Corruption rife in pokie trusts system: Former director

Francis Wevers

[By David Fisher, NZ Herald]

   The former boss of the industry association representing pokie trusts says the system is corrupt and needs total reform.

   Former Community Gaming Association executive director Francis Wevers said the incentives to take advantage were too powerful. The result was "endemic non-compliance" and "corruption" in a business which had a turnover of $9 billion. About $850 million was distributed to the Government, the community and pokie trusts.

   The pokie trusts face extinction under a private member's bill brought by Maori Party MP Te Ururoa Flavell, which would strip the trusts of their powers and create a new system for distributing funding.

   His proposed bill creates a system where local government would distribute the cash with a focus on making grants to local organisations.

   The bill has led to pokie trusts organising a revolt among community and sporting organisations, using the spectre of disappearing funding.

   Mr Wevers said he believed a new system would lead to greater levels of funding going back to the community, though did not believe local government was the right conduit.

   He said the flaws in the current system gave the hospitality sector too much power, allowing host pubs to command too much of a share of pokie proceeds under threat of shifting allegiance to other gaming trusts.         "Right from the start, the hospitality sector has seen the requirement for money to go back to the community as an imposition."

   Mr Wevers said attempts to reform the industry failed as those involved "reverted to behaviour to maximise returns to venues" and trusts. "There were a whole of lot of people and lawyers assisting them who were looking at ways to avoid the law."

   He said trusts sought professional advice to create funding structures that worked around the law, arguing they were not forbidden by the rules. "What they were doing was corrupting the intent of Parliament."

   Mr Wevers said after leaving the CGA he had written a report highlighting the flaws in the industry which went to then-Internal Affairs minister Nathan Guy. He said there was a willingness to fix the system.

   In the report, he said more than half the pokie trusts were subject to sanctions by the Department of Internal Affairs after breaches of legal and operating obligations.

   Mr Wevers said sanctions were light and infrequent. They were seen as an "irritant rather than a disincentive" and "calculated as an affordable cost of business".

   He said it was critical Government found a solution because of the need for funding.

   "There are too many sports organisations that are so dependent on pokie money because they don't have any capacity to raise it any more from people who play the sports."

   Mr Wevers said eradicating pokie machines was not the solution; those who wanted to gamble would find furtive methods to indulge.

   He had made a submission to the select committee considering Mr Flavell's bill, recommending a new system for distributing cash. He believed it should be divided and tendered on a territorial basis with decisions based on those who offered the lowest level of expense and greatest return to the community.

   There also needed to be greater harm-minimisation measures, including swipe cards for players that recorded their level of gambling.

   A further measure he recommended - also in Mr Flavell's bill - was removal of the ability to fund racing stakes with pokie money. Gambling money being used as a gambling stake was "bizarre".

   Current CGA executive director Brian Corbett said he rejected Mr Wevers' views on pokie trusts but would not comment further.

   Internal Affairs Minister Chris Tremain, the third minister to hold the role in a year, refused to be interviewed. In a statement, he conceded "there may be wider concerns in the sector which need to be addressed".

Hamilton City Council votes to support Bill

   By a vote of 10-2, Hamilton City Council today, supported the thrust of the 'Flavell' Bill to remove pokie trusts from the role of distributing pokie machine profits, and place that job in the hands of a 'local, publicly-accountable, democratically selected entity'.

   Only the city's Mayor, and a Councillor with previous close links with the Waikato Rugby Union, opposed the move.

Mayor Hardaker supported pokie trusts

   The Council also supported the Bill's move to require at least 80% of pokie profits to be given back as grants to the local community, to improve gambling harm reduction measures, to give Councils power to license ALL pokie venues, not just new ones, and to end the practice of using pokie money to prop up race meeting prizemoney.
   At a meeting of the Council's Policy and Strategy Committee, discussion took place around the "rorts and ripoffs" associated with the pokie industry, with one Councillor describing his experience of dealing with pokie trust funding processes as being "close to corrupt."
  Evidence was given that Netball, with more players than Rugby Union, received only one quarter the amount of grants from pokie trusts, while sports and racing recieved 53% of all grants in the last year - greatly exceeding community and emergency services, or any other sector.
  Councillors were not convinced by industry 'scare tactics' suggesting that community and sporting groups would get less support under the Bill, and agreed that the current 40% return rate was pathetic, and "not balanced."

