Kiwis pumped $843 million into pokie machines last year, with 40 per cent going back into the community. It's supposed to be a win-win - but the Government is poised to overhaul the system as it balances grassroots funding and rising addiction levels. By Bethany Tiddy.

It

was 5pm and the store was ­quiet. Susan* had been waiting all day to hit the pub and she needed ­money. She logged on to her computer and created a fake ­customer, to whom she gave a refund of $300, crediting the money to her own eftpos card.

Grabbing her handbag, she left the store and caught the No 91 to her home in Kilbirnie, Wellington.

The bus hissed to a stop and Susan stepped off. At her usual ATM, she filled her purse with a stack of $20 notes and continued around the corner to a bar. Inside, she slid onto her favourite ­leather stool.

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Thirteen pokie machines twinkled at her with a promise of another big win.

Meanwhile, on the other side of town, Michael* was on his favourite stool, also playing the pokies. He'd taken the day off work again. His workmates had ­noticed he had lost weight. One of them assumed he had cancer.

He let them ­believe the lie, especially when they started throwing thousands of ­dollars at him for "treatments". He sat on the stool from 10am-8pm without eating or going to the toilet.

In 2012 Michael pleaded guilty to eight charges of dishonesty and was jailed for three years.

Three months before that, Susan was sentenced to seven months' home detention and 300 hours' community work.

Over two years she had fabricated hundreds of fake customers and ­deposited more than $130,000 into her own bank account.

In the months after her conviction, Susan was confined upstairs in her home with an electronic ankle-attachment that monitored her every move. She couldn't do the gardening or pop out to pick up milk.

"People don't realise how hard it is. I was petrified all the time," she says.

Susan and her husband had to sell their two-storey home and move to a cheaper place.

Four years later they are still paying the mortgage on their new house, but Susan counts herself lucky she didn't get sent to jail.

Michael spent three years in jail ­before he was released in 2015. He now lives alone in Wellington.

"I'm 54 years old, living in a dingy flat. I'll never have a retirement savings.

"My life is crap. This has devastated my life."

Susan and Michael are among the 80,000 New Zealanders the Problem Gambling Foundation believes are addicted to gambling.

Kiwis lost $843 million to pokie machines last year. About $300m of that went straight back to the ­community, funding everything from ambulances to footballs for kids.

The Government is poised to announce the results of a review launched last year of non-­ casino gambling, or pokies - known as "class 4 gambling".

The aim was to look at the long-term sustainability and effective allocation of funding to communities. It also set out to assess whether the legislation is still fit-for-­purpose, whether the sector can be regulated more cost-effectively and how to prevent and minimise harm from gambling.

From June to August last year the public made 750 submissions. The key issues are ­expected to be put before ministers next month. After that, the Government will decide on the next steps.

One group arguing strongly for pokie machine reform is the Problem Gambling Foundation. It says although the 2003 Gambling Act has been successful in limiting pokie machine gambling, more needs to be done.

It suggests tighter controls over pokie machine operators and the hours of operation in venues. It wants training and auditing be conducted independently, greater penalties for non-compliance, more transparency about where the money goes and a higher priority to be given to harm ­minimisation.

The foundation wants pokie machines to have a "pre-commitment" as a ­required feature of play, in which users set their own limits in time spent or money lost.

It also worries there are too many ­fingers in the pie - community grants are channelled through 37 ­societies or trusts and the Foundation wants fewer and less competition between them.

"I am comfortable with the current problem gambling levy rate", says Peter Dunne. Photo / Mark Mitchell

All of this would be likely to see funding vital to community groups slashed - a trend already evident with the explosion of online ­gambling that punters can enjoy at home.

During the time Susan was on home detention and Michael in jail, the Lion Foundation funded many local charities, including the Life Education Trust, a charity which educates children about health and nutrition.

CEO John O'Connell says 40 per cent of its national income comes from trusts like Lion Foundation.

The grants fund rent, ­educational ­programmes, operat­ing costs and part of the ­salaries of the ­educators. "Without it we would struggle to operate."

And therein lies the rub.

Pokie machines were introduced to New Zealand in the 1980s. They have become a feature of many pubs, clubs and sporting venues, tucked away in discreet, walled-off corners around the country.

There are about 16,000 pokies in New Zealand (outside of casinos). Some 3000 are owned by sports clubs and RSAs but the bulk are owned by community trusts.

They're supposed to be a bit of harmless fun, where those bored with the horses can get a bit of a flutter.

But there's big money at stake.

Of the $843m spent in the slots in 2016, $737m was lost in bars and pubs and $106m was spent in private clubs, according to figures released by the ­Department of Internal Affairs last week.

A quarter of the cash goes towards Government duties, levies and licensing fees.

About a third goes on trust operating costs and salaries, and to the venues that host the machines. A small portion - about 1.3 per cent - is set aside to help the 80,000 addicts.

The biggest chunk - some 42 per cent or about $300m - is funnelled into community organisations all over the country.

