The involvement of the cash-strapped Otago Rugby Football Union in pokies has raised questions over the sustainability of the country's sporting organisations. Hamish McNeilly reports.
Chances are that a person who slots a $2 coin into the pokies will lose, but many others stand to win.
And winners do not come much bigger than the country's sporting organisations, which received $817 million in pokie grants in the six-year period from 2006 to 2011.
Leading the way was the national sport of rugby with $142 million, followed by horse racing ($99 million) and football ($60 million).
Under the Gambling Act 2003, pokie grants could fund a range of "authorised purposes", including horse race meetings, racing stakes, amateur sports teams and clubs, while professional players or teams were excluded.
"Where there is a grey area is funding which goes to subsidise something in the amateur area for a sport's organisation and therefore releases cash to be put in the professional side of their organisation," Problem Gambling Foundation chief executive Graeme Ramsey said.
The increasing reliance on pokie grants posed a dilemma for the country's sporting organisations, with at least 40% of pokie revenue coming from those identified as being problem gamblers.
"There is a real ethical dilemma for sports organisations trying to do good within our community [in that] they are reliant on such a problematic source of funds, in exactly the same sort of way sports previously relied upon tobacco."
Sports managed to go cold turkey when tobacco sponsorship ended, but more than two decades on organisations remain addicted to gambling funds.
"The big question is: are sports in the country financially sustainable?"
Earlier this month, the Otago Daily Times revealed the Otago Rugby Football Union attempted to set up its its own pokie trust, the Murrayfield Trust, to distribute proceeds from Auckland-based bars to Carisbrook.
The Department of Internal Affairs (DIA) declined the application in late 2004 after concerns over the influence the union had over the Murrayfield Trust.
It confirmed it was not investigating the union, but was investigating one of its major funders - The Trusts Charitable Foundation (TTCF).
Between 2005 and 2010 that trust gave more than half of the $5.1 million in pokie grants to the ORFU, funds which were granted solely for the purpose of the amateur game.
Those involved with the ORFU, which has been fighting off liquidation, remain tight-lipped over the union's involvement with pokies, and the New Zealand Rugby Union has also distanced itself.
NZRU community and provincial rugby general manager Brent Anderson said the ORFU was a sovereign legal entity, which managed its own affairs, "so it is not appropriate for the NZRU to comment on these issues".
"The NZRU has also only been involved in ORFU operational matters from late last year and the issues raised largely predate this period, so we aren't in a position to comment on specifics.
"Our priority has been on developing a recovery plan for Otago rugby. However, any potential breaches of the relevant obligations around gaming funding would be of concern and we would expect them to be investigated."
Mr Ramsey said Otago's case was not an isolated one.
"I don't think the Otago Rugby Football Union is the only rugby organisation, indeed the only sporting organisation, that has sought to capture [pokie] funding".
Today, the ODT has revealed the New Zealand Softball Association is another organisation with apparent links to a Wellington-based bar and pokie grants.
In 2010, the DIA confirmed it was investigating Southern racing clubs after a spike in pokie grants.
That investigation revealed activities unlike other rorts involving sporting organisations in so far as organisations would invest funds through a third party to buy a pokie bar, with funds then flowing back to the organisation though an aligned trust.
Mr Ramsey said the country needed an accountable and transparent system "where you and I can't set up a pokie trust", and those running the machines needed to be separate from those giving the grants.
"New Zealanders are sick and tired of the rorts that go on with pokie funds. I think community groups are hurting at the moment because there is such limited sources of funds available at the moment. We are definitely ready for the debate."
Internal Affairs Minister Amy Adams said she was "giving consideration to" possible changes to the gambling sector.
Ms Adams said she would be "concerned if the system was being exploited. However, I am confident with the processes in place to deal with any issues.
"If Internal Affairs is made aware of any inappropriate use of grants, it will investigate."
The Government was committed to supporting the Gambling (Gambling Harm Reduction) Amendment Bill to select committee stage, she said.
"This will enable interested parties to make submissions on the issues raised in the Bill."
The architect of that Bill, Maori Party MP Te Ururoa Flavell, said "we ain't going to boot gambling out of Aotearoa, especially the pokie machines, so the practical solution is to try and reduce harm".
The Bill proposes to minimise harm in five ways, including empowering local authorities to eliminate or reduce the number of pokies after consultation with the community and affected operators.
Mr Flavell said under the Bill racing and racing stakes money would no longer be considered an authorised "charitable" purpose under the Act.
"We didn't want to promote the whole notion of gambling supporting gambling."
Another proposed change was a "shake-up" of the trusts involved and for funds to be returned to an area where a venue was located, and higher returns going back to the community.
Once the Bill went to the select committee "it opens up the door up for all the issues to be brought into the open", he said.
The department's gambling compliance director Debbie Despard said it had about 70 investigations and inquiries under way, some of which involved sporting organisations.
In 2009, the department investigated and shut down a significant grants-capture rort involving three trusts, trotting clubs and seven pubs.
In another case, a former employee of Counties Manukau Bowls pleaded guilty in January to obtaining more than $600,000 by deception and using forged documents, she said.
He is to be sentenced next month.
"The department wants to ensure that community groups have fair access to gambling-generated community funds and will take action where possible over any attempts to capture funding flows that are detected.
"We endeavour to support and assist societies to comply with their obligations under legislation. However, we will not hesitate to audit, investigate and prosecute societies where they deliberately or repeatedly fail to meet these obligations."
