Harder to get a gaming machine licence, easier to lose it

22/06/2004

From July 1 it will be much harder to get a gaming machine licence and much easier to lose it.

The biggest change that the Gambling Act brings is the new licensing regime that will be in force from the beginning of next month. Key changes include new financial accounting, reporting and forecasting requirements.

To help the sector comply, the Department has worked with chartered accountants to develop standardised accounts that will help streamline accounting, reporting and licensing for the sector.

The June issue of the Department’s newsletter, Gambits, summarises key points. Detailed information is being sent to all societies and will be available on the Department’s website, www.dia.govt.nz. The Department has also provided information to the Accountants Institute.

Gaming machine licences issued from July 1 will include mandatory requirements that:

• financial statements must comply with generally accepted accounting practices (GAAP) and the Financial Reporting Act (section 108 of the Gambling Act)
• annual reports must be signed by qualified auditors (section 107) and will have to include a financial forecast for one year ahead
• an applicant for an “operator’s licence” (the operator is the society that owns the machines) must prove their financial viability (section 52(1)(c)).

These new requirements are no more than the standard, sound business practices that all businesses would normally be following for their own benefit. However, in the Department’s view, financial accounting in much of the gambling sector has historically been poor and these new requirements will be challenging.

Standardised accounts

The Director of the Department’s Gaming and Censorship Regulation group, Keith Manch, said that the Department cannot make standardised accounts mandatory but they will make life much easier for societies and the Department strongly recommends their use. Correctly used, the standardised accounts will:

• be readily understood by chartered accountants and auditors
• produce GAAP compliant financial statements
• flow directly into annual reports
• help produce financial forecasts
• produce balances that can be simply transferred into licence application forms
• help societies show whether they are financially viable.

Staggering licensing dates

Additionally, the Department will change the annual renewal dates for licences so that a society can make its year-end, audited annual report and application to renew its licence one process.

The Gambling Act requires societies to provide audited annual reports within three months of the end of their financial year. Annual relicensing will occur within that period.

Currently, more than 75% of licenses issued under the Gaming and Lotteries Act expire in September each year, causing a bottleneck and delays. As these existing licences expire, there will be a transition period when licences will be renewed under the Gambling Act for more or less than a year until all are linked to societies’ financial years.

Media contact:

Keith Manch
Director Phone 04 495 9449, Cellular 027 445 6420

Vince Cholewa
Communications Advisor Phone 04 495 9350, Cellular 027 272 4270