Class 4 licensing criteria

Class 4 gambling operators

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To operate Class 4 gambling under the Act, all operators (including clubs) must have two different kinds of licences:

  • A Class 4 operator’s licence; and
  • A Class 4 venue licence for each venue that hosts its machines.

Only a corporate society can conduct Class 4 gambling.

All class 4 licensing application must be lodged by a corporate society

Class 4 gambling forms

Late or expired licences

If a corporate society has not applied to renew its Class 4 operator’s and venue licences before the existing licences expire, the licences are no longer valid and all of the corporate society’s gaming machines at all of its venues must be turned off.

If any of them are not turned off, the corporate society can be prosecuted for conducting illegal gambling.

The Act allows the Department to return incomplete applications, along with any accompanying documents and application fees.

The Department’s practice is to return an incomplete application promptly and explain to the corporate society that if it does not file a completed application before the current licences expire, the licences will no longer be valid and all its machines must be turned off from that date.

To summarise, a society’s licences continue in force after the expiry date if:

  • It has applied for renewal before the expiry date; and
  • The Department has not declined the application.

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Investigating societies, venues and grant recipients

The Department may, to the extent necessary to determine compliance with the Act, investigate and audit not only societies but also grant recipients, management services providers and businesses operating at Class 4 venues (section 117).

This means, for example, that the Department may: question grant recipients about the legality of grants, or request financial statements from management services providers and/ or venue businesses in order to determine compliance with the Act.

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Class 4 venues

Territorial authorities

A corporate society must apply for territorial authority consent if it proposes to:

  • Establish a new gaming machine venue; or
  • Increase the number of machines that may be operated at an existing venue.
  • Relocate an existing class 4 venue

A territorial authority’s decision to grant territorial authority consent must be made in accordance with its Class 4 (gambling) venue policy.

Process for applying a gambling policy (steps to providing or declining consent) (LINK https://www.dia.govt.nz/Gambling-territorial-authorities-applying-policies-process

Where territorial authority consent is required, it should accompany the corporate society’s application for a Class 4 venue licence.

Grounds for granting a venue licence

The Department must refuse to grant a Class 4 venue licence unless the Department is satisfied that:

  • The applicant holds a Class 4 operator’s licence
  • The possibility of persons under 18 years old gaining access to Class 4 gambling at the venue is minimal
  • The venue manager is an individual and any investigations carried out do not cause the Department to be dissatisfied about his or her suitability to supervise the conduct of Class 4 gambling at the venue and venue personnel
  • Any investigations carried out by the Department do not cause the Department to be dissatisfied about the suitability of any other key person
  • If the application relates to a venue that is licensed to another corporate society, the other corporate society has surrendered its venue licence for the venue
  • The territorial authority has provided a consent (if required)
  • On issue of the licence, the applicant will own any gambling equipment (except for electronic monitoring systems) that it proposes to operate
  • On issue of the licence, the applicant will not operate any gambling equipment that is financed by the manufacturer, distributor, or vendor of that equipment
  • All gambling equipment to be operated at the venue meets relevant minimum standards
  • The venue agreement (if required):
    • enables the Class 4 gambling conducted at the venue to comply with the Act and the proposed venue licence; and
    • includes the information specified
  • For a venue that is not established before the commencement of this section, the venue is not to be part of a place at which another Class 4 venue or a casino is located
  • No person will be both a key person in relation to the relevant Class 4 operators’ licence and a key person in relation to the venue licence
  • If the TAB New Zealand (TAB NZ) or a racing club is the applicant, the venue is:
    • owned or leased by TAB NZ or a racing club; and
    • no other corporate society holds, or has held in the 5 years immediately before the date of application, a Class 4 venue licence for the venue
  • If the applicant is TAB NZ, the venue is used mainly for racing betting or sports betting
  • The risk of problem gambling at the venue is minimised
  • The proposed venue is suitable in all other respects to be a Class 4 venue
  • There are no other factors that are likely to detract from achieving the purpose of this Act
  • Any other requirement set out in regulations or licence conditions is, or will be, met.

The venue is not used mainly for operating gaming machines

This will be assessed on a case-by-case basis and may for example include:

  • An assessment of the financial records relating to the venue
  • Examination of the venue floor plans

And, in the case of new venues:

  • Requesting evidence that the venue has been operating as a successful business without gaming machines.

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Venue agreements

Under the Act a venue agreement can remain in force for up to three years. However, if the venue licence is surrendered or otherwise terminated before the expiry date of the venue agreement, the approval of the venue agreement ceases on the date of surrender/termination.

A venue agreement must:

  • Include the full name, date of birth and contact details of the venue manager, and list the manager’s gaming-related duties
  • Include the payments to be made by the holder of the Class 4 venue licence to the venue operator, which must be payments that comply with the Gambling (Venue Payments) Regulations 2016
  • Have an expiry date of no later than three years after the date of the agreement.

