Rage against the machines

Spin the wheel: chook, chicken or chocolates? Beadlebomb in the last race at Waipukurau on Saturday for a trifecta. Lotto, Powerball, Strike and a scratchy on the side. Or hours feeding grocery money into one-armed bandits hoping images and numbers align for that elusive win? 

Gambling turnover in Hawke’s Bay is among the highest in the country, taking around $50 million annually; over 50% from the pockets of those who can least afford it, with venues knowingly targeting vulnerable communities. 

The impact of problem gambling is often played down, with the well-worn argument that reinvesting a third of the profits back into the community somehow compensates for the harm. 

Don’t try that line with Vicki Berkahn, general manager of Te Rangihaeata Oranga Trust (TRO) and Hawke’s Bay Gambling Services, who claims that convenient narrative from councils, legislators, and venue owners turns a blind eye to the damage being done.

The irony is gambling is a big earner for the government and grants issued from the profits sustain or subsidise many community groups and sports clubs known for their contribution to the common good. 

That makes it hard for TRO, the only specialised gambling harm provider for our region, to get a decent hearing. Moves are afoot to tighten regulations, gather more data on harm and reduce pokie machines, but Berkahn says it’s too little too late.

TRO is funded from a $20 million industry ‘problem gambling levy’ via the Ministry of Health to provide counselling, health promotion and public health advocacy to individuals, whanau, and communities affected by gambling harm. 

What used to be termed ‘compulsive’ gambling is now classified as a psychiatric or personality disorder with victims caught in a vicious spiral chasing the next win that often ends up turning them, their family and circle of friends into losers.

Recent figures suggest about 54,000 New Zealanders are gambling at a harmful level, experiencing “an uncontrollable urge to continue gambling” despite the toll it is taking on their lives and the lives of others. Another 110,000 are experiencing low levels of harm and at risk of further problems in the future. 

It’s estimated that 22% of New Zealanders aged 15 years and older will be affected at some time in their life by their own gambling or by that of members of their family or household.

Berkahn, who has a master’s degree in pathological gambling, says gambling is addictive because it stimulates the brain’s reward system much like drugs or alcohol and is the most common impulse control disorder worldwide. 

People get hooked after a big win, believing it’s easy money, then continue chasing that experience. “Those machines are geared to pay back 90 cents in the dollar so over time players are constantly losing.” 

And who does it harm most? Problem gambling is defined by the Ministry of Health as a health equity issue with Māori “disproportionately affected”. In 2011, 50% of pokie users were Māori and that number has continued to grow. 

TRO receives referrals from Probation, the Hawke’s Bay District Health Board Community Mental Health Service, general practitioners, the Police Family Harm team and individuals wanting help. In the year ending April 2020, 357 clients were referred in the Hastings area alone; 57% were Māori.

That “demonstrates an inequitable level of harm”, says Berkahn, 86% of which can be attributed to pokie machines. Failure to address this, she says, places “the government and its agents (local councils) in breach of Te Tiriti o Waitangi”.

The problem in Hawke’s Bay is exacerbated by placement of gambling venues in areas “known for higher socio-economic deprivation”. 

Returning a portion of the profit to communities “does not wash away responsibility to prevent harm to the addicted gamblers,” says Berkahn.

She says the Gambling Act, currently under review, “continues to fail our whānau in Hawke’s Bay”. 

Pokie heaven or hell

Slot machines, poker machines or pokies first entered the market around 1987 and are common in clubs and bars and controlled by charitable trusts. Profits are shared in a three-way split by government, venue owners and communities. The requirement to return 40% of profits to communities was dropped in 2020.

New Zealanders broke their own record in 2020 with the equivalent of every adult spending $572 on all forms of gambling – $128 at casinos, $160 on Lotto, $80 at the TAB, and a whopping $204 at the pokies. 

Despite the removal of 5,500 pokie machines since 2007, the New Zealand 

Community Trust (NZCT), which oversees licensed venues and distributes gambling profits, claims it’s had no impact on the percentage of problem gamblers, which it insists is only 1-2% of the social cost of tobacco, alcohol and other drugs and has plateaued since the 1990s.

