The Department of Internal Affairs

The Department of Internal Affairs

Te Tari Taiwhenua

Building a safe, prosperous and respected nation

 

Services › Casino and Non-Casino Gaming › Authorised Purpose Guidelines for Societies and Clubs

The Gambling Act 2003 states that societies must conduct gambling to raise funds for "authorised purposes". The use of funds for unauthorised purposes can lead to prosecution or licence cancellation.


What is an Authorised Purpose?

Authorised purposes under section 4 of the Gambling Act 2003 are:
  • a charitable purpose;
  • a non-commercial purpose that is beneficial to the whole or a section of the community;
  • promoting, controlling, and conducting race meetings under the Racing Act 2003, including the payment of stakes;
  • Classes 1-3 gambling can also raise money for an electioneering purpose.
See also:
Examples of Authorised Purposes
Tips for Making Authorised Purpose grants


Personal or commercial gain

Nobody should make a direct commercial profit from any authorised purpose grant.


Grants to individuals should be avoided because they often constitute "personal gain" or a personal commercial profit.

Sometimes there is a legitimate "incidental" commercial benefit as an indirect result of an authorised purpose payment (e.g. if producing an educational booklet were an authorised purpose, it would be legitimate to pay the printers as a necessary part of the production).


Charitable purposes

Charity is helping people in need in the community. Typical recipients of charitable grants are the needy, for example, poor, sick, disabled or elderly people. Grants to further public health, religion and education may also be charitable.


Some examples of charitable authorised purposes are:
  • welfare assistance for people in need;
  • hospital visits for the elderly;
  • donations to IHC, Barnardos or the Cancer Society;
  • donating a computer to a school.
See also:
Information on Charitable Purposes for Operators and Grant Applicants


Education and training

Grants for public education are usually an authorised purpose. Grants to educational bodies are a charitable purpose as long as the grant is for public rather than private purposes. In the case of individuals receiving grants it is especially important that the selection of recipients is done in an open and transparent process.


Training which will result in commercial gain or career-oriented qualifications (e.g. training for tourism or professional sports) is unlikely to be an authorised purpose. A distinction is drawn between giving a grant for "general" education and training and giving a grant that will assist a person in their commercial and professional career. For example, a grant to a centre training the unemployed in general employment skills would be an authorised purpose while training "promising" athletes with the aim of creating professional sports people would not.

Training for venue operators in gaming machine operations is not an authorised purpose but may be claimed as an expense if the society allows this.


Religious purposes

The advancement of religion is a charitable purpose. This applies to all religions and sects that fall under the criteria of religion at law being a "belief in a supernatural being, thing of principle and the acceptance of certain canons of conduct in order to give effect to that belief". Grants will often be for the provision and maintenance of grounds and facilities used by religious organisations.



Electioneering Purposes

Grants can be made for electioneering purposes. An electioneering purpose is defined in the Gambling Act 2003 as "the purpose of a group or individual standing for an election to public office". This definition spans national elections to elections for the board of a community trust. However, net proceeds from Class 4 gambling cannot be applied to electioneering purposes. This includes any net proceeds from gaming machines. Party political purposes other than those directly related to electioneering cannot be an authorised purpose.



Lobbying purposes

Grants should not be made for lobbying purposes - for example, lobbying to change a law, bring a court action, or influence a statutory decision making process. The definition of Authorised Purpose carries with it the notion of the purpose being beneficial to the community. Any consideration of whether this purpose is beneficial to a section of the community must also take into account the sections of the community to whom the action would be detrimental. The need to lobby on any issue presupposes the existence of a contrary point of view.

An organisation that engages in lobbying may be considered for grants for other activities they undertake that come within the authorised purpose definition. It may also be possible to make grants to groups that are putting into effect decisions that have already been made for a community benefit. For example, help a group raise funds for the betterment of a designated bird sanctuary.


Grants for sport

Grants must only be made for amateur sport. Most kinds of grants for amateur sports are permissible. You can pay for playing uniforms (but not dress uniforms), grounds maintenance, equipment, coaching - in short, anything that is necessary in order to play the sport. Grants should be made to the national organisation or an affiliated club, not to individuals.


Professional sports are not authorised purposes, except where a professional is involved in coaching, training or development for junior sport. Grants could be made for short term coaching courses, not a full-time salary.

To ensure that the sporting group has bona fide credentials, teams or individuals that benefit from grants should be affiliated to a recognised national organisation. Grants made to non-affiliated "social" sports clubs (such as corporate leagues) are not deemed to be an authorised purpose as membership in these teams is not open to the general public.

