Pokies and porkies

Am I the only one who thinks the folks from the pokie trusts have been telling a load of porkies lately, in their desperate attempts to get public opinion on side?

Te Ururoa Flavell’s Gambling Harm Reduction Bill certainly seems to have caused a flurry of lobbying – with Pub Charity and the Lion Foundation, two of the largest trusts, doing much of the lobbying.

In the last week they’ve:

–        Emailed thousands of community organisations who are grant recipients, asking them to make submissions opposing the Bill

–        Launched a website called Ban the Bill

–        Spent tens of thousands of dollars on a 12-page insert in the weekend papers promoting their organisation’s role in the community.

From what I can see, however, all this activity does seem to be based on self-interest, rather than in the best interests of the community.

The Bill, which passed First Reading with a massive 85 votes in favour, with 7 votes opposed, would do away with these self-appointed pokie trusts. They would be replaced with local distribution committees set up by councils, in much the same way the Government’s Creative NZ Fund is currently managed.

Under current law, these trusts are only required to redistribute about 37% of pokie machine takings back to the community. So only about $240 million annually from pokie machine losses goes back to communities. The rest is split between Government levies and the well over $100 million which goes towards the trusts’ own administration costs.

This Bill increases the percentage of pokie machine takings which must be given back to the community to 80%.  If the Bill becomes law, the DIA’s latest figures indicate that over $224 million in additional support would be sheeted back to the community in grants, or a total of about $464 million.

The Bill also requires new mandatory gambling addiction prevention measures on pokie machines – something problem gamblers desperately need.

All of this runs counter to what the industry’s saying in the media. Martin Cheer, CEO of Pub Charity, has claimed that  the Bill would mean less money for the community. That’s ironic, given that his own outfit is short-changing community groups by nearly $28 million a year, returning only 37.7% of the $65 million currently lost via the pokie machines it owns. That’s one of the worst rates of return of any pokie trust. Mr Cheer ought to clean up his own backyard before criticising this Bill.

What there would be less money for is the expensive salaries and flash offices of the trustees and management in these self-appointed groups. And possibly less for professional rugby and other professional sports.

The reality is that communities are being ripped off by cronyism and rorts in the pokie industry. The funds consumed by the pokie trusts are enormous. The Green Party believes it’s time some transparency and accountability was brought to bear.  That’s why we’re supporting Mr Flavell’s Bill.

Submissions to Parliament’s Commerce Select Committee close 21 June; to make an online submission click here.

28 thoughts on “Pokies and porkies

  1. Speaking of ‘porkies’ it is worth pointing out that the current law says that grants can only be made for amateur sport and amateur sportspeople with bona fide credentials, not to professional sport.

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  2. Tom says “Speaking of ‘porkies’ it is worth pointing out that the current law says that grants can only be made for amateur sport and amateur sportspeople with bona fide credentials, not to professional sport.”

    True, but that didn’t stop the Otago Rugby Football Union from getting pokie money for amateur sport and in contradiction of the grant conditions, spending it on professionals.

    We received a grant in the mail today for junior sports equipment, but we have to buy locally at very high prices rather than from a Christchurch supplier who can supply at half the price.

    It’s a huge waste of money.

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  3. The present law on distributing pokies profits seems to be about giving open slather to frauds and rip-offs.

    Pub and pokie owners decides who gets grants, and its been abused to the tune of tens of millions of dollars, every year.

    Orginisations like the institute for the blind are declined grant money while pub owners donate pokies money for prize money in horse races !!.

    There has been numerous court cases of people ripping of pokies money, remember Brent Todd ??.

    The sooner the law is changed to stop all the frauds, backhanders and theft of this charity money the better …..

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  4. ……”A former MP pleaded not guilty this morning to fraud charges over an alleged $1.8 million pokie scam, in the Auckland District Court.

    The charges relate to a swindle involving Auckland tennis clubs, a charity and companies set up between 2003 and 2005 relating to gaming machines”…..

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  5. @ photonz1, maybe, but they got caught and are being done for it. So the system works. Accountability and transparency rule. A bit like uncovering a big ‘porkie’.

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  6. It’s appropriate that those regulating the number of local pokies also allocate the pokie proceeds in the community.

    Especially when this is also going to ensure that proceeds go to the community where the pokies are located.

    This with the reduced overhead costs (more money lost on the pokies to disperse to community groups) of council oversight should mean even where there are less pokies (sinking lid) there is still no loss of local funding – a win win.