Regardless, the quarterly spend to March 2021 was $252 million across 14,781 poker machines, the highest since records began in 2007.

In the 2020-2021 financial year Hawke’s Bay pokie players amassed a massive $45.9 million in losses across 44 venues and 650 machines. 

$19.8 million was chewed up by 281 pokie machines across 18 venues in Hastings and in Napier $21 million went through 289 machines at 19 venues. In Central Hawke’s Bay nearly $2.2 million was lost on 29 machines at two venues and Wairoa players lost $2.5 million at three venues.

Both Hastings and Napier councils adopted sinking lid policies in 2011 agreeing to cap the number of venues or limit the number of machines allowed. Those policies are being updated.

Revised health strategy

The Ministry of Health says harm through high-risk gambling behaviour is of the same magnitude as high alcohol consumption and other health issues such as anxiety and depression, with the cumulative harm close to twice that of drug use disorders, bipolar, eating disorders and schizophrenia combined. 

The most harmful forms of gambling are the continuous use electronic gambling machines (EGMs or ‘pokies’). 

“Pokie machines in the 44 venues around Hawke’s Bay are the biggest cause of harm in our region – 90% of our problem gamblers cite pokies as their main issue – well ahead of Lotto,” says TRO’s Berkahn.

She claims gambling harm is well hidden in Hawke’s Bay with less than 10% of problem gamblers seeking help. That means around 2,500 people will experience either moderate or high-risk harm from gambling, with a further 5,000 at low risk but likely to experience gambling-related harm during their lifetime.

The Ministry of Health says unregulated online gambling has become a significant issue with smart devices becoming commonplace. Covid opened that door much wider creating a new group of problem gamblers.

NZCT says there’s inadequate data about offshore gambling websites, but based on UK numbers New Zealanders could be losing around $300 million annually. 

In 2019 the World Health Organisation (WHO) added video game addiction to its International Classification of Diseases database, claiming 10-15% of gamers exhibit the recurring behaviour that overtakes other life interests. 

An Auckland University study suggests up to three percent of New Zealanders have a problem, but health boards haven’t been keeping track so no-one knows for sure. The fact we have more game developers per head of population than any other country may be indicative, along with a Digital New Zealand study asserting two-thirds of Kiwis play video games.

China recently limited young people to a controversial three hours online gaming a week; Singapore and India are working on legislation to curb gaming addictions.

The Ministry of Health has called on the Department of Internal Affairs (DIA), which regulates all gambling, to take all gambling-related harm into account in its Online Gambling Review alongside the government’s mental health action plan, when reviewing the Gambling Act 2003.

Hard making ends meet 

The DIA approved more community grants in 2021 than previous years; 6,400 organisations received $132 million in grants, the largest category being sport ($70.6 million) particularly rugby, multi-sport and soccer (football). 

Auckland received $32.3 million, Wellington $15.3 million, Canterbury $15.2 million and Hawke’s Bay $5.3 million or 36% of profits taken from our region. 

Mark Aspden, CEO of Sport Hawke’s Bay agrees it’s an awkward issue as gaming trust funding means some activities now take place that otherwise would not have. “It can mean that a staff member is employed to run competitions, or a kid’s team has uniforms or a facility can be built.”

Generally, he says, sporting, like many other community organisations, finds it challenging to get enough people and money “to offer a really good service or activity for their community”. It’s difficult at the best of times and Covid has “exacerbated the challenges”. 

While there are alternatives, Aspden says most sports organisations are run entirely by volunteers with day jobs. “There’s often a lot to do running a 

sports organisation and it can be difficult hunting down alternative sources of revenue. Loyalty schemes have been tried but generally not been successful in the medium to long term.” 

He doesn’t think there is any magic solution. Some golf clubs sell firewood or graze sheep, some volunteer at events to get funding. In the end that often leaves the responsibility with a small number of volunteers.

Some organisations are fortunate to have good sponsors, while others have bars or food service that bring in money. “Even if you do all of that, current regulation allows the use of gaming funding to do more or provide a better service.”