The Department must approve the form and content of venue agreements. The Department will check that venue agreements contain the following statements, which are the minimum requirements needed to ensure the venue operator is accountable to the society for compliance with the Act:

  • Venue operator will comply with the requirements of the Act, regulations, game rules, licence conditions and procedures relating to the operation of gaming machines, and any directions issued by the Department
  • The way in which the venue will prevent persons under 18 having access to the gaming machines
  • Venue operator will display the venue licence in a prominent place in the venue and will display the information about the licence (as required by section 82 of the Act)
  • Only persons authorised by the society may service, modify or have access to the interior of gambling equipment
  • Venue operator will keep records of venue staff used in the gaming machine operation
  • Venue operator must keep and supply the society with records relating to gaming machine profits
  • Venue operator will provide the cash float for operation of the gaming machines Venue operator must carry out meter readings, operate gaming machine float, bank gaming machine funds in accordance with the procedures specified in the Act and game rules
  • Venue operator will not enter into any agreement or activity where any party stands to benefit commercially from any gaming machine profits
  • An agreement to pay expenses to the venue operator that comply with the Gambling (Venue Payments) Regulations 2016
  • Venue operator will cooperate with the Department, its Gambling Inspectors and other employees
  • Venue operator will cooperate with the society’s auditor
  • Venue operator will take all necessary steps to comply with, and assist the society to comply with, any conditions that the Department has added to the venue licence.

Venues moving between societies

In relation to a society application for a Class 4 venue licence, the Department requires evidence from the applicant that the previous society has voluntarily surrendered its venue licence or intends to do so on a specific date (section 67(1)(e)).

A venue licence is not transferable (section 80). The agreement for a venue to move from one society to another is entirely a matter between the two societies and the venue concerned. The Department is not responsible for obtaining the surrender documentation from the previous society or for arbitrating in any situation where a society refuses to surrender a venue licence.

No gambling for four weeks

If a society has not conducted Class 4 gambling at a venue for more than four weeks, it must surrender its venue licence unless the Department agrees that the venue can remain inactive for a specified period (section 71(1)(g)).

Circumstances in which the Department might agree to the continuation of a venue licence will be looked at on a case-by-case basis. The situation must be outside the control of the venue operator and corporate society, and prevent gambling from operating. This might include emergency or unforeseen circumstances.

Disposal of gaming machines

If a society intends to sell, destroy or otherwise dispose of a gaming machine, it must notify the Department, within 20 working days, of how the gaming machine was disposed of, and the name and contact details of the person who acquired the gaming machine (obligations regarding disposal of gaming machines is found in section 83).

There is no statutory requirement to advise the Department if machines are simply removed from a venue, but retained by the society (e.g. placed in storage). However, societies are asked to provide the Department with this information because it will assist in keeping track of machines and preventing miscommunication between the Department and the society. It may also result in increased return to the community, as gaming machines removed from a venue and not immediately replaced, may result in a partial refund of gaming machine fees.

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Class 4 operators

Grounds for granting an operator’s licence

  • The Act provides that the Department must refuse to grant a Class 4 operator’s licence unless the Department is satisfied that:
  • The gambling to which the application relates is Class 4 gambling
  • The applicant’s purpose in conducting Class 4 gambling is to raise money for authorised purposes
  • The applicant’s proposed gambling operation is financially viable
  • The applicant will maximise the net proceeds from the Class 4 gambling and minimise the operating costs of that gambling
  • The net proceeds from the Class 4 gambling will be applied to, or distributed for, authorised purposes
  • The applicant is able to comply with applicable regulatory requirements
  • The applicant will minimise the risks of problem gambling
  • Any investigations carried out do not cause the Department to be dissatisfied about the suitability of the applicant or any key person in relation to the applicant
  • There are no other factors that are likely to detract from achieving the purposes of the Act
  • A key person in relation to the applicant is not also a key person in relation to a Class 4 venue licence held, or applied for, by the applicant (except in the cases of the New Zealand Racing Board or a club that operates gaming machines on its own noncommercial premises).

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Clubs

The Act treats clubs that operate gaming machines differently from corporate societies that operate gaming machines at pubs and other public venues.

The Class 4 gambling in clubs booklet is a guide for those who govern, manage or work for clubs with a licence to operate gaming machines in New Zealand. It contains some guidance relating to licensing forms, as well as information about licence related topics like key persons or authorised purposes.

Class 4 gambling in clubs - booklet (PDF, 1MB)

Is it a club?

As the requirements for clubs are less onerous than those for other gaming machine societies, the Department must be satisfied that the organisation is genuinely a club, and is not a commercial enterprise calling itself a ‘club’. The Department will expect there to be rules about membership, election of officers, and purposes and operations of the club. It would also be usual that a club has been in existence before an application is made for a Class 4 gambling licence.