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  7. Dear Ms Roche
    At the very least you could inform yourself about a subject before you spout off about it. Yes you could return 80% to the community as you claim if you a) failed to pay all the tax,you owed[good luck with that], b) found someone to give you gaming machines for nothing and service and repair them for free , c) get them licensed and electronically monitored for nothing d) get the DIA to work for free, e) find venues that would host the machines and service and monitor the customers for nothing, f) found volunteers to administer the distribution of funds and audit the outcomes.
    Take care of those things and you will be about right. By the way the Lion Foundation publication you refer to is a 6 monthly obligation under the current Gambling Act. But of course you knew that already. Trust me my backyard is plenty clean which is more than can be said for the diversion of public health funds into political campaigns. But of course that’s a story for another day. As my father used to say whenever you point your finger at somebody there are always 3 pointing back at you.

    Yours sincerely
    Martin Cheer
    CEO Pub Charity

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  8. Quite a lot of rot being talked here. lets start replacing rot with reality.

    In the intertests of full disclousre – I work with a number of community groups for who pokie machine funding is an impoortant source of income. Creative Communities is also an important source of funding for some, so I am familiar with both the approaches Denise discusses, and am thus aware of the realtive strengths and weaknesses.

    Obviously I’m not familiar with every pokie machine trust in the land, just those that serve the North Canterbury region, but I suspect that as they are all regulated under the same laws, they all work in a similar way.

    So, lets start with SPC

    It’s appropriate that those regulating the number of local pokies also allocate the pokie proceeds in the community.

    Why? That places a monster conflict of interest within one group, and gives them effectively power of god. The conflict comes because today there are pressures on those who regulate the machines from both sides; the antigamblers who want less machines, and the trusts on behalf of the community groups who want more machines, and thus a balance appropriate to each community is struck.

    Today, most areas are served by a number of trusts, and the trusts have different policies, and thus community groups can target trusts who are more interested in their activity. With the one councuil does all approach as you advocate, then f th council decides a particular activity is less worthy, then a group has no alternative pokie funding source.

    So that is all bad news. The current method, although imperfect, is far better than what you propose.

    Especially when this is also going to ensure that proceeds go to the community where the pokies are located.

    Today it is extraordinarily difficult to get funding from pokies out of your home area. I have received rejection letters on this very ground. Thus this is not an advantage, it is no different than the current situation.

    This with the reduced overhead costs (more money lost on the pokies to disperse to community groups) of council oversight should mean even where there are less pokies (sinking lid) there is still no loss of local funding – a win win.

    I’m not convinced the costs will be reduced. I suspect that if the council take on more work it’ll just be a bigger call on the general rate.

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  9. Next up – nznative

    The present law on distributing pokies profits seems to be about giving open slather to frauds and rip-offs.

    There was a time when this was true, however it is much more difficult to do these days. In particular, now that every pokie machine in the country is wired up to the Ministry, there is vastly reduced scope for cash fraud, which frankly, used to be trivial.

    Pub and pokie owners decides who gets grants, and its been abused to the tune of tens of millions of dollars, every year.

    Grants are allocated by an allocation committee, and must be in accordance with the grant policy. If the policy is abused then legal challenges can and do arise. Pub owners have no part of the fund allocation process. So there is no “abuse”. You may not like the distribution policy, but that is not “abuse”. But at least different trusts have differing policies, so in most areas you can apply elsewhere.

    Under SPCs scheme, you would be even worse off if the Council’s allocation policy didn’t match your wanted purpose.

    …while … pokies money [is used] for prize money in horse races !!.

    I do agree that allocating pokie income to stake money should not be an acceptable purpose, but that is for the government to fix, its a minor detail. I’m generally not in favour of throwing out babies with the bathwater.

    Orginisations like the institute for the blind are declined grant money …

    Reality check – most organisations are declined grant money as there isn’t enough money to go round. And every year there is less. Rejection letters ar a fact of life; there isn’t the necessary money.

    Why is this? The sinking lid policy implemented by some councils has significantly reduced the number of pokie machines. Thats a win for the anti-gamblers. The loosers are the communmity who get less funding. get the stats from the DIA website and draw the graphs, the conclusion is obvious.

    There are only two solutions. The first is to alter the allocation policy, so if the Blind consistently get more funding, then other groups will get less. Applying for pokie funding is itself a gamble, even when the request is fully within the allocation policy. You could choose to pick a different set of winners and losers. Or it can be accepted that pokie income isn’t even keeping pace with inflation, and perhaps that issue needs to be addressed.

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  10. Photonz:

    We received a grant in the mail today for junior sports equipment, but we have to buy locally at very high prices rather than from a Christchurch supplier who can supply at half the price.

    You’re rather missing the point.