Aspden concedes there are a range of views among members of sports organisations on the merits or otherwise of taking money from gambling sources. “If that funding stopped, without an alternative being put in place, there would be fewer sporting activities.”

Trusts distributing Class 4 Gambling funds include Lion Foundation, Pub Charity, Grassroots Trust Limited, Four Winds Foundation (together comprising 54% of all grants totalling $71 million) plus local trusts Flaxmere Licencing Trust, Pub Charity Endeavour, First Light, Grassroots and Youthtown.

In the first quarter of 2022, the New Zealand Community Trust returned $300,852 from pokie profits back to Hawke’s Bay. Major recipients were sports clubs including basketball ($85,000), rugby, rugby league, yachting, volleyball ($40,000), cricket, football, marching and waka ama, most of it for salaries, along with coaching, uniforms, equipment or venue hire. 

Non-sport recipients included leasing a HB Rescue Helicopter ($25,000), a new boat hull for Ocean Beach Surf Life Saving club ($8,000), fencing for Bledisloe College, and stage, lighting and sound equipment for the Cancer Society Hawke’s Bay Centre ($8,743).

Gaming venues contributing to these grants included Clive Hotel, Currizzas Tavern, Hastings, and the Water Bar, Napier.

Prevention and banning tools

NZCT insists it takes “takes seriously” its obligations, training over 500 venue staff a year in harm prevention and minimisation. 

It deploys the latest technology as part of its strategy, including the Kiwi-developed Guardian system which uses adaptable facial recognition software and a voluntary photographic database of problem gamblers to trigger alarms at gambling venues.

Guardian is built into gaming management systems, which alert staff to check a person’s ID before they’re asked to leave.

It works with the multi-venue exclusion (MVE) service pioneered by TRO five years ago, where gamblers ban themselves from pokie venues and the TAB, which Berkahn says is like going into “instant rehab”. 

MVE means problem gamblers are breaking the law if they enter any gambling venue, and the venue can be prosecuted if it ignores the alert.

“People come to us, typically on a Monday morning after they have spent all their money or someone else’s money, realising enough is enough,” says Berkahn. 

“It’s like an alcohol-locking device on your car… Once it’s in place “they walk out the door with a huge amount of relief.”

TRO staff regularly visit HB’s 44 gambling venues to facilitate the MVE process. In March 2022, Berkahn says 130 people had banned themselves for either six months or two years.

While legislation is in place to support MVE the entire gambling support network in the country is supposed to be engaging, but “not everyone wants to do the face-to-face counselling”. 

And she says venues rarely if ever ban anyone for problem gambling, something that should be a KPI (key performance indicator) in the framework of prevention. 

Three-yearly council review

Every three years councils review their Class 4 Gambling and TAB Venue Policies which set the rules for operating pokie machines. 

Berkahn and her team regularly make submissions for improved controls but find “strong opposition” and a high level of vested interest.

Many councillors have a conflict of interest because of their involvement in organisations that benefit from gambling and aren’t able to vote. In Central 

Hawke’s Bay “they all had a conflict of interest so they all participated.” 

The only win in the 2020-21 round was official recognition of the disproportionate effect on lower income families and amended sinking lid policies preventing new machines or venues in Hastings, Napier and Central Hawke’s Bay. Wairoa was still reviewing theirs when BayBuzz went to press.

TRO wanted councils to go much further, excluding Class 4 gambling venues from “high deprivation areas”, removing six machines per license renewal and no longer licencing venues where gambling was the main source of revenue.

It wanted trial closure “at peak food and beverage service delivery times”, and for venues to train staff in approved assessment tools to identify and then refer problem gamblers for treatment.

Berkahn says a sinking lid policy on its own will not decrease opportunities for gambling harm and found the response overall “pretty disheartening”. It was clear “elected members and community groups all want to protect the community grant money that comes from pokies.” 

At this rate she suggests it’ll be a lifetime before three-yearly reviews make a real difference in the region.

