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Issue #58, March 2015

Download a text only version of Gambits.

Gambling Amendment Bill (no. 2) now law

The Gambling Amendment Bill (no. 2) has received the Royal Assent and came into force on Tuesday 3 March as the Gambling Amendment Act 2015. It includes significant amendments to banking of gaming machine profit and harm prevention and minimisation provisions. Further information on other aspects of the Act will be communicated to the sector in due course.

Banking of Class 4 Gaming Machine Profits

GMP to be banked directly into society bank account

Section 104 of the Gambling Amendment Act specifies requirements for the banking of Class 4 gaming machine profits. The main change is to clarify that a Class 4 venue manager must bank gaming machine profits (GMP) directly into the gaming machine society’s bank account.

The amendment is intended to ensure that GMP is not used for cash flow for the primary business at Class 4 venues, thereby reducing the possibility of loss of GMP.

Historically, late or non-banking of GMP has occurred as a result of cash generated by the gaming machines being used to run the primary business, and there being insufficient funds available on the final day for banking of the GMP. A number of these instances have led to a loss of GMP when the primary business has folded owing substantial debts.

The Department’s approach to regulating the new banking requirement

Our primary concern is ensuring that the objective of this provision is realised – that money from gambling is banked as soon as possible in order to protect the integrity of gaming machine funds. We will therefore work with Class 4 operators to best determine a practical approach to ensuring that this happens. We are keen to hear society’s views on this matter, including what the current practices are in managing cash and banking at their venues. The Department will soon confirm with societies how consultation will take place.

We recognise that there are now various cash management practices across Class 4 venues, including EFTPOS becoming the primary transaction in paying for goods and services. This has led to less cash being available at venues to operate the primary business. This has resulted in some practices which possibly contravene the Gambling Act (Class 4) Game Rules (game rules) around the use of the gaming machine float.

A revision of the Class 4 game rules is under way. This will include the rules around cash floats and the use of cash generated from the gaming machines. In the meantime, we will continue to monitor and implement our current policy around the late or non-banking of GMP.

In the interim, we suggest that all Class 4 societies prepare for consultation with the Department by reviewing their processes to assess whether they comply with the new requirements of section 104.

The Department must be advised if late banking occurs

The amendments to section 104 also clarify processes for notifying the Department if late banking occurs.

Essentially, if late banking occurs:

  • the gaming machine society must now advise the Secretary of the late or non-banking of GMP (previously the requirement was to advise the Secretary of the disconnection of the machines); and
  • the gaming machine society has the option of disabling the machines themselves and notifying that this has been done, or can request the Secretary to disconnect the machines.

It is normal practice to have machines disabled, via the EMS, through a request from the society to Intralot. It is recommended that this approach continues, but if a request is made to the Secretary to disable via the EMS, this will be done and the associated cost levied by Intralot will be passed on to the society.

Contact your liaison officer in the Department if you have any queries.

Harm Prevention and Minimisation

Ongoing duty to provide assistance to problem gamblers

A new section 309A has been inserted into the Act that places further obligations on casino and Class 4 venue staff to assist gamblers who demonstrate ongoing concerns about their gambling or other behaviour at the venue.

Essentially, it is not enough to approach a gambler just once about their gambling, provide information about problem gambling, and then take no further action if there are ongoing concerns about their behaviour. Rather, the new provision creates an expectation that further steps will be taken to provide all possible assistance where ongoing concerns about an individual’s gambling exists. If appropriate, these further steps could include providing the gambler with further information about problem gambling or issuing them with an exclusion order.

This measure reinforces the duty-of-care responsibilities casino and gaming machine operators owe to their customers.

Self-excluding problem gambler must provide re-identification information

The Act continues the requirement for exclusion orders to be issued by casino and Class 4 venues to persons that request them.

However, a person requesting an exclusion order must now provide sufficient information to enable them to be re-identified by the casino or Class 4 venue if they attempt to breach the order.

Specifically, a venue manager or holder of a casino operator’s licence, or a person acting on behalf of either of those persons, may refuse to issue an exclusion order if the person requesting the order fails or refuses to comply with a request to:

  • provide their name and date of birth; and
  • either provide a recent photograph or consent to a photograph of him or her being taken; or
  • the quality of the photograph referred to above is such that the person cannot be readily identified.

The provision was introduced as a practical measure to provide a robust exclusion process for venues.

New wording for offences

The Act provides new wording for section 312 of the Gambling Act, which sets out the offences relating to breaches of the exclusion order requirements.