Richard Boock (Sunday Star Times 24/6/12) on pokie funding of sport

   IT'S HARD to parody sport these days. Seriously, the type of material that might have once brought down the house at a stand-up comedy festival is now being uttered with poker-like faces at business and management meetings. And the thing is, no-one laughs at all. Where once there would have been people gasping for air and weeping at the humour of it all, now there are just sage nods and frowns of concern. Nothing seems too absurd.

 

   The latest episode surrounds sport's reaction to an attempt to reduce gambling and gambling- related harm in New Zealand, via Te Ururoa Flavell's Gambling Amendment Bill. This is a plan to both lessen the negative effects of gambling in New Zealand and to better distribute pokie machines proceeds than they are at present. If the bill is passed, 80 per cent of the funds will have to be returned to the regions in which they were collected.

You might expect sport would support these types of noble objectives. After all, problem gambling is an ongoing blight within the community; sport is part of the community, therefore it stands to gain as much as anyone, right? Yes? Well, actually no. The way sport sees it, the more gambling we have, the more pokie machine money it can get its hands on, therefore the healthier its bank balance. It opposes change for specifically this reason.

   No, I'm not having you on. Earlier this month the National Sports Organisations Leadership Group, representing most of the country's biggest codes, lobbied its members to oppose the bill on the grounds reduced gambling would equate to reduced funding. Naturally enough, it also had massive problems with the redistribution proposal, sensing it would miss out there as well. Fewer funds for sport, it argued, was a greater concern than less problem gambling.

   Truly, sport's sense of entitlement knows no bounds. Even when it was pointed out to the NSOLG that its opposition to the Gambling Harm Reduction Bill was inappropriate, it chose to remain in denial. Chairwoman Raelene Castle recently tried to justify the stance on the basis that "gambling is a reality in every society in the world". It nicely summed up the group's sense of responsibility. If it's a reality and there's money in it, sport's happy to suck it dry.

   Maybe we shouldn't be too surprised. I mean, it's remarkable how far sport has been prepared to stray from its fundamental values in pursuit of cash. So much for priorities such as health, and physical and mental wellbeing. What a laugh. Sport routinely sells them off for all the money it can get. The NSOLG has been using those exact terms to justify its opposition to the gambling changes. It even had the gall to talk about how sport brings communities together.

   The real message? Essentially it's that the more gambling we have, the better off we'll all be. Because of sport, that is. And if that sounds bat-shit crazy then I can only say, it wouldn't be for the first time. Those with decent memories will easily remember the drama we had trying to wean sport off "Big Tobacco". The squeals of outrage, the cries of hardship, the warnings about grassroots' sport.

   Truth is, sport's never been able to do the right thing where money's involved. Neither has it been able to learn from its previous mistakes. Even now, it's so dependent on the booze industry it's lost any capability to see sense. Try suggesting a ban on alcohol sponsorship to the NSOLG and you'll likely get the same answer: "We simply can't do without the money; it'll ruin us." Sport's never been able to see the bigger picture.

   It's the same, too, with New Zealand sport's ongoing dilemma regarding Sky TV's near monopoly in the broadcasting market. When clearly, a move to support anti- siphoning legislation (guaranteeing free-to-air live coverage for selected "iconic" events) would be in everyone's best interests, few of our national sporting organisations can see past an initial drop in revenue. Nor the end of their nose, for that matter. What's best for them in the long run doesn't seem to compute.

   Still, what sport is saying to the country over the Gambling Harm Reduction Bill carries its inflated sense of self-importance to brazen new heights. It's akin to suggesting we don't want people smoking fewer cigarettes because it'll mean less tobacco tax. Or opposing moves to ease traffic congestion because it might mean less road tax. If you had John Clarke (Fred Dagg) reciting some of this stuff word for word, we'd all be in hysterics.         But no, the NSOLG wants us to take it seriously.