The definition of "bona fide sport" that is approved by the department is a sporting activity, organisation or club that is:
  • affiliated or aligned to a national body; and
  • genuine and real (has standards and rules etc.); and
  • played on a regular basis as part of a significant competition; and
  • open to public membership.
Trophies or modest non-cash prizes are the only kind of sports prize that is an authorised purpose. Cash prizes or large non-cash prizes are not an authorised purpose.

Grants for a public sports facility (e.g. a stadium) are acceptable as long as the facility is not used primarily for professional sport.

"Trade tournaments" or sporting events staged primarily for commercial publicity and/or the benefit of a select industry group, are not an authorised purpose.

See also:
Sport, Gambling and Grants


Other community purposes

These must be non-commercial and benefit the community as a whole or a section of the community. A "section of the community" means a group that is open to public membership. A closed group where membership is discretionary is too limited to be considered a section of the community. For example, a closed group could comprise members of a family or a firm’s social club.


Some examples of community authorised purposes are:
  • amateur theatre groups;
  • non-profit museums and art galleries;
  • amateur Maori cultural groups;
  • non-profit community cultural or arts festivals.

Racing and other semi-commercial sports

Under the Gambling Act 2003, an Authorised Purpose for which a grant can be made includes "promoting, controlling, and conducting race meetings under the Racing Act 2003, including the payment of stakes".


Racing has a particular status in New Zealand society, which is recognised and reinforced in the legislation.

Authorised Purpose statements can allow for the proceeds from gambling to be spent on racing purposes.

However, grants cannot be made to support the commercial wing of the racing industry, for example, the training and/or breeding of racehorses or payment of jockeys or drivers.

Grants for ten-pin bowling should be purely for the assistance of members of the recognised amateur league and should not directly benefit any commercial ten-pin bowling centre (e.g. by the payment of lane fees).

Similar rules apply to any sports facility run for commercial profit, such as billiard parlours and golf "country clubs".


Wages and salaries

Wages and salaries may be eligible for authorised purpose grants where the employing body has an entirely non-commercial community or charitable purpose and provided that the payment of a wage is necessary to achieve the authorised purpose. For example, the payment of an amateur sports coach for specific short-term coaching courses may be an authorised purpose.


Wages and salaries of people involved in the gaming operation are not an authorised purpose. They should be claimed as an expense by the society.


Travel outside New Zealand

Grants for New Zealand residents to travel outside New Zealand are allowable provided:

  • the purpose of the travel is an authorised purpose (e.g. a genuine amateur sporting tournament);
  • the travel expenses claimed are actual and reasonable.
This type of grant would usually only be for travel and accommodation and not for food and sightseeing etc. However, it may be difficult to obtain reliable audit data on funds spent overseas. As such, it is recommended that as far as possible all expenses should be paid in New Zealand (e.g. through a travel agent). If there is any doubt about whether a grant can be audited, it should not be allowed. The society may have a policy of not allowing these grants at all.


Vehicles

Vehicles purchased with authorised purpose funds must be used for authorised purposes only and usually to assist in transporting needy people to hospital etc. Vehicles are not for private or commercial activities. Club "courtesy vans" used to ferry patrons home from social functions, regardless of need, are not an authorised purpose. For auditing purposes, logbooks of the use of the vehicle need to be maintained.



Social activities

Most events which are social in nature (parties, balls, sports supporter's trips etc) are not authorised purposes. Provision and maintenance of facilities set up for provision of social activities are also not an authorised purpose.


Purchase of alcohol, paying staff for bar work, and the maintenance or provision of bar facilities are not authorised purposes.

Examples of social activities which are authorised purposes are:
  • a Christmas party for children in hospital;
  • a concert for the residents of an old people’s home.
The following are not authorised purposes:
  • Family reunions;
  • Entertainment in pubs or clubs;
  • Sporting trips for supporters or spectators;
  • After match functions for sporting groups.

Promotion and advertising

Advertising is seldom an authorised purpose unless what is being promoted is entirely non-commercial and benefits the community.


The kinds of advertising or promotions which may be acceptable authorised purposes are:
  • the promotion of public amenities such as parks or museums;
  • advertising for charitable appeals;
  • advertising for non-profit cultural events;
Sponsorship or advertising for the society or venue, including branding of the venue name on clothing or equipment, is not an authorised purpose.


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