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In an effort to resolve "questionable funding practices", Minister of Internal Affairs Dr Richard Worth has pointed to a possible shake-up of the $1 billion charitable gaming trust industry.
The embattled minister confirmed to the Otago Daily Times he had held a series of meetings with industry representatives.
"My priorities in this area are to maximise the community funding generated by non-casino gaming machines and to resolve questionable funding practices in the sector."
Dr Worth, who was under the spotlight earlier this month following conflict of interest allegations, said he had asked the department for advice before deciding how to "achieve these two priorities".
A spokesman for the Department of Internal Affairs declined to answer questions, saying "the department has nothing to add to what the minister has said".
The Charity Gaming Association, which represents 27 of the 55 charitable gaming trusts, confirmed it had met the minister, chief executive Francis Wevers, of Wellington, said.
While conceding there needed to be improvements to the current "grants distribution mechanism" following several high-profile fraud cases, he did not support a centralised funding agency similar to the Lotteries Commission.
"We don't support wholesale changes. While a centralised grant distribution would look attractive, it would not be responsive to local communities."
For the year ending March 31, the sector turned over more than $900 million, returning a minimum of $320 million to the community and a further $312 million to the Government in taxes.
By law, trusts were required to return a minimum of 37.12% to the community, with 33% being returned to the trusts, of which up to 16% could be claimed by venue operators, he said.
Problem Gambling Foundation spokesman David Coom welcomed the minister's comments as "recognising there is a problem".
He said the current structure of trusts was "incredibly inefficient" and supported a move to centralise distribution.
"It would be more efficient and the return to the community would increase dramatically."