Consultation on gaming machines

24/03/2004

The recently passed Gambling Act introduces a new regime for gaming machines in pubs and clubs and requires the Department of Internal Affairs to consult on regulations and rules so that the community and sector have a say in how the objectives of the law are achieved.

The Director of the Department’s Gaming and Censorship Regulation Group, Keith Manch, said that last year these machines accounted from more than half of the money lost by New Zealander gamblers – $941 million out of total losses of more than $1.8 billion.

“It is important that the whole community is involved because this is a huge amount of money and the only reason gaming machines are licensed in pubs and clubs is as a form of fund raising for community organisations,” Mr Manch said.

Historically, how much of the money raised should be paid to pubs for hosting gaming machines has been one of the more contentious issues in the sector. Pubs do not own the machines. They are owned by organisations the Act calls “societies”.

Under the Act societies can pay actual, reasonable and necessary (ARN) expenses only, and the Department must refuse to grant or renew a licence unless it is satisfied that the society will maximise its return to the community and minimise its operating costs.

This is an important change in the law and is very different to the way some societies behave under the current Gaming and Lotteries Act.

The Department has seen that currently some societies aim to maximise their payments to pubs, while meeting the minimum return to the community. Currently, if a society returns less than 33% of its gaming machine profit to the community the Department can cancel its licence.

The minimum return under the Gambling Act will be set by regulation. At the end of last year the Department issued a consultation document proposing that the minimum return be set at 37.12% exclusive of GST. Community groups and the sector will be advised of the new minimum as soon as possible, with it taking effect from July 1 as licenses are granted or renewed.

The Department’s Consultation Document on Limits on Venue Expenses issued this week, includes two options that are suggested ways of helping societies achieve the objectives of the new Act. The document also includes 14 questions for feedback about the options.

“These options are a starting point,” Mr Manch said. “We would be happy to hear from community organisations and sector groups about possible amendments to them or even completely different ways of paying ARN, maximising returns to the community and minimising costs.

“People will see that the options are different to a proposal raised in a discussion paper last year when the Department was reviewing its policy under the Gaming and Lotteries Act. While the information gathered in that review is useful, the Department decided it would not introduce an interim policy under that Act only to have to introduce another new policy from July 1.”

The two proposed options are:

• A payment of up to $120 per machine per week. This would be up to $112,320 a year to cover actual, reasonable and necessary expenses at a pub that had 18 gaming machines.
• A payment of up to $100 per machine per week, with dispensations of up to an additional $50 per machine per week. This would be up to $93,600 a year for a pub with 18 machines, or up to $140,400 with a dispensation.

Currently, under licence conditions under the Gaming and Lotteries Act, societies pay up to $150 per machine per week and there had been provision for dispensations of up to a total of $500 per machine per week ($468,000 a year for a pub with 18 machines).

According to the Department’s database, the average payment has increased from $49 per machine per week in 1999 to $113 in 2003. The current range is from $0 to $390 ($0 to $365,040 a year for 18 machines).

Other consultation documents

The Department is also consulting on other aspects of gaming machine operation. These are:

• Proposed game rules, these would replace the existing operations manual
• Minimum technical standards
• Electronic Monitoring System

Copies of all documents have been sent to community and sector organisations, and are also available here at: Gambling Act Consultation (22/03/04)
Hard copies are available by contacting Executive Officer Cristin Smith at the address below or on telephone 0800 257 887.

Organisations have a month to make submissions; they should be with the Department by April 22. Submissions on all documents except the EMS and housie consultation should be addressed to the “Link Project Communications Coordinator”. Submissions on the EMS consultation should be addressed to the “EMS Project Coordinator” and on housie to Jim Kimber.

The Department’s address is: Department of Internal Affairs, PO Box 805, Wellington.


Media contact:

Keith Manch Phone 04 495 9449
Director Cellular 027 445 6420

Vincent Cholewa Phone 04 495 9350
Communications Advisor Cellular 027 272 4270