The Department of Internal Affairs

The Department of Internal Affairs

Te Tari Taiwhenua

Building a safe, prosperous and respected nation

 

Gaming machine regulations: more funding for community groups


21/10/2004

Gambling Act regulations gazetted today will mean that community groups will get more funding and better access to information about grants from gaming machine profits.

The Acting Director of the Department of Internal Affairs’ Gaming and Censorship Regulation Group, Peter Burke, said that gaming machine societies that make grants to community groups will have to:

  • distribute at least 37.12% of their GST exclusive gross profits to community organisations
  • maintain a website.

    Other provisions will apply to operators of all gaming machines in pubs and clubs and include requirements to keep documents and data, maintain and manage gambling equipment and provide information to the public.

    The provisions setting the minimum return to the community will come into force on 1 December 2004, while that requiring websites will come into force on 1 July 2005. Most of the other provisions will be in force from 1 December 2004.

    GST inclusive or exclusive?

    “This sector exists only to raise funds for the community,” Mr Burke said. “How much money gambling operators should return to the community is the most fundamental issue.

    “To give an idea of how much money we are talking about, estimates for the last year are that machines in pubs produced a gross profit of $800 million.”

    Under the previous law, the Department of Internal Affairs had written a licence condition that at least 33% of gaming machine profits had to be returned to the community.

    Although it was intended that this 33% be GST inclusive, most gaming machine operators chose to make it GST exclusive, which meant that, effectively, they returned only 29% to the community.

    This meant that potentially community groups including charities, sports groups, schools and other worthwhile causes had been deprived of as much as $32 million last year.

    The requirement to return 37.12% (GST exclusive) to the community is the same as returning 33% (GST inclusive).

    Fair access to grants

    Gaming machines in pubs led to more than $230 million in grants to community groups last year. Fair access to those grants is vital.

    There have been a wide range of problems with community groups feeling shut out of the grant application process. Easy access for all through the Internet is one way of helping get around those problems.

    Internet technology is now widely and cheaply available. The simplest websites can be created for as little as about $200 and cost about $12 a month to maintain.

    Mr Burke said that it is pleasing to see that many gambling operators already operate websites and that the Charity Gaming Association’s Code of Practice endorses their use.

    Clubs and “end user trusts”

    The regulations setting minimum returns to community groups and requiring websites do not apply to all gambling operators. The two exceptions are:
  • Clubs, which are allowed to operate their own gaming machines. Clubs can be a community purpose. They do not have to make grants to other community organisations but can do so.
  • The very small number of community groups that are licensed to operate gaming machines for their own community purposes. These are known as “end user trusts”. They do not have to make grants to other community organisations but can if they wish to.

    Clubs and end user trusts will have licence conditions added to their gambling licences. The conditions will relate to each organisation’s specific circumstances.

    Copies of Gambling (Class 4 Net Proceeds) Regulations 2004

    The full text of the regulations will be available on the Department’s website, www.dia.govt.nz, within a few days.

    This media release is a summary of the regulations only and gambling sector organisations are advised to read the regulations in full. This media release is not a substitute for independent, professional legal and financial advice.

    Sector background

    Gaming machines in pubs and clubs are owned and operated by organisations known as gaming machine societies. At 30 September 2004, 626 societies were licensed to operate 22,294 machines at 1,897 venues.

    Clubs are permitted to be societies and to operate their own machines. They are not required to make grants to other community organisations but may do so.

    Machines in pubs are owned by societies independent of the pub. Publicans can be paid actual, reasonable and necessary expenses for hosting machines for a society. They must have no involvement in decisions about grants and must have grant forms freely available next to the machines.

    Machines in pubs are responsible for about 80% of the sector’s gross profits, while those in clubs account for about 20%. Total gross profit for the last year was about $1 billion.

    Societies pay 33% in tax and levies, must maximise returns to the community and minimise costs. If they return less than 33% to the community their licence can be cancelled or suspended.
      Media contact:
      Peter Burke
      Acting Director Gaming and Censorship Regulation Phone 04 495 9449, Cellular 027 242 1447

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