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Raj Krishnan became Director, Gambling Compliance in July when Debbie Despard moved to the New Zealand Transport Agency. He reflects on 2014 and looks to 2015.

As another year comes to a close, it’s a good opportunity for me to reflect upon my time as the Director, Gambling Compliance. I’ve really enjoyed my time in the role over the last few months and am looking forward to continuing through 2015.

The Class 4 sector is going through a period of change, and there are challenges on the horizon. We know machine numbers are declining for a number of reasons, and whether this decline will continue or start to stabilise is unknown. Coupled with the need to increase returns to 40 per cent, pressure will be put on the financial sustainability of a number of venues and societies. Over the past few months I have enjoyed meeting with societies to discuss their strategic approach and how they are positioned to meet these challenges. We will be keeping a close eye on the impact that these changes have on funding from the Class 4 sector to communities, ensuring we can effectively inform future regulatory reform.

These challenges will also allow opportunities for innovative thinking and practices to emerge. This is exciting, and we will continue to engage with organisations about how this innovation might be applied. However, we are absolutely committed to preventing unhealthy competition and illegal practice in the sector. Such acts bring into question the integrity of the sector, and undermine the good work that is happening out there for the benefit of our communities. As recent media coverage has shown, we will not shy away from taking enforcement action against those who willingly do not comply.

At the recent regional forums I also took the opportunity to discuss how we see our role as the regulator. We want to make it easy for people to comply with the law, and help those who are trying to comply. This means reviewing our own practices to ensure we are making it easy for our stakeholders, and that we are effective in our communication. We won’t always get it right, but we will continually improve as we work towards being a responsive regulator.

In the casino sector, 2014 was the year to review and redevelop our operating model. We have adopted internationally-led best practice and moved to a risk-based model which allows better targeting of high risk activities and non-compliance that may lead to gambling harm, opportunities for crime or that may undermine the integrity of casino gambling. By focusing on these specific work areas, we are better able to change and adapt our regulatory work in order to manage a changing environment. Casino compliance staff identified a number of initiatives within the focus areas (and continue to do so) and are creating new solutions and activities that target risk in a different and high impact way. Examples of these initiatives include: a review of the audit programme to ensure that our audits are relevant and properly targeted; better analysis of data in order to identify risk and trends; and enhancement of our relationships with problem gambling services providers.

In conclusion, we should not overlook the significant benefits that gambling provides to communities throughout the country. We want to maximise returns to the community whilst ensuring it comes at the lowest level of cost and harm. There are a number of organisations and individuals in the sector who are aligned in this thinking and working hard to make sure it is a reality. We acknowledge and appreciate your efforts.

Some societies have asked for clarity about the circumstances in which Class 4 venues may operate gaming machines on days where the sale of alcohol is restricted. These days include Christmas Day, Good Friday, Easter Sunday and ANZAC day.

The Gambling Act 2003 does not prescribe any explicit restrictions on the days or hours of operation of Class 4 venues. But the Gambling Act 2003 requires that:

• Gaming machines may only be operated while the ‘primary activity’ at the venue is offered and available; and
   
• As long as all other Class 4 gaming obligations including requirements of the Act, licence conditions and game rules are met.

When a venue’s ‘primary activity’ is not ‘offered and available’ gaming machines cannot be operated.

The nature of a venue’s ‘primary activity’ will depend on that venue’s specific business and is heavily fact dependent. A venue’s ‘primary activity’ may entirely or partially rely on the sale, supply and consumption of alcohol. However, venue primary activities may also include the provision of food served on the premises (e.g. restaurants), or the provision of sports, recreation or entertainment facilities or a combination of these activities. A venue cannot be used mainly for operating gaming machines.  

Venues which are primarily or exclusively used for the sale, supply, and consumption of alcohol (such as taverns) will not be considered to have their ‘primary activity offered and available’ if the alcohol licence does not allow the sale and consumption of alcohol by customers on the premises. As the ‘primary activity’ of the venue is not ‘offered and available’, the venue is not permitted to operate its gaming machines.