Venue agreements

Neither a club that has a ‘Class 4 operator’s licence’ for gaming machines at its own clubrooms nor TAB NZ is:

  • required to have a venue agreement (section 65)
  • subject to the restrictions on venue key persons in section 113.

Numbers of machines

The Act includes two provisions that could allow some clubs to have more gaming machines Section 95 applies to club mergers and, in some circumstances, might allow up to 30 machines.
Section 96 applies to individual clubs that would otherwise be allowed up to nine machines and, in limited circumstances, allows them up to 18 machines. See ‘Club mergers’ section below.

Authorised purposes

Club authorised purpose statements can include:

  • The provision and maintenance of facilities and equipment for the use and enjoyment of the club’s members, including the repayment of mortgages
  • Assistance to adjuncts within the club to further their non-commercial aims and objects
  • Grants to bona fide community and charitable groups
  • The provision of scholarships to students in need
  • Welfare of members
  • Payment of capitation and affiliation fees to the club’s national body
  • Provision and maintenance of a suitable vehicle associated with welfare, sports and services to members
  • Payment of wages and salaries of staff employed for the purposes of assisting the club to meet its non-commercial aims and objectives
  • Other general running costs in relation to the club’s non-commercial activities including but not restricted to rates, insurance, publicity, communication systems, electricity, stationery, computers, laundry and cleaning.

The Department’s interpretation of items that do not fit within the definition of authorised purposes as referred to in section 4 of the Act are:

  • Expenditure related to the gambling operation, including but not limited to the cost of any gambling equipment, training, attendance at conferences, affiliation with gambling related organisations, and advertising
  • The purchase of liquor or anything intended to be sold
  • The purchase of buildings or property for commercial or investment purposes
  • Any other commercial enterprises
  • Expenditure associated with operating the bar, including construction, refurbishment and maintenance of the bar and bar equipment, and wages and salaries of bar staff
  • The use of a club vehicle as a courtesy coach.

Commercial venues

Some clubs purchase commercial venues, usually pubs, to use as clubrooms. The Department has to be satisfied that the operation is entirely non-commercial before it can issue the applicant with Class 4 operator’s/venue licences. Where the ‘clubrooms’ are operating, in effect, as a pub, it is unlikely that a licence will be issued.

Clubs hosting a society’s machines

Where a club hosts gaming machines owned by another society, it is treated as a venue hosting gaming machines. The club could be paid for hosting the machines in accordance with the Gambling (Venue Payments) Regulations 2016.

However, it could not receive grants from that gaming machine society and people who work at the club are not exempt from the venue key persons provisions of the Act (sections 113 and 118) For instance, key persons of the society that owns the gaming machines.

The Department requires societies operating gaming machines at clubs to explicitly exclude those clubs from their authorised purpose statements. This is done by adding a licence condition to the society’s Class 4 operator’s licence.

Club mergers

Section 95 of the Act gives Ministerial discretion to permit more gaming machines in the case of club mergers. The section applies to two or more corporate societies that are clubs and:

  • Two or more of which hold Class 4 venue licences that can each demonstrate a significant history of:
    • Operating as clubs for club purposes
    • Operating the number of machines specified in any Class 4 venue licences held immediately before making an application to the Minister
  • Can each demonstrate that they intend to merge into a single club operating at an existing Class 4 venue
  • Can demonstrate to the Minister’s satisfaction that the proposed Class 4 venue is not a commercial premises
  • Can demonstrate to the Minister’s satisfaction that the merged club will have a substantial active membership
  • Have obtained a territorial authority consent for the venue, either without a condition on numbers of gaming machines or with a condition on numbers that is consistent with the number of gaming machines that it is proposed to operate at the venue.

The clubs may apply jointly to the Minister for approval to operate up to the number of gaming machines consented to by the territorial authority at the proposed venue.

The Minister’s approval must specify the number of gaming machines that may be operated, but the number:

  • Must not exceed the number of gaming machines specified in a territorial authority consent and must not in any case exceed the lesser of:
    • 30; or
    • the sum of the number of gaming machines specified in all the clubs’ Class 4 venue licences at the time of the application.

The clubs may then apply jointly to the Secretary for a Class 4 venue licence for the proposed venue in accordance with section 65, but the Secretary must not issue a class 4 venue licence until the clubs have:

  • Merged into one corporate society;
  • Obtained a Class 4 operator’s licence.

On issue of the Class 4 venue licence:

  • The Secretary must cancel the previous Class 4 venue licences held by the clubs, and there is no right of appeal against that cancellation;
  • The Secretary must not consider an application for a Class 4 venue licence for any of the venues for which the clubs held Class 4 venue licences within six months after the cancellation.

The limits in subsection (4) may be reduced by regulations made under section 314(1)(a).

Updated: November 2020