   Just as astonishing is sport's apparent newfound expertise in the field of problem gambling, and its intimate knowledge of best practice when it comes to a suitable funding mechanism. If you believe all you read, you could be forgiven for thinking that it's not simply opposing Flavell's bill for its own sake, but for the good of the wider community. That's right, it's just a coincidence that it stands to retain millions of dollars of funding if its objections are allowed.

   But the most insane part? That sport seems genuinely convinced people will accept its twisted viewpoint at face value, without considering its clear conflict of interest. That, like the emperor in the Hans Christian Andersen tale, it appears completely unaware of how much it's exposing of itself and its dodgy principles. That it can stand up naked in public and crack the most outrageous funnies, all the while keeping a straight face. Extraordinary stuff, indeed. Oh well. We can't laugh with it any more, that's for sure. But we can certainly laugh at it.

Pokies nothing to do with charity - Bob Jones

With friends like Bob Jones....

   The Prime Minister should reject casino conference centre's sleazy trade-off, writes Sir Bob Jones. The Lion Foundation is a charity only in the eyes of the law but it most certainly is not by any dictionary definition. 

   Taking money from zombies by stealth and paying it to worthy causes ain't charity. A charitable donation is one given voluntarily by the payer, which I'm sure is not the case with the dead-beats pumping money into these machines. The amount taken now exceeds $1 billion annually. 

   I recall having dinner in Sydney with a Chinese friend a few years ago. She had recently established a medical practice in Chinatown. "I'm just a social worker," she wailed. "My day is a non-stop series of desperate Chinese girls coming in on some medical pretence. But all they really want is to talk about the mess their lives are as a result of their husbands' poker-machine addiction."

   For full article, go to: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10813887

Pokie operators warned over lobby laws

   Newstalk ZB - Operators of pokie machines are being warned not to break the law around their lobbying.it comes after concerns have been raised about the way some representations have been made against Gambling Amendment Bill currently before Parliament.
   Minister of Internal Affairs Chris Tremain says he is concerned about misuse of gaming machine money.
   "But I am advised that the department has written to all gaming machine societies to remind them that gaming proceeds cannot be used for lobbying," he says.

Pokie Rorts Must be Stopped - Dominion Editorial

Graph sourced from Pub Charity 2011 Annual Accounts

   The gaming industry has been quick to highlight the glaring flaw in Maori Party MP Te Ururoa Flavell's legislative attempt to tame the pokie machine wild west.

   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.

   Presently just 37 per cent of machine proceeds are distributed to the community. The remainder is split between the Government in the form of taxes and the industry in the form of rents, salaries, machine hire and administrative costs.

   However, the flaw in Mr Flavell's gambling bill is easily remedied. The number 80 can be changed at the stroke of a pen. Neither Mr Flavell nor other parliamentarians should allow themselves to be dissuaded by the industry's campaign against the bill.

   When it comes to its own affairs, the industry has shown itself to be an unreliable witness. Commitments made are broken; laws and regulations are flouted.

   According to a report prepared last year by the former chief executive of the Charity Gaming Association, Francis Wevers, 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.

   For five years Mr Wevers served as the industry's mouthpiece, defending it against external criticism while working internally to try to clean up its operations. In his report, prepared for Nathan Guy, a former internal affairs minister, he effectively admits he failed completely.

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 staff of some gaming machine societies.

   Mr Wevers blames the "all pervasive and pernicious" corruption in the industry on its legislative environment. The incentives to engage in unlawful activity outweigh the consequences of getting caught.

   The harm caused by pokie machines is well documented. Gambling addictions devastate some communities. The supposed tradeoff is that those communities get funding for worthwhile projects.

   There is an element of truth to that. Many sports clubs and volunteer organisations have become almost totally dependent upon pokie machine funding. However, much of the money raised in poorer communities is distributed on the other, wealthier, side of town, and pubs and gaming machine trusts are inflating their costs to boost their bottom lines.

   The industry has been given ample time to get its house in order. It has failed to do so. It is time for lawmakers to take a hand. The business of operating pokie machines should be separated from the awarding of grants and operators should be held accountable for their failings. Mr Flavell's bill presents an opportunity to accomplish both objectives. His fellow parliamentarians should seize it.

