Increases to the proportion of revenue clubs and bars with pokie machines give to community groups will be delayed under a new Government proposal.

Internal Affairs Minister Peter Dunne said the possible breathing room for pokie operators came as they faced increasing financial pressure.

The rise of online gaming, lower drunk drive limits and stricter rules were possible factors he said.

"The levels of funding to the community from class 4 gambling have dropped significantly in real terms since 2004," Mr Dunne said in a speech to the Hospitality Association's annual conference in Nelson.


"We need to rethink the proportion of proceeds that societies give to the community. Some societies could go out of business because of the combination of higher fees, other cost pressures and a high proportion of proceeds required to be given back to the community.

"This would mean that the overall pool of money available for grants to the community would be smaller. We need to get the balance right."

The amount trusts must distribute to charity is 40 per cent of gross gaming machine proceeds, and that was due to increase up to 42 per cent by September 2018.

Mr Dunne has today released a discussion document with a preferred option to keep the rate of return at 40 per cent for up to a five-year period, with the increase to 42 per cent in 2022.

Maintaining the previous timeframe, cancelling increases all together or dropping the rate of return below 40 per cent are other options.

A delay would be a nod to industry concerns about increasing costs, and after Mr Dunne also confirmed fees paid by pokie operators would increase from December.

The Community Gaming Association had protested the fee increases risked "throwing the baby out with the bath water" and killing off community grants that are worth about $250 million a year.

The reason for the fee increase was that the Department of Internal Affairs was not bringing in enough money from fees to cover the costs of regulating the sector, with a shortfall of $9 million a year.


Pub and club gaming machines dropped from 20,120 in 2007 to 16,717 at the end of last year.

Gambling spend has not fallen significantly, but the DIA's revenue from operators has, as it is tied to the number of machines. The DIA has reported increased levels of fraud and other breaches in the pokie sector.

Mr Dunne said the proposed delay to increases in the rate of return were a short-term fix, and a larger assessment of the regulatory environment would be carried out, which could shed some red-tape and save operators money.

He has also asked officials to examine the reasons for the decline in the sector, and look at future forecasts and how that might affect community funding.