We all know the house always wins, but when Jackpot City won my money, a bright pop-up offered me even better matching should I deposit more cash – and all with a single click. Nope, I thought. And that should have been the end of it.
The next day the phone calls began.
Once a day, every day, my phone would ring, the screen displaying various 06 and 07 numbers. Upon answering the line went dead, until Monday morning when they called again. This time there was someone there.
“I have some good news for you!” said a man in a thick South African accent. “You’re one of our selected players to be selected for our welcome special offer we have running on your account.”
“Fantastic,” I said.
“It’s guaranteed to increase your bank roll,” he said.
“That’s great,” I said.
“When you signed up a few days ago you wanted to have fun, and make tonnes of money at the same time, is that true?” he asked.
“Yes, I wanted to have fun and to make tonnes of money.”
“We just had a few players win over $12,000 – I’m sure that’s the sort of money you want to make?”
“Yes I would love $12,000. But, wait, who are you?”
It turns out my new friend Connor works for the promotions department of “the casinos”. Which casinos? He wouldn’t say, but he did confirm he was based in South Africa and not the middle of the north island of New Zealand, as his phone number would suggest – “although we actually have a department there in New Zealand as well.”
This was a curious admission given that commercial online gambling is illegal in New Zealand – but one which a different employee, supposedly based in Cambridge, England, doubled down on when I called back to check. What came next was more concerning still.
“I’ve been trying to stay off the website,” I told my new friend. “I’ve been having problems spending too much of my money.”
“Mhmm,” he replied. “But have you won major? Have you won big?”
“No, I haven’t won major or big, I was losing a lot of money and starting to worry about how much I was gambling.”
“OK, what I’m going to do is, you say you’re losing money, I’m going to try and do my best for you to make that money back and even more. I’m going to give you something extra and some hot tips, if you can make a deposit in the next 24 hours.”
“I’m really struggling and I don’t want to gamble any more because I’m spending a lot of money I can’t afford,” I said. “Actually, I’ve really been trying to stay away from it.”
“OK,” he said. “But if you change your mind, like I said, there’s a hot tip for the day. And what I’ll also give you extra is, another hot game is called Tarzan, I’ll increase that spin to $1.25 a spin just for you. But you need to make a deposit in the next 24 hours. Can you do that?”
And on and on it went. Before hanging up, Connor assured me he wished to see me on the leader board soon.
Paula Snowden, CEO of the Problem Gambling Foundation, says the Jackpot City promotions are a flagrant exploitation of our laws, and antithetical to the harm reduction approach championed by the gambling act.
“Our view is that The Jackpot City promotion operates like a Trojan horse and it undermines our public health protections,” she says. “Children are exposed to something it is illegal to promote to anyone in New Zealand under the age of 18, and it is legal because ‘there is no pay of consideration’. We need to get over the technical issue and look at what the legislation is designed to achieve – gambling harm minimisation, the purpose of the Act.”
But why the inconsistency? According to the DIA, commercial online gambling is illegal in New Zealand “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 offerrapid opportunities for investment.”
I read Paula Snowden a transcript of my conversation with Jackpot City.
“Oh my God,” she said. “This is appalling. We had no idea it was this bad. What they are doing is morally and ethically corrupt and it will be doing severe damage to vulnerable New Zealand gamblers. They are bypassing our laws, which are all about harm reduction and minimising the growth of gambling, and it’s just disgusting. We were disappointed with the DIA’s response, and we will be taking this to the minister. They have to regulate this with legislation. You look at places like the UK and Australia, they are plugging the gaps as fast as they can. The DIA has to act.”
The DIA points out that the location of the online casino currently exempts it from New Zealand regulation. “Overseas gambling sites are subject to the law of the country they are based in,” a DIA spokesperson said. “New Zealanders who gamble on overseas websites do not have the protection of New Zealand law.”
Nor do they have the protection of any of the harm reduction strategies in place in physical casinos here in New Zealand. Colin Espiner, general manager of communications at SkyCity, said both it and independent casinos such as the Christchurch Casino are required by law to employ a number of measures that overseas operators do not.
“We have to abide by a variety of legislative requirements including the Gambling Act, which sets strict parameters around number of outlets, number of table games and machines, host responsibility and harm minimisation measures, and places rules around advertising,” he said. “We also abide by anti money laundering legislation, local employment law, and of course pay company tax, gaming tax, and GST in New Zealand.”
“We believe this is an important issue that needs to be considered by government and regulators. SkyCity has no firm position with respect to outcomes but is keen to ensure, and participate in, a safe, fun online gaming environment for New Zealanders.”
For the Problem Gambling Foundation’s Paula Snowden, it amounts to exploitation.
“They’re replicating the environment that vulnerable gamblers try to avoid,” she says. “They’re using all the psychological triggers they can, including these phone calls.”
Legal experts spoken to by The Spinoff said this appears to be a political problem rather than a breach of the law. The matter of Jackpot City, which continues to advertise on New Zealand free-to-air television, and to target New Zealanders, even when they say they have gambling problem, is clearly very much a moral problem, too.
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