- © Fairfax NZ News

Time to put the heat on pokie charities - Herald Editorial

   The scrutiny on poker machines and the damage they cause has never been more intense. Such has been the product of SkyCity's proposed convention centre deal and Maori Party MP Te Ururoa Flavell's Gambling Harm Reduction Bill, which passed its first reading in Parliament last month.In such circumstances, it might be expected that pokie charities would be doing everything possible to keep their noses clean. Not a bit of it, apparently. According to the Problem Gambling Foundation, they are using money meant for community projects to oppose Mr Flavell's bill. Such activity succeeds only in further undermining their position and adding weight to the legislation.

   It is easy to see why the gaming trusts strongly oppose the bill. Their very existence is threatened. It would strip power from the gaming trusts that dominate the pokie industry in pubs and clubs, placing the power to distribute the $300 million available to community groups in the hands of committees appointed by local councils. Further, 80 per cent of the poker machine proceeds would have to go back to the communities where the gambling took place.

   The latter aspect has much to commend it. At the moment, poorer communities suffer the consequences of this insidious and addictive form of gambling disproportionately. It makes sense that, as far as possible, the proceeds from pokies help those most harmed by them, rather than community groups, charities, schools and sports clubs in areas where they barely have a presence.         This may encourage the installation of more pokies in such suburbs. The relatively small number of users would, however, temper any such development. Equally, the 80 per cent threshold, rather than a dogmatic 100 per cent, provides flexibility in the distribution of money.

   It should be far harder to support the transfer of that distribution power from gaming trusts to local committees. Such an upheaval makes sense only if the pokie charities are not properly and fairly maximising returns to the community while minimising the harm caused by pokies.

Unfortunately, they are erring in rather too many cases. Two years ago, the Internal Affairs Department suggested that 30 of the country's 50 gambling trusts had "issues of non-compliance" similar to those of the Trusts Charitable Foundation, which paid more than $500,000 to one of its trustees to sign up new pokie venues.

   There has also been discontent over the vast sums going from poker machines to trotting clubs in a way that has raised questions of conflict of interest. In 2009, three trusts were banned from giving any more money to four trotting clubs after their grants to them soared from less than $500,000 a year to $5.4 million over two years.

   Issues of transparency and non-compliance raised by these episodes have been compounded by the money apparently being used to oppose Mr Flavell's bill. Rules governed by the Internal Affairs Department stipulate that pokie proceeds should be spent on reasonable and necessary purposes. It is difficult to see how this spending qualifies. Ethically, it is certainly unsustainable. Money meant to be returned to community groups or to fund harm minimisation measures is being used unconscionably.

   It hardly helps that the Pub Charity Incorporated chief executive insists that the harm caused by pokies is overstated. An abundance of research suggests this is far from so.

The pokie charities' behaviour is self-destructive. It may be all the more reckless given that parties should, by convention, allow their MPs a conscience vote on gambling issues. They will have only themselves to blame if Mr Flavell's bill gains far more traction than initially seemed likely.

Northland communities short-changed by 'Pokie Trusts'

Denise Roche MP

Community and sporting groups in Northland stand to benefit by nearly $10 million annually if a new Bill currently before Parliament is supported, Green Party gambling spokesperson Denise Roche said today.

The Gambling (Gambling Harm Reduction) Amendment Bill is a Private Members Bill put forward by MP Te Ururoa Flavell, which was supported by 85 votes to 7 at its first reading in April.  The Bill will require councils to set up independent committees to distribute funds from the pokie industry.

“Pokie trusts operating in Northland only return an average of 39% of the $26 million lost annually into their pokie machines back to the community,” said Ms Roche.

"The rest is used by the pokie trusts for admin costs, including directors' fees, or goes back to the government in GST and levies.

"The new Bill will change this situation, requiring a higher rate of return of 80% to the local community, or almost $21 million annually in Northland’s case.

“Pub Charity, one of the two largest pokie trusts in Northland, returned only just over the legal minimum of 37.12% of money lost in its pokie machines to community and sporting groups,” said Ms Roche.

"Pub Charity alone would have to hand over about $4 million extra a year to Northland groups if the Flavell Bill goes through.”

"Pokies are the most harmful form of gambling, but as we recognise they will be around for some time, it is vital that any benefits gained offset harm they cause in the communities affected.”