    The idea is to keep the money as far as possible in the local community, and thus although the trust may be paying twice as much as it needs to, the money stays local.

    Creative Comnmunities are getting more fussy about this now than they used to be, which restricts what expenses one can use a CC grant to offset.

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  11. dbuckley says “The idea is to keep the money as far as possible in the local community, and thus although the trust may be paying twice as much as it needs to, the money stays local.”

    I get that. But at a point that becomes a massive waste of money. We only get HALF the equipment we could get if we went to a Christchurch supplier (OR the trust pays DOUBLE to get the same equipment).

    Either way, it’s a huge waste of money and it’s the sports clubs and charities who lose.

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  12. Finally, Denise.

    Firstly, thanks for bringing to my attention that there is a bill that requirtes a submission.

    The question of how much gambling a community should allow (or indeed if there should be any control over gambling at all) is a vexed one in most circumstances, but it is particularly difficult in New Zealand. In most countries, a large portion of gambling profits (excepting taxes and duties etc) are a source of corporate profits, but in New Zealand pokie machine profits are used in very large part for the public good. The community benefits directly by grant contributions to communmity groups, and from some trickle down from the venue. The PGF get their funding this way too, and most folk think the PGF do good work in support of problem gamblers, though their political activities are more suspect. Finally, society benefits from taxes and duties. There is no equivalent of the simple for profit business model in pokie machine trusts, despite your rhetoric alluding so.

    As I noted above, I’m generally not in favour of throwing babies out with the bathwater, but I will examine the bill in detail and submit on it. There are things that are less than optimal at the moment. I’ve seen the movie Demolition Man. I hope you’ve seen it too. In it we learn that Taco Bell won the restaurant wars, and now all restaurants are Taco Bell.

    Having all community grant funding work in the Creative Communities model would be the granting equivalent of all restaurants being Taco Bell. What such a model would bring would be monopoly and uniformity of decison making, which will lead to marginalisation of grant recipients. As a society, we generally agree that monopolies are not good models.

    Finally, I can think of only three significant reasons that venue operators have pokies on their premises, and put up with the hassle of running them. The first is that they actually get some money for doing it. The second is the knowledge (or belief!) that having pokies will encourage the gambler to buy something (usually) from the bar. The third is the knowledge that the presence of these machines is good for the community.

    If the bill significantly reduces the income due to the venue operator (and I’ve yet to read the bill, but if there is going to be 80% of income going to causes, that 80% has to come from somewhere), then the operator may choose just to chuck the machines out. This would obviously suit the agenda of the antigamblers. If this happened widespreadly then it would be disasterous for community groups.

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  13. Photonz1 notes “I get that.”

    As Judge Haller said in My Cousin Vinny, “No, Mr Gambini, I don’t believe you do [get it]“, before finding Vinny in contempt of court and sending him off to jail, whereby girlfriend Mona Lisa Vito has to bail him out to the tune of $200. (Marisa Tomei picked up best supporting actress Oscar for that role)

    You think that the “waste” of money is more important than “keeping the money local”. Thats your perspective on it, and you are entitled to take that view., but that view is contrary to the prevailing wisdom.

    All grant funders now take the view (to a greater or lesser extent, with greater becoming more common) that keeping the moeny local is more important than spending less money and have it go many miles away, where it has no chance of being recirculated into the granting community. By spending the money far, far away you are helping a distant community rather than your own.

    If you need twice as much kit then you should apply for twice as much grant for twice as much kit, with supporting reasons.

    As I noted above, grant funding is a gamble, but more than that, its a game, and playing by the ruoles is important; it helps the chances of being sucessful in the application.

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  14. Buying locally at twice the price is no guarantee that the money will stay local. If the local outlet is part of a chain store, there is no guarantee that the profits will even stay in New Zealand.

    Trevor.

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  15. Of course its not a guarantee.

    However, to source distantly is to pretty much guarantee the money wont stay local.

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  16. Martin Cheer:

    Trust me my backyard is plenty clean which is more than can be said for the diversion of public health funds into political campaigns.

    Do you have any evidence to back up this claim and is this associated with the Green Party? If the answer is yes to both, please come forward. If not, keep the gossip to yourself.

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  17. I’ve now read the bill. The topic of this blog post, Pokies and Porkies is indeed very apt.

    Denise says: Under current law, these trusts are only required to redistribute about 37% of pokie machine takings back to the community. … This Bill increases the percentage of pokie machine takings which must be given back to the community to 80%.

    I’ve just read the Bill, and thats not what it says. Not even close.

    This bill makes no changes whatsoever to the proportions of monies derived by gambling going to good causes. None at all.

