Services › Casino and Non-Casino Gaming › Interim Approach to Dispensations for Site Payments

15 April 2003

Where a society wishes to pay a site payment of more than $150 per machine per week, the society must make an application to the Department for a dispensation to do so.

The Department will grant a dispensation where the site payment is an actual, reasonable and necessary expense for the society (Condition 56(1), Set B Conditions). In determining this, the first step is for the society to provide the details of the actual costs incurred by the site operator directly arising from the gaming machine operation. The Department will then consider, on a case by case basis, whether those are reasonable and necessary. This may involve a comparison with costs incurred by other operators to decide whether or not the amounts are reasonable.

In general, the following types of costs are likely to be necessary for the proper operation of gaming machines:

• Labour costs relating to the operation of gaming machines (e.g. starting-up machines, hopper refills, clearing cash, bagging coins, etc.).
• Direct costs resulting from the operation of gaming machines (e.g. electricity, stationery, bank fees, etc.). It is not appropriate to claim for a proportion of all general business costs. Site payments should be limited to costs that arise due to the gaming machine operation, and should not include general business costs that a site operator would incur regardless of whether or not gaming machines are operated on the site.
• Floor rental, being the rental value of the floor space occupied by gaming machines.

For the Department to be satisfied that the site payment sought in a dispensation application is an accurate reflection of the actual, reasonable and necessary costs incurred by the site operator directly arising from the gaming machine operation, the society will need to provide sufficient evidence to justify its claims. For example, in respect to floor rental, it must provide a scaled floor plan indicating the area used for gaming machines and a copy of the site’s lease where appropriate, or a professional valuation of the market rental value of the premises.

To verify this evidence, it may be appropriate in some cases for the Department to visit sites, inspect them and speak to site operators or seek professional advice on matters such as leases and market rentals.

Site rental, being the value a society places on a site having regard to its turnover, is no longer allowed following the High Court decision, Pub Charity v Attorney-General (PDF, 902K)* - High Court, Wellington, Durie J, 6 March 2003, CP211/02.

Finally, we note that the current Site Payments Dispensation Assessment form is no longer sufficient or completely appropriate in light of the assessment the Department now needs to make and societies should not rely on it to cover the full scope of information required.


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