Ms Roche was also pleased that the proposed legislation would clamp down on pokie money being recycled into the gambling industry via donations to support horse-racing and would introduce systems on pokie machines designed to reduce addiction problems.

Submissions on the Gambling (Gambling Harm Reduction) Amendment Bill to the Commerce Select Committee close on 21 June, with hearings expected to be around August. The Green Party supports the Bill.

Pokies and Porkies

Te Ururoa Flavell MP

Am I the only one who thinks 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.
- Green Party MP Denise Roche

Pokie trusts accused of misusing community cash

[By David Fisher, NZ Herald, 6/6/12]

   Pokie charities have been accused of using money meant for community projects to oppose a proposed law 

change which threatens their survival. A complaint has been lodged with the Department of Internal Affairs asking if gaming trusts were legally entitled to spend money to oppose a bill which seeks to reform the gaming industry. 

   The gaming sector's lobbying has had an effect on senior Cabinet ministers, said Maori Party MP Te Ururoa Flavell, who drafted the bill. Mr Flavell's private member's bill would strip power from the gaming trusts which dominate the $700 million pokie industry in pubs and clubs.

   It would put power to distribute the $300 million available to community groups in the hands of local authorities, wiping out the current funding bodies. The bill also aims to increase harm prevention measures and to increase the amount of money returned to communities which host pokie machines.

   The gaming trusts which distribute grants have been organising meetings and started an online campaign seeking support to overturn Mr Flavell's bill. The campaign included a website, barthebill.co.nz, created by Pub Charity Incorporated and emails from the Lion Foundation urging opposition.

   Problem Gambling Foundation chief executive Graeme Ramsey said he had complained about money being spent by the trusts on opposing the bill. He said the rules, governed by the department, stipulated pokie proceeds should be spent on reasonable and necessary purposes.

   "It is very questionable as to whether this meets that purpose," Mr Ramsey said.

He said the gaming sector was rallying because the bill "absolutely threatens their survival".

"Turkeys don't vote for Christmas," he said. "They are running seminars and encouraging grant recipients all over the country to put in submissions against it."

   Green Party spokeswoman on gambling Denise Roche accused gaming trusts of bullying community groups to put in submissions. She said she knew of one group which had been told by four different funding bodies in one week to put in a submission.

   The submissions were publicly declared and would allow gaming trusts to see who had opposed the bill.

   Mr Flavell said he drafted the bill because of the negative effects gambling had on Maori, Pacific and lower socio-economic communities. He said it had also become clear the gaming trust system was flawed.

   "Some of the trusts are straight out and out rorting the system. There are a number of trusts getting away with murder."

   Mr Flavell said he was concerned opponents of the bill had made statements which he believed were untrue. "Scaremongering" was counter-productive to the debate around pokie trusts which the public needed to have. He said he knew of senior Cabinet ministers being approached by the gaming sector and told of flaws in his bill.

   He expected the bill to go through changes as part of the select committee process, under which the public would have the opportunity to debate pokie machines, their proceeds and how they were distributed.

BigFatLies vs the Real Oil

The pokie ‘trusts’ are spending megabucks of public money on fighting this Bill – this Lion Foundation newsletter is an example.

Their future, and their fat directors’ fees and salaries, are at risk – so the fibs and half-truths they will tell will try and convince the public to keep their cosy little (or not-so-little) nests intact.

BigFatLie: Pokie ‘trusts’ are claiming a few minor ‘tweaks’ will fix all the problems. Real Oil: if so, why haven’t they made those tweaks themselves any time over the last 20 years?

BigFatLie: Pokie ‘trusts’ claim they are already heavily regulated and don’t need any more restrictions. Real Oil: So why are some pokie trusts paying out less than even the pathetic 37% of income as community grants.

BigFatLie: Pokie ‘trusts’claim the biggest impact of the new law will be on ‘community groups’. Real Oil: So how does that work if most of their grants are going to sports?

BigFatLie: Pokie ‘trusts’ claim Council-organised distribution systems will return less to the community, and be less accountable. Real Oil: only 41% of pokie trust income goes back to the community – 100% of Creative NZ and Hillary Commission funds run by Councils went back to the community.