The new wording changes the onus of proof for a charge relating to an exclusion order. Previously, it was an offence to allow a self-excluded gambler to enter the gambling area of a venue, but only if a person knowingly allowed this to happen. This high standard of proof is usually associated with truly criminal offences with high penalties, rather than public welfare type offences like section 312.

The limited scope of the old wording meant that venue personnel who made little attempt to put in place procedures to monitor the exclusion orders they had issued, may not have been held liable if excluded gamblers enter the premises undetected as a result. This undermined the purpose and effectiveness of the exclusion regime. 

Accordingly, the nature of the offence has been changed so that an offence is committed if a person who is subject to an exclusion order enters the gambling area of a casino or Class 4 venue. However, there will be “an absence of fault defence” for situations where the defendant (venue manager or holder of a casino operator’s licence or a person acting on behalf of either of those persons) has acted reasonably (that is they had reasonable grounds to believe there were effective procedures in place to prevent excluded gamblers from entering the venue and took all reasonable steps to ensure that the procedures were complied with). This is consistent with the Act’s approach to under-age gambling offences.

Other changes

Section 310 has been amended to clarify the effect of a problem gambler exclusion order once one has been issued. It states that when a self-identified problem gambler requests exclusion, it is from just the “gambling area” at the venue rather than the whole of the venue. As an example, this would enable an excluded gambler to visit a restaurant at a casino complex but not the casino gambling area.

A new section 312(A) has been added to the Act. This is a new requirement, particularly for Class 4 operators, whereby they will now be required to hold records of gamblers excluded from any of their venues. Currently, records only need to be held at the individual venues. It also requires them to make records available to the Secretary on request of the Secretary. We encourage you to start thinking about ways in which you can comply with this requirement and contact your liaison officer in the Department if you have any queries.

Safer Gambling Venues

Minimising the harm from gambling is a challenging yet vital task faced by gambling operators. Gambling operators have an obligation to provide safe gambling venues.

The Gambling (Harm Prevention and Minimisation) Regulations 2004 clearly place responsibility on societies to provide problem gambling awareness training to the venue manager or any other personnel to ensure there is always a trained person at the venue when Class 4 gambling is available.

Gaps in how venue staff identify and manage potential problem gamblers were highlighted in the Department’s Mystery Shopper initiative last year. The exercise saw undercover gamblers sent to casinos, pubs and hotels to assess how staff reacted to signs a person may have a gambling problem.

The results showed there is room for improvement in this area, and we are aware that a number of societies are working with their venues to improve harm minimisation practices. We are also encouraged that a number of societies are willing to talk to each other about the opportunities that exist – as harm minimisation is a challenge common to all.

Health Promotion Agency involvement

The Department is also considering other initiatives to support the promotion of safer gambling at venues. One of the key areas we have already looked at is the training provided to venue staff. An initial assessment of the material indicates there aren’t significant gaps with the harm minimisation content, so we are keen to work with you to identify other factors that may be affecting how staff interact with gamblers. Our work with the Health Promotion Agency (HPA) will help guide our next steps.

The HPA has three streams of work that are being developed to help venues meet their host responsibility standards. The three streams are:

  1. Social Permissions Campaigns – a public facing in-venue campaign that promotes and supports the host responsibility that staff have in the gambling venue;
  2. Harm Minimisation material – a refresh of signs and pamphlets that must be available to gamblers in venues;
  3. Best practice guidelines and top tips – one document that captures best practice for Class 4 venues, supported by a user-friendly top tip’s tool that offers all staff a number of practical actions they can incorporate into their day-to-day customer care activities.

The HPA has started meeting with a number of societies that expressed an interest at the regional forums in developing this work and will shortly be undertaking some interviews with venue staff and gamblers to ensure that the messages and materials will be useable. If you would like more information on the work being undertaken by the HPA, or would like to meet with them, please contact Hannah Booth, Manager Minimising Harm at H.Booth@hpa.org.nz

Banknote upgrade

In November 2014 the Reserve Bank provided details on the banknote upgrade planned to begin this year. Key points from the update were:

  • The upgrade is to improve security features;
  • Targeted date for release of $5 and $10 notes - October 2015;
  • Targeted date for release of $20, $50, $100 notes -  April 2016;
  • A mix of old and new notes will be in circulation;
  • Based on the rates of issue, it will take 12-18 months for the majority of notes in circulation to be replaced by new notes.

What does this mean for clubs and societies?