Funders centralise focus

The Hawke’s Bay Funders Forum, established in 2007, recently brought together gambling trusts and other funding groups as part of the first regional funding site (www.HBFunding.co.nz). 

Rather than multiple strategies and directions, chairman Kev Carter says the charitable sector and wider Hawke’s Bay region will benefit from improved funder connection, coordination and support for groups looking for funding.

The forum is designed to act as a hub to support and work with charitable organisations, keep up with relevant funding policy, identify areas of development, discuss significant community projects and “collaboratively initiate or contribute to projects”.

Carter says a lot of funding does go out to groups from gambling revenue and it would be a shock to them if that funding stream was cut off.

“However, we have seen a slow move away from gambling revenue by some groups and organisations, especially faith- based organisations, deciding not to apply for gambling revenue any more.” 

He says similar changes are occurring in the move away from “alcohol and fast-food sponsorship in the sports and recreation sector, especially in the kids sports space.”

Moral outlier struggles

Early in 2020, 50 Hawke’s Bay sports clubs met with a lawyer to encourage submissions against the sinking lid policies of local councils. Tamatea Rugby & Sports Club took a bold stand, determined to find funding that didn’t rely on gambling revenue. 

“Morally we made a call,” says club chairman and president Stewart Whyte. Initially there was strong support from members, supporters and other clubs, along with assistance from SportHB and Netball HB, to help train managers and coaches. 

The 100-year old Waipatu-based club raised over $20,000 from members to help restore the clubrooms which had been closed for 18 months. 

However, it needed about $50,000 a year to be effective. “We struggled and found ourselves in a really vulnerable position,” says Whyte.

A hard decision had to be made. The new 2022 Rugby & Sports Club committee overturned its anti-pokie policy, and has returned to seeking revenue from gambling profits, at least until it can come up with a more sustainable funding model.

While the long-term goal remains the same, Whyte says it will require more “community currency”. 

That means a return to naming rights, partnerships and other forms of sponsorship that supported clubs before they came to rely on the pokies. 

Betting on law change

While the gambling industry argues pokies are safe because host responsibility polices are in place, Berkahan insists these fall far short of what is needed.

The problem, she suggests, is that the DIA as policy advisor to the government on gambling regulation has its role limited to “encouraging and supporting” gambling venues to provide a “culture of care” towards gamblers.

While there are over 30 different host responsibility policies for pokie venues she says none are effective at protecting the gambler and their whānau.

For example, the law doesn’t currently require venues to collect evidence to support court cases. “A Christchurch man was allowed to gamble away hundreds of thousands of dollars at a casino without the venue being prosecuted for not providing a ‘culture of care’,” she says.

The presiding judge said this was a problem that could easily be fixed by a change in the law. Berkahn says until there’s a law change, gamblers will continue working the pokie machines for hours on end without a tap on the shoulder or an intervention.

One of the challenges is that venues only see loss of income, and staff may be avoiding an adverse reaction, not wanting to add more responsibility while they’re on the minimum wage.

The Ministry of Health’s draft Strategy to Prevent and Minimise Gambling Harm for 2022-2025 is expected to deliver tougher regulations and new levy rates to government and community from July 2022.

TRO is hoping further tools to help curb harm, including more of a Health and Safety approach, and consistent policies requiring hosts to protect problem gamblers, will be included in imminent changes to the Gambling Act.

As the DIA call for submissions, a banned person was found to have gambled continuously for 28 hours at SkyCity casino in Auckland with no enforcement action taken. A Newshub sting followed another gambler who played for six hours straight with no tap on the shoulder. Days earlier a local former All Black was outed for defrauding family and friends of more than $100,000 to fuel his gambling habit.

The challenge remains, must public good organisations continue to rely the proceeds from harm-inducing behaviours or do communities, councils and businesses have to return to the generosity of old. Perhaps businesses can support causes, clubs and projects as part of ‘triple bottom line’ split of profits, one for the shareholders, one for the business and one back into the community?

Regardless, gambling venues, councils and trusts need to more effectively monitor problem gamblers, and refer them to or alert the agencies that can help manage this mental health issue that not only damages the individual but creates much wider community harm.