To better understand the statistical figures which we will share later in this article, it would help to state that the Department of Internal Affairs, the body which regulates gambling in New Zealand, recognizes two systems of gambling on electronic gaming machines:
- Casino Gaming: As the name suggests, this refers to gambling on machines hosted in casinos.
- Class 4 Gaming: This group of pokies refers to gambling on machines located in clubs, pubs, and hotels.
The Difference between Casino Gaming and Class 4 Gaming
While electronic gaming machines remain the same irrespective of whether they are located in a casino or hosted in a pub, the main difference between casino pokies and Class 4 gaming are:
- Unlike casino pokies, the motive behind Class 4 gambling is not profit-making but generating revenue to fund community groups through grants.
- Only corporate societies licensed by the Department of Internal Affairs (DIA) have the right to operate pokies machines in clubs, pubs, and bars.
Regardless of the two systems’ different motives, they contribute to the general statistics that define the New Zealand casino market. This article examines the market’s 2021 data to help Kiwis understand what the impact of the current market trends could mean for them individually and as a community.
Spending Statistics at Pokies Machines in 2021 in New Zealand
Although published on March 12, 2021, the press release by the DIA on gaming machines spending focused on the December Quarter of the year 2020. Despite the shutdowns following the covid-19 outbreak, the market quickly recovered. It, however, couldn’t sustain the recovery in 2021, as we shall see later in this article.
According to the press release, the Gaming Machines Profit (GMP) recorded a whopping $252 million across 14,781 pokies machines, excluding casinos, in the last quarter of 2020. This figure is the all-time highest amount since the records began in 2007. With $7 million short, the next highest amount the market has ever registered was $245 million in December 2007. Following closely in the third position was the September quarter figure of $244 million in 2019.
Between December 2019 and December 2020, the GMP dropped by 13.6%. Also, in the 2020 calendar year, there was a reduction in gaming machines and venues (clubs, pubs, and bars). The respective numbers were 73 and 12.
Despite the September-December quarter’s impressive 3.7% ($9 million) growth, the market’s overall 13.6% drop from the previous year decreased the 2020 GMP by $128 million.
Stakeholder Reactions on the December Quarter GMP Increase in 2020
After expressing his surprise at the December quarter market bounce back, Chris Thornborough, the DIA gambling director, noted that some of the shortfalls in the 2020 GMP could be attributed to the covid-19 restrictions on gambling activities.
On the December quarter GMP increase, the Pub Charity Chief Executive, Martin Cheer, held a different opinion, saying that the increased proportion of online gambling, especially lotto, contributed to the boost. Cheer went ahead to say that “it’s inevitable that we are going to see this migration of lots of activities to online, including gambling. But unfortunately, a lot of it’s offshore and unregulated. It doesn’t produce any returns for the community. It can’t be taxed. So it’s a very disruptive and destructive trend for the industry.”
With the implementation of gambling restrictions following the covid-19 outbreak, more Kiwis started to explore online gambling options. In 2020, we have seen new online casino sites coming to New Zealand almost daily to cut a slice from the country’s growing interest in iGaming.
Class 4 Grants Data Analysis Review
Following the not-for-profit motive behind the Class 4 gaming system, the DIA expects all Corporate Societies licensed to operate pokies machines to return a minimum of 40% of their revenue to the community in the form of grants. Different community groups like sports, education, health, etc., can apply to Corporate Societies for the grant.
On their part, the DIA mandates every society to keep a comprehensive record of the applications they receive and the number accepted or rejected. The DIA prepares its Class 4 Grants Data analysis reviews with this record.
In November 2021, the Department of Internal Affairs published two reports to analyse the Class 4 Grants Data from pokies gambling across New Zealand. The first report reviews the 2020 full calendar year, while the second is an interim analysis of the first 6 months of 2021. We will focus on the 2021 6 months interim analysis and draw comparisons with the 2020 report where necessary.
Class 4 Grants: 2021 Interim Report
The summary of the key results in the first 6 months of 2021 shows that of the 14,888 applications received by Corporate Societies, 10,720 were approved for funding. The individual amounts of the 10,720 approved applications added up to $132 million approximately with 53% ($70.6M), 21% ($27.8M), and 9% ($11.7M) going to Sport, Community, and Research & Education respectively.
The rest of the grant was distributed to other approved community groups with:
- Arts and Culture receiving 6% ($8.4M)
- Applied Fund – 5.9% ($8.2M)
- Other/Unknown – 4.8% ($6.7M)
- Health/Welfare/Rescue Services – 4.4% ($6.1M)
- Environment and Animals – ($0.9M).
The DIA compiled the 2021 first 6 months interim report with data provided by 30 Corporate Societies. Among the 30 societies, approximately 54% ($71M) of the grants came from New Zealand Community Trust, Lion Foundation, Pub Charity, Grassroots Trust Limited, and Four Winds Foundation. There was a significant decrease in the individual grant amounts from all the societies before 2020 and 2021. Also, with its $5.1M grant, One Foundation dropped from its $19.3M 4th position in 2020 down to the 10th position in 2021.
Despite the noble motive behind Class 4 gaming, Paula Snowden, the Chief Executive of Problem Gambling Foundation, believes that the people losing money in gambling are still the poor communities the Class 4 Grants are meant to help. According to her, “people losing the money are poor people in poor communities, and what we say is we’ve got to stop focusing on the 40% that becomes charity and think about the 60% of the losses because they walk out of poor communities.”
While Snowden’s opinion may come from her experience handling clients dealing with gambling problems, part of the responsibility rests with the gamblers who try to replicate the Rawiri Pou’s $10 million Mega Moolah jackpot every day.
However, the government has drawn a list of strict harm minimization requirements which corporate gaming societies must implement to help reduce gambling problems. Also, the gambling industry pays about a $20 million yearly levy to the Ministry of Health to fund the implementation of its Preventing and Minimising Gambling Harm Strategic Plan.
Disclaimer: Gambling involves an element of financial risk and maybe addictive. Please play responsibly and at your own risk. Subject to applicable laws.