Sports groups are the big winners and get about $122m each year. Health and education groups get $34m, and ­community groups (anything from the New Zealand Machine Knitters Society to the Horowhenua and Kapiti Toy Dog Club) get $44.5m.

Art groups get around $10.9m and community services get $10.1m.

The trusts that distribute the ­money are listed on charities' websites.

Their logos are printed on flags waved at children's sports games and footpath signs at the entrance of bars and pubs.

The word "gambling" is replaced by "gaming".

The largest three, New Zealand ­Community Trust, the Lion Foundation and Pub Charity Limited, operate ­nearly half the venues and pokie machines.

The Lion Foundation says it returns 90 per cent of its money to organisations within 5km of the bar where it was spent.

A big chunk of Susan and Michael's losses probably went to sports. Lion Foundation donated $10,000 to ­Athletics Wellington in 2013.

Its sport development manager, Jo Murray, says it has had a major impact on sport in Wellington, including access to the Newtown Park.

"It means we don't have to charge groups and schools extra to use the park."

Athletics Wellington was once run by volunteers, but can now employ ­workers like Murray, whose own salary is paid by pokie money.

But there is conflict at play.

"It would be nice to receive funding from a good place," says Murray.

"Where else do you get it from?"

It's a view shared by Mary Ansell, CEO of StarJam, which helps young people with disabilities through music and ­performance workshops.

It got $7500 from Lion Foundation in 2013, which it used to pay rent for its Auckland office.

Ansell says StarJam could not do without the funding, which provides "huge relief".

"It's a dilemma when it's so difficult to get funding. Problem gambling is an issue. We trust that the pub charities are doing what they are legally bound to do."

But are they? An undercover sting by Internal Affairs last year found 101 of 102 venues failed to stop a person who had clear signs of gambling addiction from playing the slots.

Critics say there is too little ­attention and funding given to helping the ­victims of gambling.

Problem Gambling Foundation ­public health manager Pesio Ah-Honi Siitia says there is growing unease ­within community groups about accepting grants.

"People do not realise where this money comes from, then they realise, then they're stuck.
"It's an ethical dilemma for a lot of people."

Lion Foundation's motto is: "Here for good".

Its head of partnerships, ­Marcus Reynolds, says it takes the ­approach that the money belongs to the ­community and they simply return that money in the most efficient and ­effective way.

Marcus Reynolds says,
Marcus Reynolds says, "One problem gambler is one too many." Photo / John Borren

"Problem gambling is a joint ­responsibility between the venue, the trust, the gambler, the Department of ­Internal ­Affairs and problem gambling ­agencies.

"There are a number of factors that make up and motivate the behaviours of a problem gambler, some of which will only ever be understood by the gambler themselves."

He says Lion Foundation would ­prefer to focus its efforts on finding ­solutions and that "one problem ­gambler is one too many".

Reynolds says Lion Foundation trains venue bar staff how to identify a problem gambler - a person who takes very few breaks, shows signs of ­distress, personalises machines, frequently takes cash out at the bar or nearby ATM, or claims the machine is ­malfunctioning.

Staff are expected to do a "sweep" of the bar every 15 minutes to find a ­problem gambler. They are encouraged to approach the person, ask if they are okay, suggest they take a break and ­provide problem gambling information.

"We do a very complete training ­programme. There wouldn't be a ­venue operator that wants to see a gambler harmed."

Lion Foundation is one of 37 societies running pokie machines around the country.

Minister of Internal Affairs Peter Dunne, who is overseeing the review, says even though pokie expenditure has increased since 2014 and there are signs that the sector is stabilising, the sustainability of community funding remains uncertain.

"I am seeking the most cost-effective regulatory model possible; one that maximises community funding without increasing harm or driving growth in gambling."

One thing that doesn't seem likely to change is the 1.5 per cent put aside to stop addicts like Susan and Michael.

"I am comfortable with the current problem gambling levy rate," says Dunne.

He places the onus on problem ­gamblers to figure out how to stay out of pokie bars. "If a gambler is having ­difficulties in excluding themselves from multiple venues, it is best that they discuss this with their problem ­gambling service provider."

The great fear is a review will turn what was designed as a win-win ­situation into a lose-lose one - less ­money for community groups with ­little impact on problem gambling and addiction.

Susan is largely supportive of the proceeds from her crime ending up in charity. "It's not the kids' fault if they get a new free soccer ball," she says.

She still buys lotto tickets and dreams of a big win - but knows pokie ­machines aren't a realistic way to earn money.

"We're focusing on the positive now. It ruined my life but we are ­struggling along."

Michael is not so positive. He believes the 1.5 per cent set aside to help problem gamblers isn't enough. "That's only $1.50 for every $100 that a gambler puts into a pokie machine.

"When I was sitting on that bar stool for 10 hours on one of my worst days, nobody ever came over and asked me if I was okay."

*Names have been changed