    So what is the 80%? The Bill codifies in law what is already current practice as I noted above. What it says is 80% of the money distributed must come from the area from which it was collected.

    If you are supporting this bill because you believe it will give more money to good causes then you’ve been duped. You’ve been lied to. At absolute best the Bill might be considered neutral on this front, but taken in toto the Bill will probably result in a reduction of finds available for good causes.

    However, this bill does have one and a half good things in it.

    The definite good thing is removing in the definition of authorised purpose, purpose iii, “promoting, controlling, and conducting race meetings under the Racing Act 2003, including the payment of stakes”. Note it removes this purpose from all forms of gambling, not just pokies. Good, no problem with that. It also removes purpose iv, “an electioneering purpose” as an authorised purpose from pokie machine gambling. I’ve no problem with that either. However, I cant find that element in the commentary, seems it is being slipped in on the quiet.

    The half-good thing is player tracking capability. However, the bill wording is a half-baked idea. Its half-baked as it attacks the problem from the wrong end.

    The proposal is that player tracking devices could be added as a requirement to the conditions of a venue licencee. So it can only be triggered as a licence condition, and then presumably once triggered, there is no detail on how or (more importantly) by whom it should (or must) be used.

    What should happen is that all venues should have to install player tracking capabilities over a few years, as machines come up for replacement. So every machine in every venue has the capability to player track.

    Then the courts should have the power to order a gambler to have and to mandatorily use the card, with penalties (including jail) for not using the card when gambling. Of course, someone could voluntarily use a gambling card, a bit like a loyalty card, and such use of the card may attract benefits…

    There is a potential Privacy Act compliance problem here, I note, with Privacy Principle 12, which deals with unique identifiers. It comes down to who owns the machines and issues the tracking data. There is no recognition of privacy issues in the Bill.

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  18. What a nice spin dbuckly puts on the vice of gambling and those who have come to rely on addicts and others wasted money.

    dbuckley claims the mountain of fraud and rip-offs involving pokies was small and inconsequential. I only put up one link relating to a 1.2 million dollar fraud. Theirs dozens if not hundreds of other cases. I cant remember how much brent todd and his pub/pokie owning mates stole.

    My example of pokies charities giving money for stake/prize money in horse racing wasn’t even illegal !!!. Its funny how lots of pub and pokie owners own race horses too ……

    …. and then theres all the illegal scams which dont get caught.

    As an example I used to play in a sport and we attended National competitions. We got pokie grants but apparently about half of the grant money was a “kick-back” .

    So I guess if the pub owners aren’t rorting it then some of the trusts are…..

    Either way I firmly believe the pokie money trough has some very dirty piggys with their snouts right in it.

    And the pigs are squealing loud right now.

    It needs to be cleaned up.

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  19. my apologies dbuckley did not call pokies frauds and thefts small and inconsequential …………. he called it trivial.

    millions of dollars of trivia …….

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  20. No, dbuckley did not say the frauds were trivial, what he said was it used to be trivially easy to commit fraud. Though dbuckley will admit that it wasn’t worded perhaps as clearly as it could have been.

    nznative: You are entitled to believe anything you like, but that belief doesn’t make it a fact. It is undoubtably true, back in the day, cash sloshed around all over the shop. The easiest place to extract the money was when it is in cash, before it goes into the banks. Once it is in a bank account then accountability is assured. So grab it while its sloshworthy, alter the books to cover the tracks, and you’re quids in.

    Now, the DIA now knows to the cent how much money is going through the system and knows it in petty much real time. So cash can’t disappear between being shoved in the machine and being delivered to the bank. Thats a massive improvement in accountability.

    In terms of kick backs; I’ve extracted many thousands of dollars from various charitable sources in the lasty few years, including pokie machine trusts, including the very one that Martin Cheer so badly represents above (Martin – the Greens blog is not the pub on a friday night!), and I can confirm there has never been a cent of kickback. We always have to provide full accountability for every cent provided, meaning the numbers have to add up.

    How would the kickback work anyway? How would I discover I needed to provide a kickback? A bloke knocking on the door? A demand in the mail? Yeah, right.

    I didnt do this stuff or have an interest in it a decade back, so I’d believe pretty much anything you say happened back then. I’d be much more sceptical of it happening in an undetected way today.

    Anecdote time. Why traditionally did shops priced things to be a penny or cent short of the quid or dollar? Because that required the customer to be given change, and the customer would expect the change to come out of the till, hence things would be rung up on the till. When the money was a whole quid or dollar, assistants could (and frequently did) not bother ringing up the transaction, just trousering the money.

