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					Speech Notes – Gaming Expo Wednesday 28 April

An industry in crisis
The class 4 gaming sector, outside Casino’s, and I include in this the
clubs sector, is slowly but surely being strangled to death. This
morning I want to talk in a little bit of depth about how and why this is
happening, the operating environment and perhaps the way forward.

Gaming machines in clubs and pubs are in fact big business – a big
fundraising business for the New Zealand government and the
community. It is a big business creating and delivering jobs and
supporting community, sport, cultural and educational needs in our
community. A need, which in tough economic times is more, not less.
At a time like this it would be great if the industry was growing and able
to meet the needs of our players and in so doing, meet the needs of
the community.

Seems that the public rhetoric around gaming machines is all about
problem gambling, while ignoring all the other significant economic
benefits. The Gambling Act was put in place to minimise problem
gambling and to “control” the industry. There is nothing about
shrinking the industry or closing it down.

Great progress has been made in minimising gambling harm. We
have significant monies invested in treatment, social marketing and
training of venue staff. You would have to say that the Act has been
successful as the number of problem gamblers presenting for
treatment continues to decline. This is despite an unprecedented level
of public awareness around the issue of problem gambling. These are
good trends and all stakeholders need to continue to work actively to
ensure that positive trend continues.
Let us therefore look at the other side of the ledger. Why have we got
an industry which is being slowly strangled to death? I believe there
are a number of reasons – all of which need to be addressed. Firstly,

In the main our players play gaming machines for entertainment.
Gaming machines are in our bars and clubs to provide entertainment
to our patrons. If they are going to continue to be in demand as an
entertainment medium then they have to be current, have to continue
developing and have to be relevant to today’s market. The bottom line
is that gaming machines entertainment gambling competitors, such as
Lotto, have the ability to continue to grow and evolve to meet the
needs of their players. Lotto is now online, and new games and prize
pools are allowed to evolve. Overseas online gambling is also rapidly
progressing and evolving with interactive plays. Yet, gaming machines
in clubs and pubs are restrained by rules and bureaucracy and are not
being allowed to develop in a way which meets the growing
expectation of our customers.

Local government have been brainwashed by the advocacy of the
Problem Gambling Foundation and now can’t see past the harm which
occurs to a very small minority, and as a consequence most are
seeking to cap or reduce gaming machine numbers. Local
government should in fact be very strong supporters of well-run
gaming venues in their territorial authority. While one would like to
have thought that local authorities would see the big picture, the
industry has to take some responsibility for not doing enough to paint
that picture.
It seems to me that apart from Francis Wevers representing the
Community Gaming Association and Martin Cheer from Pub Charity,
very few of the Trusts are actively engaged in advocacy with territorial
authorities. Local authorities are over time, going to determine if any
fundraising is going to occur through gaming machines in their
community. Trusts must engage and develop effective partnerships so
that territorial authorities can take in the big picture when they
determine their gaming policies.

This nicely leads on to Trusts.

With the Department of Internal Affairs continuing to tighten the screws
on the sector, it has created a dog eat dog competitive environment
among the Trusts. This is not just unhelpful, it is in fact destructive, as
each of the Trusts compete for venues, and in some cases struggle to
survive. The consequence of these pressures last year saw the major
Trusts exit from the Community Gaming Association leaving a major
vacuum. That disunity was also apparent last year when despite the
best efforts of the Hospitality Association we were unable to progress
a commission based payment system for venues. It is not too strong
to say that the lack of Trust unity made a significant contribution to the
failure to get that proposal across the line. Continued fragmentation
will make it extremely difficult for consistent, effective advocacy to the
Department of Internal Affairs and government. In the current
environment the Department are able to pick the Trusts off one by one
and in so doing continue to tighten the screws on the industry’s future
Next and probably most importantly, is the part being played by our
friends at the Department of Internal Affairs. It is interesting that
nowhere in the Gambling Act do I see it that it is the intent of the Act to
reduce gambling activity. It certainly intended to reduce problem
gambling, and the evidence would suggest that good progress is being
made in that direction. The Department unfortunately seems to have a
single-minded focus on optimising returns through cost reduction. In
any other sector optimising returns would see systems and
mechanisms to facilitate growth and development, while maintaining a
duty of care for the vulnerable. That is not what we are seeing. We’ve
seen that in the Department of Internal Affairs eyes the only way that
the return to the community can be enhanced is if venue operators are
further squeezed, and the mind-numbing, bureaucratic, cost
categorisation exercise is a prime example of this.

Control does not mean reduction, control means having in place
systems which ensure transparency and probity. A system which is
forcing small sites and clubs to give up their entertainment and
fundraising capability does not make economic sense. Yes the system
does need to be efficient, yes it does need to be transparent, and yes
it needs to return funds to the community, but blunt instruments like
the 37% required returned to authorised purpose, and society’s 16%
cap on Limit D are not achieving the objective of maximising the
returns to the community when we see those very returns declining
quarter by quarter by quarter.

I do have some sympathy for the Department as the sector has failed
to create a culture of trust, has failed to deliver unity and consistency
and that the fringes continues to have malpractice exposed.
Lastly we have the venues. The venues seem to be right at the end of
the food chain after everybody else has had their slice of the pie. This
may sound simplistic, but venue operators consider that they are the
whipping boys, on one hand required to do more and more to reduce
gambling harm and on the other, resourced less and less to do so. It is
a bit rich for venues to be told they must have constant surveillance of
their gaming rooms and on the other to be told that they won’t be paid
for it as it is unnecessary. Venues have had enough of being
squeezed and hounded as the demand to cost reduction gets shoved
down the line.

The current philosophies and rules being applied to the sector are
simply not sustainable. If we continue the way we are going we will
see a continual erosion of the number of venues, the number of
machines, the number of Trusts and the amount of money which is
available to be distributed to the community.

This must change, and I believe the starting point for that change must
be a genuine coming together of venues, Trusts and manufacturers to
present a unified position to the Department of Internal Affairs and the
politicians. A position which will deliver an environment where the
sector can grow its contribution to the government and the community,
an environment that does genuinely deliver transparency and probity,
and one that is trusted by all.

The Hospitality Association is not prepared to give up on this sector.
Despite the failure last year to deliver unity and get a commission
based payment system across the line, the Association is prepared to
try again and facilitate an industry crisis summit to try and turn this
industry away from the rocks on which is close to floundering.
Within the next two months the Association will be issuing invitations to
all the Trusts, the clubs sector and the manufacturers, to bring
together a unified position to take to government and the Department
of Internal Affairs. We must put together a constructive package, a
package to grow the entertainment through gaming machines, grow
the returns to the community, provide transparency and probity and be
trusted by all.

The consequences of failure are high, if we cannot do this, then in 10
years either the industry will be dead or there will be an entirely
different model in place. I urge you all to respond positively to the
Association’s initiative, come with a constructive mindset and come
very firmly with the big picture in mind. We are an industry in crisis –
it’s time to act or shift in to the hospice.

Thank you.

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