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Two-thirds of Waikato gambling machine operators audited by Internal Affairs since July have been formally warned for breaching licence conditions.
A further pokie operator -- the Waitomo Golf, Squash and Bridge Club -- has lost its licence following two poor audit results from the department.
Waikato audits found only five of 15
licensed operators in the region were complying with the conditions of their licences to operate the machines.
By law, gambling machines are allowed only as a form of fundraising for community groups, and are officially regarded as part of the charitable sector. Societies which operate the machines are audited at least every two years.
But recent audits of societies' adherence to the strict rules for handling and distributing gambling profits have discovered widespread holes nationally.
Incorrect banking of gambling machine profits and inaccurate record keeping was the most common breach found by department gaming inspectors.
Of 209 audits by the department between July last year and the end of February, only 45 per cent (93) were found to be complying with rules.
Fifty per cent (105) of those audited have received formal warnings, and five per cent (11) have had their licences to operate suspended or cancelled.
The poor audits have prompted the department to warn operators that failing to comply with their licence conditions will lead to them being shut down.
"Putting the right amount of money in the bank, on time, is absolutely fundamental to the rules," said gaming regulation acting director Keith Manch.
"Even if the errors are unintentional, they leave the door wide open for theft and fraud. Ultimately, if money is mislaid or misappropriated, it is being taken from the community groups for whom it was intended."
Mr Manch said that as the machines operated on cash only, without detailed and accurate record-keeping, the money was impossible to track.
The Waitomo club was audited in 2002, when seven breaches of its licence conditions, including incorrect banking and inaccurate records, were found.
A second audit last year found the breaches were still happening.
According to the department, of $941 million spent in clubs and pubs on the machines in the last financial year, operators spent $315 million on administration and operating costs -- the equivalent of $12,600 for each machine.
- NZPA
