Key Takeaways
- Waiariki McIlroy‑Jones, 25, pleaded guilty to running New Zealand’s largest illegal lottery, which generated ≈ NZ $11 million in revenue between June 2022 and July 2023.
- The scheme began as a “poster package” lottery and later morphed into a loyalty‑rewards club offering discounted merchant entries, but it never met the legal requirements for a sales‑promotion scheme.
- Prizes escalated from vehicles and cash to a freehold house worth NZ $700 000, with over 287 000 tickets purchased by roughly 69 500 unique participants.
- Although the judge indicated McIlroy‑Jones will avoid imprisonment, the final sentence—likely involving fines, asset forfeiture, or community‑based penalties—has been reserved until June 2024.
- The case marks the first prosecution of an online illegal lottery in New Zealand and underscores the Gambling Act’s strict controls on prize‑based promotions.
Background and Charges
Waiariki McIlroy‑Jones appeared at the Christchurch District Court in May 2024 facing charges laid by the Department of Internal Affairs for organising illegal gambling and profiting from an unlicensed lottery. The allegations centred on his company, Jonez LRC Ltd, which was accused of running a nationwide lottery that offered high‑value prizes such as cars, caravans, cash and eventually a freehold house. The prosecution argued that the operation violated the Gambling Act 2003, which requires any lottery offering prizes over NZ $5 000 to be conducted by a licensed not‑for‑profit society. McIlroy‑Jones and his company pleaded guilty in January 2024, acknowledging the illegality of the scheme while maintaining that they had believed it to be a lawful sales‑promotion activity.
Formation and Early Activities
Jonez LRC Ltd was incorporated in June 2021 and initially focused on buying and selling used vehicles. In October 2022 the company attracted the attention of Internal Affairs after complaints emerged about giveaways being organised by the then‑22‑year‑old McIlroy‑Jones. According to the summary of facts, the defendants began conducting a lottery in 2022 that used motor vehicles—or cash alternatives—as prizes. Although they marketed the activity as a legitimate sales‑promotion scheme, it failed to satisfy the statutory criteria, such as clear terms, proper disclosure, and the prohibition on profit‑making for private gain.
Evolution of the Lottery Scheme
The operation evolved significantly over its lifespan. The first phase, dubbed the “poster package scheme,” required participants to purchase a downloadable JPEG poster for NZ $30 to gain entry into draws for cars or cash. By 2023 McIlroy‑Jones shifted to a loyalty‑rewards club model: customers bought a “package” of a set value that granted a specified number of entries into upcoming lotteries and offered discounts at about 40 merchants across six cities. Despite the rebranding, the scheme remained opaque—participants rarely received clear information about their membership level, redemption process, or expiry date. The frequency of draws increased, with multiple lotteries held each week, and the prize values rose steadily.
Scale and Financials
Between June 2022 and July 2023 the lottery sold over 287 000 entries to approximately 69 500 unique purchasers, producing total sales of NZ $11.12 million. McIlroy‑Jones paid himself a shareholder salary of NZ $180 000 during this period. The defence emphasized that the majority of revenue was redistributed as prizes and used to cover operating expenses, leaving little personal profit. Nonetheless, the sheer volume of transactions and the escalation of prize values—culminating in a freehold house valued at NZ $700 000—demonstrated a scheme that far exceeded the limits permissible for an unlicensed promotion.
Legal Arguments and Defendant’s Position
Throughout the proceedings, McIlroy‑Jones maintained that he believed the lottery was a lawful sales‑promotion scheme. His lawyer, Kathy Basire, argued that he had relied on poor legal advice when launching the venture and that his prior legitimate business—selling car‑related merchandise to the “boy racer” crowd—demonstrated an entrepreneurial mindset rather than a criminal one. Basire contended that the proceeds largely flowed back to participants via prizes and operational costs, and that McIlroy‑Jones had not used the funds for an extravagant lifestyle. The judge acknowledged these points, noting that the defendant had not attempted to conceal the activity and had been transparent about the nature of the giveaways to participants.
Court Proceedings and Judge’s Remarks
At the brief appearance on Friday, Judge Raoul Neave described the matter as complex and indicated that a custodial sentence was unlikely. He stated, “I think I can say now without any great difficulty he’s not going to prison. It’s just a question of what else I do with him.” The judge emphasized that McIlroy‑Jones had not tried to hide the scheme and that participants received what they paid for—the chance to win a prize. However, he warned that legitimate assets connected to the enterprise could be subject to forfeiture, suggesting that the financial penalty would fall heavily on the defendant despite the avoidance of imprisonment.
Defense Mitigation and Asset Forfeiture
Basire highlighted that McIlroy‑Jones would be starting from scratch financially as a result of the conviction and that he had family responsibilities to consider. She urged the court to take into account his lack of a criminal mindset and his potential to contribute positively to the community if guided appropriately. The judge concurred that the primary loser in the case would likely be McIlroy‑Jones himself, as any assets tied to the illegal lottery—such as vehicles, equipment, or proceeds held in bank accounts—could be seized and redirected to the state or community programmes under the proceeds‑of‑crime provisions of the Gambling Act.
Regulatory Perspective and Implications
Internal Affairs director of gambling Vicki Scott labelled the prosecution the first of its kind targeting an online illegal lottery in New Zealand. She noted that in just over a year the scheme had generated more than NZ $11 million, making it the largest illegal lottery ever identified in the country. Scott stressed that lotteries of this scale must be licensed and operated for community benefit, not private gain. The case serves as a stark warning that attempts to circumvent the Gambling Act’s strict controls—by disguising a chance‑to‑win promotion as a sales‑promotion scheme—will be met with vigorous investigation and prosecution, reinforcing the regulator’s commitment to minimise gambling‑related harm and ensure that any profits are returned to the public.
Sentencing Outlook and Conclusion
While the judge has signalled that imprisonment is off the table, the final sentence—expected in June 2024—will likely consist of a combination of financial penalties, possible asset forfeiture, and perhaps a community‑based order or conditional discharge. The outcome will aim to balance accountability with the defendant’s demonstrated lack of intent to deceive participants and his expressed willingness to make restitution. Ultimately, the case underscores the importance of clear legal compliance when running prize‑based promotions and highlights the authorities’ readiness to pursue even sophisticated online schemes that threaten the integrity of New Zealand’s gambling regulatory framework.