If you want to gamble, you can buy Lotto tickets, bet on the horses, dogs, All Blacks, whatever, and insert gold coins in poker machines – pokies – wherever you find them.

However, when people talk about gambling, it’s usually about the pokies.

When gambling was legalised in New Zealand in the early nineties, “people saw pokies as a huge money maker,” says Craig Williams, CEO of Napier’s RSA. “I think they were in the early days. Now they’re just another bit in the entertainment mix.”

Not to mention a nice bit of income for central government – and for the RSAs, hotels, pubs and clubs that have pokies.

The Napier RSA has 18 pokie machines, the legal limit for clubs. The machines and their users have their own smoke-free room, with access to a bar that also serves groups in the restaurant at the far side.

The RSA buys and owns its machines (at $30,000 each), and on proceeds from them pays central government 20% duty, 15% GST, a ‘harm minimisation’ levy to the Ministry of Health and a monitoring fee to the government, which tracks the nation’s pokie activities on a computer in Wellington. The remaining proceeds help support the RSA’s activities.

Funding dependency

Williams is upfront about it: “Yes, we are grateful for the profits they generate – and it would be very difficult for the RSA to replace that profit if there were a change in the legislation.”

Trusts, which own pokie machines but pay rental fees to venues such as bars and hotels for having them on-site, pay the duty, GST and other levies but also are required to donate 39.12% of their proceeds to community not-for-profit organisations.

In Hawke’s Bay, dozens of local sport and community groups receive pokie funding. For example, in the six months ending March 2012, Pub Charity, one of 10 trusts operating in Hawke’s Bay, granted $10,106 to Hastings District applicants and $311,259 to Napier City applicants, including $10,000 to CanTeen, $13,100 to Lifeline and $20,000 to the Hawke’s Bay Museum. The Southern Trust made donations of more than $85,000 to Bay applicants from January – March 2012, including $10,000 to CanTeen and $15,000 to Port Hill United Football Club. Sports figure large in donations, with Pub Charity sponsoring the 2012 Rugby Sevens. Donations and expenses come out after any winnings by pokie users.

“If there’s a funding opportunity with a gaming trust we apply for it, but it’s a small percentage of our income,” says Roydon Day, CEO of Napier Family Centre. “We don’t rely on it.”

“We give $300 million a year to NZ communities and $350 million goes to the government in tax and GST,” says David Moore of First Sovereign Trust.

The Gambling Act of 2003 stipulates the percentage of gambling proceeds to be spent in communities. Its other objectives are to control the growth of gambling, reduce harm caused by gambling and ensure community involvement in decisions about access to gambling.

Moore says that, over the years of life of a pokie, on average a machine returns to players 92 cents of every dollar that has gone into it. That does not make every player a winner or every machine a gold mine. Trusts receive 10% of the remaining proceeds, out of which they buy new machines and pay wages, rentals, the government and all the related levies and fees.

“People have the perception that gaming machine operators are wealthy, but only eight cents in the dollar comes to them,” Moore says.

How many dollars are we talking?

The Department of Internal Affairs reports spending in pokie machines nationwide amounted to $203.7 million in the first quarter of 2012. For the 12 months ended March 2012 expenditure was $865.4 million. The spending is captured through the electronic monitoring of non-casino gaming machines.

Craig Williams, RSA

For a trust, this works out as follows, based on $10,000 of proceeds from a machine:

Between 2003 and 2012, nationally the number of machines has declined from 25,221 to 18,133. The Hastings District, including Clive, Flaxmere and Havelock North, has 192 machines. Napier has 370. Of those, 57 are in Marewa and 18 in Maraenui.

Both Napier and Hastings currently have ‘sinking lid’ policies, whereby as venues with pokie licences close or change hands, those licences are permanently retired.

The Department of Internal Affairs reports that between January and March this year, $3,993,888 went into the pokies in the territorial authority of Napier. This was followed by $3,714,243 in Hastings district, $603,905 in Wairoa and $566,889 in Central Hawke’s Bay. That’s a total of $8,879,926
Or about $36 million over the year, generating a donation pool of approximately $13 – $14 million for community grantees. No small change!

According to Gail Bell and Joy England of the problem gambling programme at Te Rangihaeata Oranga Trust in Napier, the city has the greatest concentration of machines in Hawke’s Bay.

However, “Proceeds don’t always come back to the community the money comes out of,” notes England.

The charitable distribution of pokie proceeds “is totally reliant on the community applying for the funds,” Moore says. “We do our best to return that money to the community in which it was raised.”
Harm minimisation

To receive a licence, the law requires gaming operators to minimise the harm people incur if they become addicted to gambling. In addition, the Ministry of Health is implementing an “integrated problem gambling strategy,” for which the gambling sector pays a levy.

“Our staff monitor our venue every hour and the machines are monitored electronically from the bar,” says Craig Williams. The RSA staff on duty have a check sheet of questions that are monitored and marked off. “We’re pretty serious about harm and managing it. We’ve had a few people with problems.”

Should a person using the pokies look like they’re getting into trouble, staff are trained to intervene with conversation, coffee, a snack. “Our staff pretty well know how pokie users are doing. We have a long-term relationship with our clients. We don’t want to see them lose everything,” Williams says.

In a niche between the RSA’s bar and the pokies room is a display of photos of people who have either been excluded from the gaming venue or who have asked voluntarily to be excluded. Players can also request a limit be put on the time they can spend in the venue.

“All gaming machines in NZ already have Player Information Displays,” states The Southern Trust, based in Dunedin. “These display how long a person has been playing a game and how much money they have spent.”

On request by someone who plays the pokies, Te Rangihaeata Oranga Trust will send out a blanket exclusion order for that person to all pokie venues in the area.

“Harm minimisation does work – it’s quite a positive approach,” Bell says. “Clubs are fairly safe, pubs are more of a problem. We work with families, courts, probation, prisons, Budget Advisory Service – we do presentations on request. We’re trying to keep the process (of gambling) safe for the community.”
Problem gambling

The Problem Gambling Foundation of New Zealand estimates that 1–2% of NZ’s population “could have problems with gambling”, noting that “Pokie machines are the most harmful form of gambling as 77-85% of problem gamblers use them as their primary mode of gambling.”

The Foundation cites research indicating that:

  • Mãori and Pacific adults were approximately four times more likely to be problem gamblers;
  • Prevalence of problem gambling was higher for adults living in neighbourhoods of high deprivation;
  • One in six New Zealanders say a family member has gone without something they needed or a bill has gone unpaid because of gambling;
  • Gambling is the second largest motivator of fraud in NZ; and,
  • One in ten gamblers in counselling reported domestic or other violent incidents related to their gambling.

How do you know if you have a problem?

“If you gamble out of need, you have a problem,” Bell says. “It’s a hard addiction to identify. It’s really a hidden addiction,” but it affects the gambler’s family and community. Often problem gamblers are identified when they cannot pay their bills. They can be of any age, gender, ethnicity and social background. “Some people go bankrupt gambling. There are some really sad cases.”

In view of these effects, Te Ururoa Flavell, MP, has submitted to Parliament an amendment to the 2003 Gambling Act, which would significantly change the way pokie machines and their proceeds are controlled. The amendment “empowers local authorities, after consulting the community and affected operators, to eliminate or reduce the number of pokie machines and venues in particular suburbs or towns where public sentiment or evidence of harm justifies this.”

It also would put local councils in charge of distributing the funds raised for charitable purposes by pokie gambling, and increase the percentage of funds coming back as grants into the community.

Not surprisingly, pokie operators and many grantee groups are not happy about the proposed legislation!

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