Poker machine proceeds

Hundreds of millions of coins rattle through poker machines in New Zealand pubs each year.

A proportion of those coins pour back out of the pokies to be scooped up by punters delighted to receive an instant return on a risky investment. The rest tumble into the Government's tax coffers and the vaults of gaming trusts which then get to decide how they are distributed.

This is a system built on good intentions. Gambling exacts a social tax on the community which in theory is mitigated in some part by returning money to the community. Many sporting clubs and other groups around the country would testify to the financial leg-up they receive from pokies grants. However, there are other hands out when the cash is distributed. The trusts also pay pubs to cover the machines' operating costs and retain a portion of the income themselves. What is the exact split?

That is a good question.

And it is a question Maori Party MP Te Ururoa Flavell is trying to address with his Bill to dismantle pokie trusts and replace them with a system under which local authorities distribute the proceeds of pub gambling. A key component of Mr Flavell's plan is that 80% of the money available to be redistributed goes back to the community.

This does not seem unreasonable, until it is pointed out that many trusts currently fail to return much above the minimum of 37.12% of their income to the community. Interestingly, amid the circling of the wagons since Mr Flavell's proposal gained political traction, some trusts have suddenly begun to increase their returns. There is even the suggestion trusts have spent pokie money meant for community projects on organising a response to fight Mr Flavell's proposed law change.

It is no wonder that, when some industry figures allege endemic noncompliance and outright corruption in the pokie business, many are willing to listen. And while such sweeping statements inevitably tarnish honest operators, there has long been, at the very least, the whiff of questionable decision-making involving some trusts. Some of this is bound up in a framework that has allowed operators too much freedom in deciding where cash goes. For example, successful host pubs have threatened to switch to another trust unless given more money.

In the South, one trust had its licence suspended for five days after spending money on venue fit-outs for high-returning sites. In other cases, legislative roadblocks appear to have been simply driven around. There have been examples in the past of organisations that, having failed to set up their own pokie trust, have entered a relationship with an existing trust and got money that way. The potential for this type of money-go-round to be abused needs addressing, but whether Mr Flavell's proposals are the best way forward needs to be carefully considered.

The Dunedin City Council, in its submission on Mr Flavell's Bill, pointed out that it receives grants itself so would have difficulty in separating its functions under the proposed changes.

Howls of outrage in some quarters greeted the awarding of $600,000 from the New Zealand Community Trust to the DCC for artificial turf at the Forsyth Barr Stadium. Imagine the volume of protest if the council was seen to be giving a grant of that magnitude to itself.

The DCC also identified flaws in a proposal to return proceeds to the community from which it was gambled. This is an idea with great merit in deprived communities, which are sadly home to the highest proportion of pokies, but holds little attraction for places such as the Otago Peninsula, which have none.

Critics have also pointed out that some councils are not the leanest organsation nor the most approachable for small clubs and may favour pet projects.

Hearings on Mr Flavell's Gambling (Gambling Harm Reduction) Amendment Bill are slated to begin next month. Lawmakers will face strident views from camps on both sides. They clearly have some serious thinking to do.


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