2020 Regulation amendment FAQs

Updated: 1 July 2020 

These frequently asked questions relate to two regulation amendments that take effect on 1 July 2020:

• The Gambling (Fees) Amendment Regulations 2020 
• Gambling (Class 4 Net Proceeds) Amendment Regulations 2020

1. How was the package of measures arrived at?

The operational measures and subsequent regulatory amendments were developed in response to concerns raised by individual societies, GMANZ and ClubsNZ. Government considered that the interim measures would not be a sufficient response to the unprecedented situation created by COVID-19.

The regulatory amendments relating to the retention were developed in discussion with GMANZ and address the longstanding issue of financial viability.

COVID-19 had a significant impact on New Zealand communities (Clubs, groups and services) who obtain funding from class 4 gambling. The regulatory relief package will help ensure the operators can return to providing that ongoing community support.

2. Who was consulted within the sector?

The Department engaged with GMANZ, Clubs NZ and other individual societies to understand the pressures they were facing, and to discuss elements of the changes.

3. Why are some fees waived and not others?

The fees that were waived are those that relate to business as usual operations (i.e., not new applications or applications for changes).

4. What about C4 fees that have already been paid or that are due now/soon?

DIA will be refunding fees that are waived but have been paid. We are working through this process and will be in contact directly from mid-July with respect to your organisation’s fees.

5. How was the timeframe for the fees waivers arrived at?

The fees waiver (from 25 March to 30 June) for class 4 operators recognises the unprecedented impacts of COVID-19 on class 4 operators, who had no (or very limited) income for three months.

The shorter period of fees relief (from 25 March to the end of Alert Level 3 on 13 May) for casinos recognises casinos have additional sources of income, including different types of gambling, and don’t have the same obligations to make returns to the community.

6. What do societies need to do?

A plan for the implementation of fees relief is being developed and will be communicated in the week of 6 July.

All societies who were due to renew their licences between 30 March 2020 and 30 June 2020 will need to ensure full applications are received by the Department by 31 July 2020. These renewals will take into account the new relief measures regarding fees and the distribution of net proceeds.

7. How does this impact financial viability assessments?

Financial viability assessments will be paused as a new process is developed; societies can continue to operate on their existing licence until their licence is renewed.

8. Why are Class 4 venue fees frozen for 2020/21?

The fees freeze proposal was underway well before COVID-19 struck; Ministers and coalition and support parties were consulted in March, and approved a paper to go to LEG—but that paper has been overtaken by events.

All gambling fees will be reviewed as soon as COVID-19 priorities allow, and the operating environment is more stable.

9. How was the working capital ratio (WCR) decided upon?

The Department sought independent expert advice from KPMG who advised that a ratio of 1.5:1 (current assets to current liabilities) is appropriate and good practice for the nature of this business.

10. Is it mandatory for societies to set the WCR aside?

No, the regulation enables societies to retain a maximum ratio of 1.5:1. The suspension of Regulation 10 and 11 will provide societies with the opportunity to accumulate the retention.

11. What if a society doesn’t have enough funding to set the WCR aside in the timeframe specified?

By also suspending regulation 11, societies have an opportunity to accumulate this reserve. This suspension will be available to a society until it achieves a ratio of 1.5:1, or the end of their 2021 financial year; whichever is sooner.

12. Are some societies disadvantaged because they don’t have the same length of time to set aside the WCR – because of their end-of-financial year date?

No. We have enabled societies to set aside WCR across their financial years 2019/20 and 2020/21.

13. How is the Gambling Group going to monitor the WCR and the distribution of community proceeds?

The temporary suspension of requirements relating to community grants by non-club societies will not relieve societies’ obligation to minimise their costs and distribute available net proceeds in a timely manner.

The Department will continue to actively monitor societies’ activities, accounts and returns to ensure they are maximising returns to the community over this period. We have started work to develop this process and expect this to be complete by the end of August. We will seek input from the sector as part of this.

14. Are there any plans to review Class 4 gaming in the future?

Yes, as part of a wider programme of work on gambling, racing and community funding. COVID-19 has provided us with an opportunity to create a more effective and integrated approach to how we minimise gambling harm, while also ensuring gambling-based revenue contributes to positive outcomes for our communities.