For any venue where the primary activity continues to be ‘offered and available’ despite restrictions placed on the venue by its alcohol licence or other legislation, as long as all other Class 4 gambling operation obligations are met, the venue can operate its gaming machines.

Where a venue continues to offer and make its ‘primary activity’ available to customers (subject to the venue’s alcohol licence restrictions) usual staffing and operating procedures may change. When this occurs, venues need to ensure that they continue to operate in a manner and with sufficient staff to enable them to meet their Class 4 gambling operation obligations (for example, gambling area supervision requirements).

Societies may wish to check that the description of a venue’s ‘primary activity’ on the venue licence is accurate. The Department is aware that a number of venues have had their primary activity incorrectly stated and that there has been particular confusion with the use of “Hotel”. 

The following information may assist societies to select the most accurate description:

• Hotel - a venue whose primary activity is the provision of lodging and ancillary to this alcohol, meals, and refreshments
   
• Tavern - a venue whose primary activity is the provision of alcohol and other refreshments to the public
   
• Restaurant - a venue whose primary activity is the provision of meals to the public for eating on the premises

Our Licensing team is available to work with societies in the New Year to correct any inaccurate descriptions.

To sum up, the decision whether a venue can operate its gaming machines is heavily fact dependent. Generally, a tavern’s primary activity depends on its ability to sell alcohol to its customers. When alcohol cannot be sold or consumed gaming machines cannot be operated. This applies even if alcohol is being served to diners, on days such as Christmas day, where the sale of alcohol is restricted. For other venues that can continue to operate their ‘primary activity’ subject to alcohol licence restrictions (e.g. hotels that primarily provide accommodation, pool halls, bowling alleys or restaurants) gaming machines may continue to operate provided all other Class 4 gambling operation obligations are met.

Foreground: L to R - Gambling Inspector Naomi Ellicock, Sergeant Shane Benge, Regional Public Health Regulatory Officer Jayne Parris and Senior Sergeant Steve Sargent review their findings. Team Leader Rick Mead talks to venue staff in the background.

Two recent inter-agency operations targeting venues from Upper Hutt to Wellington identified areas of excellent practice, particularly in the CBD. But there was also a significant level of gambling and private security law issues.

The Department’s Central Gambling Compliance team joined forces with the Wellington District Police Alcohol Harm Prevention Office and Regional Public Health on two recent nights to focus on gambling, private security and sale of liquor offences.

Team Leader Rick Mead said the collaborative effort was the first of its kind in Wellington and gave the agencies the opportunity to get a complete view of each venue’s level of compliance.

“It also means we now have a greater understanding of each agency’s priorities so we can continue to work together and share information and resources,” Rick said.

It is hoped similar operations will become a regular occurrence.

There are less than 12 months to 1 December 2015 when Class 4 non-downloadable jackpots must cease operation, as detailed in the December 2010 edition of Gambits (page 13).

A new version of the Minimum Technical Requirements for Class 4 Linked Jackpot Systems was notified in the NZ Gazette and took effect from 2 December 2010, requiring all new jackpots to be downloadable and allowing existing, licensed non-downloadable jackpots to operate until 1 December 2015.

Manufacturers have advised the Department that lead times for replacement can be up to two months. We suggest that if you intend to replace your current non-downloadable jackpot with a downloadable jackpot, you give some thought to planning the changeover, such as the associated costs and installation times.

Casino game rules have been amended to incorporate two new games, “Electronic Baccarat” and “Electronic Tai-Sai” following an application by SkyCity Management Ltd.

The changes were made by the Secretary for Internal Affairs, under section 367 of the Gambling Act 2003, after consultation with interested parties and careful consideration to ensure the rules would be consistent with the Act's purpose to prevent and minimise the harm caused by gambling. 

The rules are available on the Department’s website.

The Department will be closed from Thursday, 25 December, 2014, to Monday, 5 January, 2015 when it reopens for business.

Season’s Greetings to everyone and we look forward to a productive and constructive relationship in the year ahead.