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  21. I can and do believe that pokies money is still being rorted if not outright stolen.

    I base this on my disbelief that all the pokie machine are ‘real time’ metered or connected or monitored to any outside overseeing authority.

    I also believe in peoples ability to bypass metering, especially if it results in free cash for them.

    Finally I believe the connection between pokie machine owners, pub owners and gambling trusts is all very oblique and probably incestuous.

    The liquor and gambling industries are no white knights to our community’s. Booze costs our country billions more than what we get back in excise tax, and pokies seem of little gain to anyone except pokie owners ….

    NoRightTurn has a good little post about our suspect ‘gaming trusts’ … http://norightturn.blogspot.co.nz/2012/06/not-very-charitable.html “(one example I know of: a Lower Hutt based trust gave tried to give money to repave a private driveway in a rich suburb; talk about robbing the poor to give to the rich)”

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  22. Martin Cheer appears fond of quoting old adages. He should consider the one that says “people in glass houses shouldnt throw stones”. It was Mr Cheer and Pub Charity who between 2004 and 2008 were found to be exploiting a loophole in the interpretation of the gambling act that related to GST and the calculation of how much their trust could pay venue operators (pokie bars). Pub Charity’s fiduciary responsibility to the community was/is to maximise returns to them, not employ high priced tax lawyers and experts to maximise returns to its pub owners. When found out, the DIA, instead of demanding the return of those funds from the trust to the community, congratulated other trusts who hadnt exploited the loophole and left Pub Charity unpunished! At the time of detection, Cheer was defiant in the media. Interestingly the gambling commission has recently had to remind the likes of Pub Charity and other gaming trusts that they are not commercial entities and that they should exist purely for the good of the community. Hope Mr Cheer took that on board.

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  23. Found a good 2012 pokie trust fraud on scoop. $605k. A “sophisticated” fraud depriving the communit of a lot of money.

    linky

    NoRightTurn linked to above seem to understand what the 80% rule means.

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  24. What? No response Mr Cheer?? Is it then not true that you have put more store into the commercial interests of pub owners than in the community which you now claim support – doesnt that put you into the same league as the rorters that you claim should be taken out of the industry?

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  25. Stuff:

    Requiring the industry to distribute 80 per cent of pokie profits back into the communities in which the machines are located would shave about $280 million off tax revenue and render the industry uneconomic

    In what universe does this bill shave anything anything off tax revenue? It makes no changes to tax revenue whatever. Editor of The Dominion Post: Fail.

    The list of people who our education system failed to teach to read gets longer by the day. I mean, reading. Thats all it takes.

    Even Denise’s submission linked to as offical Green Party stuff states “Maori Party MP Te Ururoa Flavell’s Gambling (Gambling Harm Reduction) Amendment Bill proposes to … raise the amount distributed from machines to the community from 37% to at least 80%” Thats just a bare faced lie.

    I’m normally a criticiser of ad hominim (or ad womenim) attacks, but come on Denise, you’ve known this stuff is all wrong for many days now and still it persists.

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  26. The Dom post editorial did state some disturbing facts on pokies rip-offs though …..

    ” more than half of the country’s gaming machine operators have been sanctioned by the Internal Affairs Department for breaching their legal and operating obligations”

    ” The incentives to engage in unlawful activity outweigh the consequences of getting caught”

    ” An industry that is supposed to operate for the benefit of the community is instead run for the benefit of the racing industry, some major sporting codes, pub owners, gaming machine manufacturers and the highly-paid sgtaff of some gaming machine societies”

    Clean it out and clean it up.

    A lot of the pokies frauds, thefts and general mess can be laid at the feet of Peter Dunne and UF.

    They set it up so people, generally in the liquor industry could rip it off.

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  27. Sure, thats what the Dom post says, but is it correct? It gets stuff that is easy to factually correct wrong, so is the rest believable?

    The first point you quote can be factually checked, as all compliance issues are reported through the DIA’s website. In the most recently six monthly report, there were seventeen compliance isses raised, some of which were indeed really serious, like “Concern about grants made outside of authorised purposes” and “Gaming during suspension of operator’s licence”, both these applying to an entire trust organisation, but most sere less serious, and relating to a single venue, example “Failure to notify the Secretary – change of venue manager”. That was indeed the most common complaint.

    So yes, the class four gambling scene certainly isn’t perfect, but it isn’t so terrible that we should just scrap the whole thing.

    A read of pages 5 and 6 of the DIA’s Gambits April 2011 edition (PDF) is recommended. This issue also has the list of snactionable offenses later on in the issue.

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