New Zealand Finds NZ$28m of Pokie Grant Money Spent on the Trusts Themselves

The Department of Internal Affairs says three-quarters of the country's 32 pokie trusts were non-compliant, a third engaged in deliberate "creative accounting", and NZ$11.5m has so far been committed back to communities. One trust lost its licence for six days.

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• The Department of Internal Affairs says about NZ$28 million that should have gone to community grants was spent by New Zealand pokie trusts on their own costs, including new gaming machines
• Three-quarters of the 32 Class 4 operators were non-compliant to some degree and about a third engaged in deliberate "creative accounting", Director of Gambling Vicki Scott told RNZ
• Operators have committed to return NZ$11.5 million through grants, the regulator hopes to recover about NZ$20 million in total, and repayment plans have been agreed with some trusts
• One Foundation's operator licence was suspended for six days over accounting failures and a venue licence it did not surrender when the law required it
• New financial guidance for the sector has been issued, and the investigation continues with further recoveries possible

The Regulator Says the Money Was Spent on Growth, Not Grants

New Zealand's gambling regulator has concluded a multi-year review of the way the country's pokie trusts handle gambling proceeds, and the headline finding is that a substantial sum meant for community grants was spent on the trusts themselves.

The Department of Internal Affairs (DIA) puts the figure at about NZ$28 million. Vicki Scott, its Director of Gambling, told RNZ's Nine to Noon on 11 September that the money was spent on assets such as new gaming machines rather than paid out through the grants system. "Many were essentially prioritising their own growth and their own competitive advantage over the interests of the community," she said. "They were spending beyond their means on things like gaming machines."

The scale of non-compliance is the more striking number. Of the 32 Class 4 operators, the licensed societies that run gaming machines in pubs and clubs and are required to distribute a share of the proceeds to community groups, about three-quarters were found to be non-compliant to some degree, according to Scott. About a third engaged in what she described as deliberate "creative accounting".

The regulator has secured commitments that will return NZ$11.5 million to community organisations through gambling grants. Scott told RNZ she was hopeful about NZ$20 million could be recovered in total, with repayment plans devised with the trusts, and that operators would have to tighten their belts in the coming years to make that happen. "Our role isn't to put a significant section of the industry out of business," she said, "but we are really firm that the money needs to be back in the community's hands in a reasonable period of time."

One Licence Suspended, New Guidance Issued

The review produced one formal enforcement action. According to the DIA's statement, reported by Inside Asian Gaming, the department suspended the operator licence of One Foundation, a society established to distribute grant funding from the proceeds of machines operated under its Class 4 licences, for six days. The regulator identified accounting failures relating to gambling proceeds and a failure to surrender a licence for one of its venues when the law required it.

Alongside the enforcement, the DIA has published new financial guidance for the Class 4 sector, which it says gives greater clarity on accounting requirements and explains operators' obligations through practical examples. "Most operators have worked constructively with us to address historical issues and improve their practices," Scott said in the statement. "While we've made substantial progress, our work is not finished."

The sector's response, as reported by RNZ, has been to accept responsibility while questioning the framing. Pub Charity chief executive Martin Cheer said mistakes and insufficient regulatory guidance may have contributed to some of the problems, while acknowledging that trusts remained responsible for complying with the rules. Peter Dengate Thrush, chairman of the Gaming Machine Association, said the NZ$28 million figure covered about ten years and was a relatively small proportion of total distributions, but that operators found to have deliberately manipulated their accounts should face consequences.

Pokie machines generate more than NZ$1 billion a year in New Zealand, according to the DIA, and about NZ$340 million goes back to communities annually through the trusts.

The Charitable Model Is Being Tested on the One Thing It Promises

New Zealand's Class 4 regime is unusual: the machines in pubs and clubs are run not by the venues but by licensed societies whose legal reason to exist is the distribution of proceeds to the community. That structure is the model's political defence, and it is exactly what the DIA's review found was being compromised. Money that the law earmarks for grants was instead funding machine purchases and competitive expansion, which in any other framework would simply be reinvestment but here is a diversion from the beneficiaries. A single six-day suspension is a light sanction against that backdrop, and the regulator has been candid that it does not want to shut down a large part of the sector. The commercial consequence is instead a multi-year squeeze: trusts repaying around NZ$20 million out of future proceeds while operating under guidance that closes the accounting routes they used.

The Timing Matters Because the Online Market Opens Next Year

The review lands as New Zealand builds its first licensed online casino market, with technical standards published this month and up to 15 licences on offer. The land-based pokie sector has long argued that its community-funding model is what distinguishes it from commercial online operators, and that argument carries weight in a country where gambling proceeds fund sports clubs and community facilities. A finding that a third of trusts were deliberately manipulating their accounts weakens that case at precisely the moment the sector is competing for policy attention against a new online regime. The DIA's decision to publish practical guidance rather than pursue widespread prosecution suggests it wants the model to survive. Whether the public and Parliament draw the same conclusion from the numbers is a different question.

The regulator has recovered a fraction of what it says was misspent and has chosen guidance over punishment. The sector's credibility now rests on the repayment plans being honoured.