Many sports in New Zealand couldn't function without the injection of revenue from gambling.

The Tall Blacks' attempt to qualify for the 2012 London Olympics didn't go well. With star players Kirk Penney and Tom Abercrombie sidelined, the team was underpowered and over-matched at a qualifying tournament in Venezuela, its Olympic dream snuffed out with barely a whimper.

The price the game of giants paid went well beyond missing a plum trip to the global sporting love-in in London. High Performance Sport New Zealand had bankrolled the qualifying campaign for the men's and women's teams to the tune of $380,000 in 2012. Having failed to see a return on its money, the funding body pulled its support, leaving a gaping hole in Basketball New Zealand's finances.

Luckily for basketball, that hole has been partly filled by Kiwis who like to take a punt on the NBA - and lots of us do.

Basketball has become the country's betting sport of choice, with $46.8 million wagered in the 2012-13 financial year, eclipsing rugby for the first time. The TAB is legislated to return 1 per cent of turnover and 5 per cent of resulted profit to the national bodies of sports it takes wagers on. For BBNZ, that meant a windfall of $485,314 in the 2011/12 financial year, and over $650,000 last year.


"If Basketball New Zealand didn't receive the TAB income I shudder to think," says chief executive Iain Potter. "We are using everything available to us to make sure we can put a Tall Blacks and Tall Ferns team on the court. There is nothing left. We don't pay [the players]."

Gambling may have given back to basketball but it was also, in part at least, gambling money that was taken away when high performance sport pulled their funding. Of the combined 2011/12 operating budget of Sport NZ and HPNZ of just over $124 million, $39,445,472 - about 32 per cent - came from a Lotteries grant.

That money is relatively small beer compared to the $134,202,165 gaming machine trusts kicked into the sport sector during 2012. Basketball's take, at club, regional and national level was $5,862,113, according to figures supplied by the Problem Gambling Foundation.

Where would the sport be without gambling money?

"It's a hard world to imagine," says Mr Potter. "There are all sorts of models but at the end somebody pays. At the moment somebody is paying, but it's selective. It's the TAB bettor, the pokie player and the Lotto player."

Basketball's dependence on gambling revenue is mirrored to varying degrees across the sporting sector. With an annual TAB levy of over $200,000 and additional income from two gaming trusts, the emerging sport of baseball is 100 per cent funded by gambling revenue.

With net receipts of over $23 million in 2012, rugby is the biggest benefactor from gambling. However, the national sport's massive economic base means gambling money is a relatively small proportion of its total revenue.

Not so small, however, that rugby isn't highly motivated to protect it.

That much was evident from the NZRU's submission to the select committee that heard arguments over Maori Party MP Te Ururoa Flavell's Gambling Harm Reduction bill.

If the bill - which was intended to give communities more control over gaming machines - was passed many rugby clubs would fold, while playing fees would increase up to 500 per cent, the union submitted.

Rugby couldn't live without its share of pokie money.

"There are a number of community organisations that could not survive without the revenue they get from the community trusts - and rugby clubs are part of that group," NZRU chief executive Steve Tew says.

"As we said in our submission, the level of dependency varies considerably down through the game and even from club to club. Are we comfortable? We are comfortable that most aspects of our game are being funded by a variety of sources, but gaming is certainly one of the major ones for a lot of clubs and some provinces."

So what's the problem with that?

There are many, say the academics who work in the problem gambling field.

With gaming machines concentrated in lower socio-economic areas, the revenue collected comes mainly from the nation's poorer citizens. Its distribution - often into areas more affluent than where it was collected - has been riven with corruption and inefficiency. And, most importantly, a good chunk of the money collected in pokie machines has been deposited by problem gamblers, whose addiction ruins lives.

Peter Adams, an associate professor at the University of Auckland who has written extensively on the effect of electronic gaming on society, uses the term "moral jeopardy" to describe the danger attached to organisations with strong moral foundations accepting money from dubious sources.

The question of whether the good that is done with the money outweighs the bad that occurs in its generation soon becomes lost. The reality is that grant recipients become just as hooked as the pokie gambler praying the lemons will all line up. Those trying to deal with problem gambling find themselves pitted against an alignment of vested interests - a government that benefits from increased taxation revenue, while not needing to fund social projects that are paid for by gambling distributions; employees at trusts and government departments whose jobs depend on there being money to distribute; and the recipients.

"We can't genuinely impact on harms because there are too many people invested in sustaining the yield from the machines," Professor Adams says. "Attempts to change the environment and make pokies less hazardous aren't going to go far if people aren't willing to reduce their dependency on the profits."

Some sports are willing, very few feel able.

"If [the money] went away a lot of sport would stop," says Softball New Zealand's acting chief executive Fay Freeman. "There would be grassroots sport but beyond that it wouldn't really happen."

Fay Freeman prefers the term reliance to dependence, but that appears to be splitting hairs. Asset poor and with little commercial clout, softball needs as much gambling revenue as it can lay its mitts on. Already many opportunities within the game are limited to those who can afford them.

"The national teams other than the Black Sox are self-funding, so you have to be able to afford to belong to a national team," says Fay Freeman. "That's how it works. You pay your own way. If you can't afford to be in the team you can't afford to be in the team."

Gaming revenue contributed $417,415 to the $2.7 million redevelopment of Rosedale Park ahead of the recent world championships, while the Lottery Grants Board chipped in $650,000. But softball also spends gaming money on programmes and services, an area that is getting increasingly squeezed. With the sinking lid mandated in the Gambling Act reducing the number of pokie machines by about 500 a year, the money available is steadily decreasing. In response, trusts are increasingly funding long-term "legacy" projects such as Rosedale ahead of people.

The issue of dependence isn't lost on those who work in the industry. Marco Management, a consultancy that offers support services and advice to licensees and gaming trusts, advocates a "zero dependence" philosophy.

"We suddenly woke up and realised we worked with a number of organisations that simply couldn't function if they didn't have this money coming in," says Marco director Ben Marris. "We did a bit of soul-searching and decided it was a place we didn't want to be. Because with that dependency comes a huge amount of stress. You are talking about lots of people having to support their families off this money, so it is quite a complex beast.

"It has grown over time and I think sneaked up over everyone."

The series
Tomorrow: Broken lives and rebuilt fields. A pokie dollar makes its way from Mangere East to Remuera.

Wednesday: Moral jeopardy. The troubled ethics of doing good things with bad money.

Thursday: It wasn't always like this. Life before gambling revenue.

Friday: Where do we go from here? Can we break the cycle?