Winners and losers: divvying up the gambling bonanza

New Zealanders gamble on average around $2500 each a year. In the first of a Herald series, SIMON COLLINS finds that from the funding that gets ploughed back into the community, certain sports groups are the only big winners.


During a break in hearings on Hamilton's proposed Riverside Casino, the chief executive of the Casino Control Authority, Trevor Garrett, took a walk across the road.

There, right opposite the hearing room, was a pub with a TAB outlet and 18 poker machines.

Elsewhere in Hamilton, about 20 similar sites offer gambling on the pokies.

Nationwide, the Government estimates that by next month there will be 15,600 gambling machines on more than 2200 sites.

While debate has been fixated on casinos, New Zealanders have already gone on an extraordinary gambling spree.

In the year to June 1999, we gambled just on $7 billion, an average of $48 a week for everyone aged 18 and over.

We lost $1.2 billion, an average of $8.10 a week for every adult.

Even after adjusting for inflation, we gambled 3.5 times as much as in 1979, and lost 2.8 times as much in real terms.

"You put a moratorium on casinos, but probably every day you are opening the equivalent of another casino from the increasing number of community gaming machines," says Mr Garrett.

And what the punters lose on those machines has become an enormous bonanza for both the trusts that own them and the pubs which often hand-pick the trusts and then get paid "site rentals."

The trusts have to give out a third of their net revenue to the community. But Weekend Herald investigations show that their donations often come with at least a verbal - though illegal - understanding that those who receive the money will patronise the pub where the pokies are located.

Some sports do well. Snooker World in Royal Oak, Auckland, gave over $200,000 in the year to March to pool, billiards and snooker associations which regularly hold their league nights on its pool tables - putting much of the money back over the bar.

In contrast, the swimming club in neighbouring Onehunga applied only once to another local pub for a grant of just over $1000 to send its senior swimmers to a tournament in Wanganui - and was turned down.

"I think you have to be able to work with the hotelier and work your way through it, and obviously football players drinking in the hotel know the system," says the swimming club spokesman, Cameron Russell.

Last month, the Government announced a major review of gambling policy which is expected to examine both the human and economic costs of the exploding gambling industry and the way its revenue is distributed.

Some other countries are already taking action. In 1994, the Netherlands cut the number of poker machines from 75,000 to 45,000 and restricted them to dedicated gambling venues where alcohol could not be sold.

Spain, which has more than 450,000 gambling machines, has recently brought in legislation to reduce the number. The US Congress is debating a bill to ban gambling on the internet.

But the authors of a recent report for the Government, Professor Max Abbott, of Auckland, and American Rachel Volberg, point out that attitudes to gambling have fluctuated many times since the pastime developed among prehistoric tribes.

In England, gambling by commoners was banned in the 17th century, flourished again in the 18th century and was suppressed again during the Industrial Revolution when the Protestant work ethic took hold.

In the last 15 years of the 20th century, restrictions have been removed suddenly and dramatically throughout the world, in line with the dismantling of other economic controls.

As recently as 1988, casinos were illegal in every American state except Nevada and New Jersey. By 1994, they had been authorised in 23 states.

In the past decade, casinos and gambling machines have spread through Europe, South America and Australia, where the machines have gradually been legalised in every state except Western Australia.

Australians now gamble more than anyone in the world - an average loss by every adult of $A819 ($1049) a year. Hong Kong is just behind, and then there is a big gap before the next batch of gambling nations, which include the United States and New Zealand.

In this country, a survey by Statistics NZ for Abbott and Volberg, published last month, found that 41 per cent of us now gamble at least once a week - the vast majority (35 per cent) on Lotto. The survey found only 2.7 per cent who bet on the races, 2 per cent who bet on pokies and fewer than 0.5 per cent who bet at casinos at least weekly.

But Professor Abbott says these are "conservative" estimates, because they are based on people's descriptions of their own behaviour.

Weekly gambling is much more common among production workers (55 per cent), tradespeople (50 per cent) and clerks or office workers (49 per cent) than among professionals (33 per cent), farmers (32 per cent) and the unemployed (28 per cent).

It is also more common among Maori (48 per cent) than among Europeans (41 per cent), Pacific Islanders (36 per cent) or Asians (27 per cent).

The money taken from these people is now a major source of funding for the arts, community welfare groups and especially sport.

In 1998-99 the Lotteries Commission gave out $138 million, or 46 per cent of its net revenue, in grants to the arts, welfare, youth and general community groups, as well as to sports through the Hillary Commission. (Of the rest, 22 per cent went in taxes and 32 per cent in retailer commissions and other costs.)

Members of the Lottery Grants Board and its committees are appointed by the Government.

