Rotorua has 24 venues that have pokie machines. Photo / NZME
Rotorua Lakes Council wants communities to get a share of the profits under the Government’s Online Casino Gambling Bill.
The controversial bill has sparked concerns from sporting organisations, who fear it will impact existing funding models.
However, the minister presenting the bill has argued there is little evidence to support the case and warned that community funding provisions could do more harm than good.
New Zealanders can currently gamble on offshore websites, but it is largely unregulated.
The proposed bill, which passed its first reading in July, aims to regulate offshore online casino gambling and license up to 15 international operators.
At present, the bill offers no obligation for operators to provide community funding.
In its submission on Friday, Rotorua Lakes Council urged the select committee to consider adding a policy requiring a percentage of profit to be returned to communities.
The council also wanted a proposed 12% online gambling duty to be reinvested into local problem gambling.
“It is only right that where possible, profits generated from gambling [are] reinvested into local communities through initiatives that aim to uplift and provide long-lasting change,” the council submission said.
The submission also raised significant concerns around online and social media advertising and its impact on younger and inexperienced gamblers.
At present, proceeds from Class 4 gaming machines, or pokies, are managed by community gaming trusts.
Legislation requires they return at least 40% of net proceeds into the community in the form of grants, with more than $300 million distributed annually to community groups, including those involved in sport, education, health and the arts.
Sporting organisations believe they are particularly vulnerable to the new bill, with gaming trust funding playing a huge role in grassroots activity.
Last year, sport was by far the leading recipient of such grants in Rotorua, receiving $3.25m of the $7.4m available – more than double the next highest category received.
Regional sport trust Sport Bay of Plenty received nearly $360,000 in grants from the Lion Foundation and the New Zealand Community Trust in the 2024 financial year.
The trust is one of more than 50 sporting organisations nationwide that have formed a “collective sport voice” urging the Government to ensure online casino profits return to communities.
Sport Bay of Plenty said the organisation opposes the current form of the bill, which “fails to uphold the long-standing principle that gambling profits should benefit the community”.
It highlighted that roughly half of the funding from sport grants goes to clubs, covering expenses such as equipment, uniforms and coaching, with none going to high performance.
Sport Bay of Plenty would not comment on the ethical concerns raised regarding gambling money largely funding community sport.
A 2020 white paper by the Problem Gambling Foundation, Hāpai te Hauora and the Salvation Army warned that the current model is ethically and financially unstable, with funds disproportionately sourced from vulnerable, problem-gambling populations in deprived areas.
Internal Affairs Minister Brooke van Velden expressed concern this week in Parliament over repeating the same model with online gambling.
“When community groups are reliant on funding from the proceeds of gambling, there is an incentive to increase gambling in order to increase revenue for those organisations,” van Velden said.
The Department of Internal Affairs had advised the minister that this model would make it harder to reduce gambling, because “community organisations are dependent on the funding that they receive”.
Van Velden also said there is “no evidence” that regulation of online gambling will reduce the current funding pool, but remained “open” to the idea of community returns.
She will meet representatives from the sporting community this week.
Rotorua has 24 Class 4 venues. This is higher than the national average by population proportion.
The current Class 4 and TAB venue policy caps gaming machines at 350, but that is currently exceeded with 362, with 74% of pokies in the district’s poorest areas.
Annual gambling losses in Rotorua exceed $26m and in 2022-23, 5.33% of gambling interventions were in Rotorua, ranking third nationwide, above Wellington, Hamilton and Tauranga.
Rotorua Mayor Tania Tapsell supported the council’s submission but previously admitted deep concerns from the community “around the morals” of the current model.
“Even though it benefits the community, we know it is being collected by an activity that causes significant harm in our community,” Tapsell said in a council meeting in late July.
Submissions for the Online Casino Gambling Bill closed on Sunday, with a subsequent report due in November.
Editor’s note: Mathew Nash was previously employed as communications manager at Sport Bay of Plenty.
Mathew Nash is a Local Democracy Reporting journalist based at the Rotorua Daily Post. He has previously written for SunLive, has been a regular contributor to RNZ and was a football reporter in the UK for eight years.
– LDR is local body journalism co-funded by RNZ and NZ On Air.