Ditch Lotto, replace it with ‘Lottery Bonds’ to curb harmful gambling, says professor

Sunday, 1 February 2026

The advertising of all the great options for setting fire to wads of cash is likely to become more prevalent this year when the new Online Casino Gambling Bill is expected to pass. Critics of the bill worry the already eye-watering $3 billion New Zealanders spend each year on gambling could blow out even further.

But while online casinos and sports betting take up column inches, it’s actually Lotto that comprises the majority of gambling in New Zealand. Kiwis spent $1.6b on having a flutter in the 2024/25 financial year, and while there’s a feel-good factor of helping fund charities to the tune of almost $400m in doing so, Lotto remains frowned upon by gambling harm advocates for being a potential “gateway” to serious gambling addiction.

A University of Auckland finance lecturer, Belgium born and raised Dr Gertjan Verdickt, agrees. And he says his study of Dutch data from 121 years ago contains a proven way in which people with an urge to gamble can still feel the thrill of a possible win - but not lose money.

Verdickt has long been annoyed by Belgium’s national lottery La Loterie Nationale, which, as with New Zealand’s Lotto, runs a flashy draw on prime-time television every Wednesday night.

The lottery’s endless promotion of the idea that people can win millions “really grinds my gears,” he says. “They never say that you, on average, tend to lose a lot of money.”

Interested in understanding more about how governments have tried to curb gambling in the past, Verdickt teamed up with friend and study co-author, Amaury De Vicq, and the pair set about scouring De Vic’qs dataset of Dutch inheritance tax records, which showed what happened to people’s outgoings when the Netherlands banned the sale and purchase of conventional lotteries in 1905.

While the 1905 equivalent of lotto tickets were banned, Dutch policymakers exempted “lottery bonds” from this new rule. Lottery bonds are a legal, fixed-income product that allow people to invest in a bond, get their principle back on maturity, and which often pay interest, but then also enter them into regular prize draws where they can “win big”. It is a form of saving for the buyer and fundraising for the seller.

The pair’s study found, in essence, that in adjusting their financial behaviour in response to restrictive gambling legislation, most less wealthy people upped their purchase of the lottery bonds, while wealthy people decreased their spending on them.

“We showed that if you are from a low income household, you see this [lottery bond] as a social mobility vehicle; we call this ‘aspirational utility’,” Verdickt says. But the spending does less harm, as the principal at the very least returns, although in some cases, to subsequent generations. Frequently interest was also attached to the instrument.

“The second thing we found is that if you were below 18 at the time of the ban, and you therefore didn't have much experience with gambling, you were less likely going to switch to lottery bonds, and reduced your spending on these products altogether, but if you were above 40 and had gambled your entire life, or had the opportunity to gamble your entire life, you were more likely to switch.”

So, for low-income people who tend to make up the bulk of people purchasing Lotto tickets and other such gambling instruments, the switch to lottery bonds doesn’t erase those habits, “you just steer them towards a more optimal product”, says Verdickt.

Lottery bonds are usually offered by governments and other state institutions for the purpose of fundraising, and so those in The Netherlands petered out after the need to raise money for such projects lessened. However, they are widely in use around the world, including in the UK, where people can put up to £50,000 (NZ $114,000) in “Premium Bonds”. The UK version does not pay any interest but people can win prizes of between £25 and £25m (NZ$57-$57m).

New Zealand did have Bonus Bonds, first issued in the 1970s. They were similar in that they did not pay interest, but did offer prizes. However, on top of a 0.00003% chance of winning anything at all, the initial investments depreciated over time thanks to inflation, and there was no maturity rate on them, so most had been whittled back to practically nothing when the system was wound up in 2020.

“Something like 99% of people got nothing at all from Bonus Bonds,” notes Verdickt.

Charity loss

There is, for many, one salient argument for retaining Lotto, and that is that it provides an almost essential, multi-million dollar fillip for a slew of charities doing essential good work in the community.

Verdickt acknowledges this argument, but says in essence it is a tax paid by those who are less likely to be able to afford it - who also comprise the group of people most likely to be addicted to gambling.

“How I see this is that it is a bit similar to how you treat alcohol or drugs or anything like that, you have to have some laws in place to save people from themselves. So yes, we fund X, Y and Z with Lotto, but think about whose money you are actually funding X, Y and Z with. That’s the moral question I have an issue with.”

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