  • The introduction of the new notes may require gaming machine note acceptors and banknote dispensing machines to be upgraded or updated.
  • As the notes will be issued in two phases and the old notes will remain in circulation for some time, we would encourage societies to consider a strategy to update or upgrade their machines that minimises costs. This could mean, for example, minimising the number of technician visits for machine upgrades.
  • Clubs and societies may wish to contact manufacturers of any relevant equipment to discuss this, particularly with regard to potential cost implications. The Reserve Bank website has a section with more details on the upgrade including Q&As.
  • Options to discuss with equipment providers could include updating machines only during the second issue* or spreading updates (and costs) over a two-year period.  

*Analysis of the 2013 gaming machines data shows that approx 81 per cent of the notes used are $20 (with $5 and $10 notes making up approx 6 per cent and 13 per cent, respectively).

Cost impact

Some clubs and societies have asked the Department to clarify whether the cost of any updates for note-reading equipment should be fully expensed in the year of purchase (on revenue account), or instead treated as a capital asset with a depreciation expense claimed in each year across the useful life of the asset.

We consider that clubs and societies ought to make their own determination on how best to account for the purchase of any note-reading equipment upgrades, in accordance with their ordinary accounting obligations.

If a club or society considers that a note-reading equipment upgrade does not change the overall character of a gaming machine and enables the gaming machine to achieve its expected operational life, then the cost of the upgrade to the machine could be expensed in its entirety in the year of purchase.

Alternatively, if a club or society considers that a note-reading equipment upgrade adds significant value, changes the nature of a gaming machine, or provides an additional benefit with a useful life of more than one year, then the upgrade purchase could be capitalised with a depreciation expense claimed in each year across its useful life.

If your club or society is still unsure as to whether any note reading equipment upgrades should be expensed or capitalised, we recommend that you seek guidance from your accountant.

Armed robbery response training

We have received an increasing number of queries from societies asking if providing armed robbery response training for venue personnel can be claimed as an actual, reasonable and necessary expense.

The Department is aware that there is an increased risk of armed robbery, particularly in urban and suburban areas such as South Auckland. We are concerned about the safety of venue operators and their staff in these circumstances and therefore consider that the reasonable cost of providing armed robbery response training for venue personnel is a necessary cost of conducting gambling in relation to many venues in New Zealand. 

We encourage societies to work with venue operators and venue managers to minimise the amount of cash held at Class 4 gambling venues to help keep venue personnel safe.

Change to availability of EMS reports

EMS (Electronic Monitoring System) .pdf reports will now be available to societies for much longer than previously on the EMS website. This will reduce societies’ expenses if older reports need to be obtained and means:

  • daily reports are now available online for six months
  • weekly and monthly reports are now available online for 12 months.

Reports older than these retention periods will still need to be requested as per the instructions on the EMS website.

Sector insights - Venue Transfers

This is a new section of Gambits focused on using the administrative data we have to provide insights into the gambling sector.

Our first detailed insight is into the transfer of venues between societies. This data can be found on the gambling statistics webpage titled Venue transfers by society and by territorial authority.

This link provides you with the gains and losses for each society over the 2014 calendar year as well as the venue transfers within territorial authorities. The data is then broken down into two 6 month periods (Jan – June 2014 and July – Dec 2014). The tables highlight where venues have transferred and the scale of transfers, relative to the number of venues a society has licensed. Venue transfers go to the heart of competition within the sector. The level of competition provides an indication of the health of the sector.

The legislation establishes a regime where societies compete for venues to raise revenue for their good community causes. Venues may also transfer to particular societies based upon the society’s compliance history and the services they provide.  Importantly, the reimbursement by a society to a venue for hosting gaming machines ought not to increase through the transition from one society to another. Reimbursement must be actual, reasonable and necessary. An area that is problematic from a compliance perspective is the illegal use of other incentives to secure venues such as promissory grants, cash payments and entertainment/hospitality.

For the 2014 calendar year, the data shows:

  • 76 venues were transferred within 29 TAs;
  • 39 TAs had no transfers;
  • The 76 venues that transferred represent 7.5 per cent of the 1008 non-club venues in New Zealand;
  • Auckland, which has 19 per cent of all non-club venues (189/1008), had the highest number of transfers in 2014 (30);
  • Transfers in Auckland account for 16 per cent within the TA

The graph below illustrates the total number of non-club venues with the amount of GMP they generate and the pattern of venue transfer of the 2014 period. The pattern highlights that the rate of venue transfers was relatively consistent across high and low GMP generating venues.

Graph showing total non-club venues vs. venue transfers by GMP in 2014

View a large version of this graph.