NZ's biggest illegal lottery operator avoids jail, sentencing delayed to June

A 25-year-old Canterbury man who built the largest illegal lottery operation in New Zealand's history will not go to prison, though his punishment remains unresolved. Waiariki McIlroy-Jones and his company, Jonez LRC Ltd, generated $11.12 million in revenue over roughly a year by selling entries into drawings for cars, cash, and eventually a mortgage-free house worth $700,000. The Department of Internal Affairs brought charges in May 2024, and McIlroy-Jones pleaded guilty in January. But when he appeared for sentencing at Christchurch District Court on Friday, Judge Raoul Neave postponed the decision until June, saying the matter was too complex to resolve immediately.

McIlroy-Jones was 22 when Internal Affairs first noticed his operation in October 2022, following complaints about giveaways he was organizing. His company, formed in June 2021, had started legitimately—buying and selling used cars. But in 2022, he pivoted to running lotteries disguised as something else entirely. The first iteration was what Internal Affairs called the "poster package scheme": customers paid $30 for a downloadable JPEG image labeled a poster, which entitled them to enter drawings for vehicles or cash. It was a thin disguise for what was actually illegal gambling.

By 2023, McIlroy-Jones rebranded again, this time as a loyalty rewards club. Customers purchased membership packages that supposedly granted discounts at about 40 merchants across six New Zealand cities, with entries to lotteries tied to their membership tier. The scheme was deliberately opaque. Members received no clear information about how the membership actually worked, what they'd purchased, or when it would expire. Yet the lotteries themselves grew increasingly elaborate. In May 2023, he ran a giveaway offering a Toyota Land Cruiser plus a caravan, or cash alternatives of $95,000 or $235,000. Two months later came the house—a freehold property in Rangiora with a $700,000 cash alternative. Between April and July 2023 alone, McIlroy-Jones conducted 29 separate giveaways under this model. Over the entire period from June 2022 to July 2023, more than 287,000 lottery entries were purchased by 69,500 unique participants.

When Internal Affairs investigators questioned him, McIlroy-Jones insisted his operation was lawful. He maintained that what he was running qualified as a sales promotion scheme, not gambling. But the law is clear: lotteries offering prizes exceeding $5,000 can only be conducted by not-for-profit societies with proper licensing. The licensing requirement exists to ensure fairness, protect participants, and guarantee that profits return to the community. McIlroy-Jones had done none of this. He had paid himself a shareholder salary of $180,000 and kept the rest of the operation's proceeds.

At Friday's hearing, Judge Neave signaled leniency. "He's not going to prison," the judge said bluntly. "It's just a question of what else I do with him." Neave noted that McIlroy-Jones had not attempted to hide the operation and had made "terrible calculations" rather than deliberately deceiving participants. The judge also observed that lottery entrants were, in a sense, getting what they paid for—a genuine chance to win. McIlroy-Jones' lawyer, Kathy Basire, argued that her client had received poor legal advice before launching the scheme and that he had operated a legitimate car business alongside it. She emphasized that the vast majority of the $11.12 million in revenue had been paid out as prizes and operating expenses, leaving McIlroy-Jones with relatively modest personal gain. She also noted he would now face significant financial loss through asset forfeiture.

Judge Neave agreed with this assessment, saying McIlroy-Jones would likely be "the biggest loser" in the case due to legitimate assets being caught up in forfeiture proceedings. The judge's comments suggest the sentence will focus on financial penalties and asset seizure rather than incarceration. This is the first prosecution of an online lottery in New Zealand, according to Vicki Scott, the Department of Internal Affairs' director of gambling. She described the case as a stark warning to anyone attempting to evade the Gambling Act's strict controls. The two final giveaways McIlroy-Jones had planned—for the house and a Nissan Safari—were interrupted before winners could be drawn. Sentencing is scheduled for June, when the full scope of McIlroy-Jones' punishment will finally be determined.