Pokie Operation Suspended

13/12/2006

The Gambling Commission has ordered the trust, which operates 18 gaming machines at Papakura’s Whitehouse Tavern, to shut its gambling operation for four days for misusing over $33,000 of ‘pokie’ money. This is the first time the commission has suspended a pub gaming machine operator. Earlier this year it suspended the Dunedin Casino for two days.

The Whitehouse Trust’s misuse of community funds consisted of a $1000 contribution to Glenn Archibald’s 2004 Papakura Mayoral electoral campaign, $1279 for its venue manager, Roger Garrick, to attend the 2004 Australasian Gaming Expo, $5842.50 to Mr Garrick for services to the Trust and a $25,000 grant to the Ardmore Tenants’ Association for challenging noise restrictions on the Ardmore Aerodrome.

The Department of Internal Affairs had proposed a month’s licence suspension, reduced to seven days after the Whitehouse Tavern Trust recovered $5200. This amount relates to the cost of the trip and money paid for Mr Garrick’s services after the Gambling Act became law. The Department didn’t pursue other money because the trust had already paid it to third parties who were not subject to the action taken under the Gambling Act.

The payments, which breached the Gambling Act or licence conditions, were identified in an audit of the trust’s gaming operations. The trust appealed to the Commission.

The Commission said in its decision that “given the flagrancy and significance” of the breaches it would not be appropriate to waive a suspension. It said the trust voted to send Mr Garrick to the expo two months after the Department warned it not to, Whitehouse attempted to circumvent the Gambling Act, which prevents gaming machine money being used for electioneering purposes, and the grant to the Ardmore Tenants Association was not an ‘authorised purpose’ under the trust’s licence.

Whitehouse argued that the payment to Mr Archibald’s mayoral campaign was reasonable because it was for the “survival of the trust”.

The trust’s counsel wrote to the Department: “Mr Archibald had promoted local gaming policy that coincided with the charitable objectives maintained by the Trustees. On the other side of the political spectrum, there are opposing factions which, if they are to obtain reasonable traction, represent a considerable risk to the Trust’s very existence.”

In its decision the Commission said:
“Whitehouse committed multiple breaches, involving a significant amount of community money. Whitehouse has not shown any contrition.”

But the Commission considered it unfair for the Department to have stated it would consider withdrawing the suspension if Whitehouse recovered $5200 paid to Mr Garrick. However the Commission noted that the Department continued to be concerned that, despite recovering the $5200, Whitehouse would continue to breach the Act and send managers to future Australasian Gaming Expos. The Department was also concerned that Whitehouse would not acknowledge wrongdoing.

The Department’s Acting Director of Gambling Compliance Greg Crott said the Commission’s decision is a good reminder to all societies of their responsibilities.

“The money raised by the gaming machines is held in trust by societies for the community and is destined to benefit a range of activities identified as authorised purposes under a society’s licence conditions,” Mr Crott said. “Societies can claim expenses for their operations but they must be actual, reasonable and necessary and we scrutinise these carefully during audits.”

The Commission’s decision is available at: www.gamblingcom.govt.nz

Media Contact:
Greg Crott, National Manager Licensing and Compliance, Department of Internal Affairs
Ph 04 495 9330
Trevor Henry, communications adviser, Department of Internal Affairs
Ph 04 495 7211; cell 0275 843 679

Background
The Whitehouse Tavern Trust is licensed to operate 18 gaming machines at Dumas Place, Papakura. On 21 June 2004, following a compliance audit, the Secretary for Internal Affairs issued a formal warning to the trust regarding grant payments and venue compliance. Twelve months later another audit raised several concerns about grants distribution, venue operator expenses and venue banking. After correspondence with the Trust the Secretary issued a final audit report on 20 March 2006, requesting the trust recover all funds paid in breach of the Act and make them available for community distribution. He also proposed to suspend the trust’s operator’s licence for a month. The trust disputed the Secretary’s findings and refused to recover the disputed amounts. On 26 June 2006 the Secretary decided to suspend the trust’s licence and the trust appealed the decision in July 2006.
On 24 October 2006 the trust advised the Gambling Commission and the Secretary that it had recovered $5200. The Secretary responded that while he would not withdraw the suspension, he believed seven days’ suspension was now appropriate.
The Commission noted that “section 59(4)(d) of the Gambling Act does not provide for the Secretary to automatically withdraw the suspension should the corporate society deal with the matter(s) identified, rather it provides for him to “consider” withdrawing the suspension. However, in order for the section to have any effect, there can only be limited situations where the Secretary does not withdraw the suspension following the corporate society addressing the matters identified. In this instance, the Secretary was concerned that Whitehouse would continue to breach section 52(1)(d) and send venue managers to future Australasian Gaming Expos.”