At the other extreme, Auckland's Sky City casino gives away just 2.5 per cent of its net revenue through its self-appointed Sky City Community Trust, an average of $1 million a year since it opened in 1996.

Racing clubs are allowed to keep the TAB's profits for their own use (apart from $1.2 million that goes to sports bodies for sports betting), as are private clubs with pokies such as RSAs and workingmen's clubs.

In between these extremes, pub charities with pokies in hotels are obliged to donate at least 33 per cent of their net revenue to what the Gaming and Lotteries Act describes as "any charitable, philanthropic, cultural or party political purpose, or any other purpose that is beneficial to the community or any section of it."

The politicians who passed the law put "party political purpose" there deliberately - last year National declared $15,000 from Pub Charity in its official statement of election donations to the Electoral Commission.

But political donations are rare. None have come to light since the Weekend Herald wrote in May to all trusts operating pub pokies in our circulation area, asking for lists of all donations made in the past year. Only 13 of the 72 trusts supplied lists.

Instead, except in the Waitakere and Portage Licensing Trust areas, an overwhelming 60 per cent of the donations reported by the trusts went to sport.

A further 21 per cent went to education, including school sports, and the remaining 19 per cent went to health, welfare and community causes. Rugby took a third of the sports grants (20 per cent of the overall total) and snooker 14 per cent.

Then there was a big drop to bowls and yachting (both 2.5 per cent), cricket 2.3 per cent, rugby league 2.1 per cent, basketball 1.7 per cent, fishing 1 per cent, squash 0.9 per cent, golf 0.8 per cent and softball, soccer, touch rugby and netball (all 0.7 per cent).

Sports with few adult players to drink in the sponsoring pubs, such as swimming (0.4 per cent) and gymnastics (0.2 per cent), got negligible amounts.

One of the six national trusts, the Lion Foundation, gave 76 per cent of its Auckland revenue to sport, just 6 per cent to education and 18 per cent to health, welfare and community groups.

Only the two West Auckland licensing trusts had a different pattern, giving only 21 per cent of their grants to sport, 19 per cent to education and 40 per cent to health, welfare and community groups. They spent the other 20 per cent on first aid kits for residents.

The licensing trusts are elected. But the trusts which own the pokies in privately owned pubs are not. Hoteliers typically either invite local people on to a specific local trust, or contract with one of the six big national trusts such as Lion or Pub Charity.

In either case, groups seeking funding must apply first to their local publican, who makes recommendations to the trust.

The Audit Office report on gaming machines two years ago said the Internal Affairs Department was supposed to check that grants are "unconditional" - that is, that the publicans are not demanding anything in exchange from the groups they give grants to.

But, says Auckland Hockey Association manager Sharon Rimmer, "most of them expect you to do something in return in terms of bringing back dollars for them. One is obviously buying product through them. The other is functions at their venues."

Sport North Harbour chief executive Sarah Dunning says the need to give something back to the pub skews funding away from children's sport, which desperately needs the money.

"It can often go to a golden oldie rugby team, for example, that might be travelling overseas on a kind of booze cruise where they play a little bit of rugby."

Chris Lander, club cricket manager for Auckland Cricket, says such relationships make sense: "The guys have to buy their grog somewhere, so when they say, 'We have an annual purchasing value of $10,000, what can you do for us?' the guy is going to open his doors."

Some clubs, like the Cook Island Outriggers based at the Panmure Estuary, regularly drink at their local pub to earn the recognition they need to get a grant from the pub's trust.

"We applied to The Local in Manurewa. That was unsuccessful," says club president Metua Matutu. "We have been patronising The Local. They said, 'Oh, you just have to patronise it.' So we are going over there every fortnight and have a beer just so they can see us there."

Popo Ben, of the Rakahanga Sports Club, another Cook Island group, applied to the Otara Licensing Trust's East Tamaki Tavern for a grant to subsidise transport and uniforms.

"They said we had to come to the tavern and be involved with the machines," he says. "It's not fair. Not everybody drinks anyway. We try to bring these young kids up to be involved with sports."

Cameron Russell, of the Onehunga Swim Club, says NZ Swimming policy is not to seek corporate sponsorship from alcohol-based organisations because most of their swimmers are under 16.

He applied for pub charity once, and was told he had a good chance of getting the grant, but it never came.

When the Audit Office first reported on the issue in 1992, there were only 14 staff in the Internal Affairs gaming compliance unit to check on the grants being made from 6200 gambling machines.

By 1998, when the office followed up its report, there were just 12 staff to cover 13,045 machines.

The whole issue is being referred to the Government's gambling review. But that is expected to take two years.

In the meantime, publicans look set to stay the biggest winners from our gambling binge.

Next weekend: The costs of gambling.