Charity gaming gives more than $250 million a year to charities, sports clubs, rescue helicopters, schools and community groups. This is money that would have to come from other sources if it weren't available from gaming machines. Roughly that same amount goes to the Government in taxes and levies. To make returns of that size requires a system that is fair, transparent, and easy to administer. Running more than 20,000 machines is complex and expensive. The issue faced by charity gaming is how much money the operators should be reimbursed. Though the law requires profits from machines to be returned to the community, it doesn't say how much money the operators should get - only that "actual reasonable and necessary" expenses can be reimbursed.
Last year, it cost about $250 million to run gaming machines before they could return anything to the community. This covered administration, office rental and staff costs of the trusts that oversaw the distribution of money and the considerable costs incurred by the operators: the machines had to be bought, licensed, insured and maintained, and there were expenses for financial processing, security, and electricity, as well as problem-gambling levies to be paid. Those who seek to discredit charity gaming often quote site rental payments of $500 a machine a week. This applies to only about one in 100 sites. Fewer than one in five machines earns even $200 a week. The national average is about $100, and 20 per cent of sites do not get any rental payments but operate machines at their own expense for community benefit.
Internal Affairs has used several methods to determine which costs are legitimate and how much operators should be paid. The system it has used since January last year allows payments of up to $150 a machine a week, with dispensations up to $500 a machine a week based on "extraordinary site costs and a higher than average gaming machine profit". The system was clear, simple and generally well-regarded.
Then, in September Internal Affairs declined an application for dispensation, and a judicial review resulted. The applicant argued that the main factor the department should consider in granting a dispensation was the site's actual, reasonable and necessary expenses. In March, the High Court found in favour of the applicant. Internal Affairs then decided to consult the public and the charity gaming sector to determine what work is "actual, reasonable and necessary" to operate gaming machines, and how to calculate its cost.
Everyone wants to maximise funds for the community and to minimise the cost of doing that. At the same time, venues incur real costs for having the machines on site. There is a danger that Internal Affairs could introduce a system that is cumbersome and even unfair to site operators. If they are short-changed, they will reduce services and opening hours. The result will be tens of thousands of dollars lost to the community. A review is welcome if it means the introduction of a simple and fair system. But there is no point having a system that puts pressure on both parties in its administration and auditing requirements while gobbling up taxpayer dollars and community funds.
The Charity Gaming Association believes nothing in the court judgment stops Internal Affairs using existing guidelines, as long as they are applied consistently. In fact, the association would like to see greater consistency across the sector. For example, although Internal Affairs has ruled out commission for gaming-machine operators, every Lotto agent gets a 7 per cent commission on every sale. This means a bookstore could get up to $150,000 a year from one terminal for opening fewer hours than a hotel. These commissions total about $31 million a year. And Lotto gives $111 million to the community, compared with almost $260 million from gaming machines. The Gambling Bill, which is expected to be back in Parliament this week, forbids commission-based payments to site operators.
SOURCE: Paul East NZ Herald.
- Paul East is the chairman of the Charity Gaming Association, which owns 40 per cent of gaming machines.
