Proposals made for electronic system to monitor gaming machines in pubs and clubs

25/10/2004

The electronic monitoring system (EMS) for all 22,000 gaming machines in pubs and clubs has come a step closer with the Department of Internal Affairs having received several proposals to implement EMS.

The Acting Director of the Department of Internal Affairs’ Gaming and Censorship Regulation Group, Peter Burke, said that the deadline for proposals has passed. At this stage the Department is treating the proposals as commercially sensitive and will not release details of them.

Mr Burke said that EMS is a major IT project that is of significant importance to the entire community.

Gaming machines in pubs and clubs are licensed as a form of community fundraising only. They are a cash-only operation. Operators make a gross profit of $1 billion a year in banknotes and coins. Turnover is about $9 billion.

Gross profit is what gambling operators receive after they have paid prizes to gamblers. It is what gamblers have lost on the machines. Turnover includes “churn”, i.e. players gambling their winnings. For example, if a gambler starts with $20 and plays a machine until all the money is lost, it is likely the machine will record it as turnover of up to $180. To the operator and gambler it is a $20 profit or loss.

Currently, record keeping is manual, with operators’ staff visiting each machine and writing down meter readings.

Incorrect banking and inaccurate record keeping are by far the most common problems identified by Department audits.

What EMS will do

Through the chosen service provider, EMS will give the Department information allowing it to:

• monitor how much money is gambled on each machine
• monitor how much each machine pays out in prizes to gamblers
• monitor how much money should be banked
• ensure that all software being used on machines is identical to the approved versions
• assist in detecting software failures
• assist in detecting tampering with a machine or software
• turn machines on and off and alter machine configuration.

EMS indicative timetable

2002	March, the Government decided that QCOM would be the software protocol used if the proposal to make EMS mandatory went ahead
2003	September, Parliament passed Gambling Act making EMS mandatory
2004	April 30, Department publishes combined registration of interest and request for information (ROI/RFI), beginning formal provider selection process June 17, Department confirms the six organisations short-listed October 13, deadline for proposals by Christmas, the Department expects to have completed the evaluation of proposals and entered into contract negotiations
2005	during the first quarter, it is expected the contract will be signed with the selected provider by the end of the second quarter, the Department expects to confirm connection dates for venues by late 2005, it is expected that some societies will connect their gaming machines as part of a pilot rollout
2006	subject to a successful pilot, it is expected that the full rollout to all societies will take place
2007	March 18, final deadline, all venues will be connected. While this is the final date set in the Act, there will be deadlines before then and most machines will be connected well before this date.

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 in their own clubrooms. 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. Pubs can be paid actual, reasonable and necessary expenses for hosting machines for a society. The 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%.

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 Phone 04 495 9449, Cellular 027 242 1447

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