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Recent Updates

 

16.09   Primary Activity and Alcohol Licences

In Re Kaiti Club Hotel Ltd [2018] NZARLA 225, the revenue breakdown was not considered detailed enough to assist in determining whether the venue was a tavern, due to the inability to apportion the revenue that did not come from gaming machine venue payments and TAB commission payments.  In this case, the Authority found that the premises were not a tavern, but primarily a gaming venue, based on the venue’s layout, the public perception, and the nature of the entertainment offered.

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34.13   Credit Betting, Cheques and the Use of Credit Cards

The section 15 prohibition is not, however, limited to gambling operators such as casinos, gaming societies, and venue operators.  Section 15(1) uses the term “person” and is therefore intended to be broader in scope.  Any person who is conducting gambling is captured by the prohibition.  In Xiao v Sun [2018] NZHC 536 [26 March 2018], the court noted that conducting gambling included “distributing the turnover of gambling” and held that a gambler who was gambling on behalf of another person, and sharing the gambling profits with that person, was caught by the prohibition on providing credit.

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35.01   Gambling Contracts Authorised by an Act are Enforceable

Gambling contracts authorised by or under the Gambling Act 2003 are enforceable: s 14(2) of the Gambling Act 2003.  Betting contracts authorised by or under the Racing Act 2003 are enforceable: s 64 of the Racing Act 2003.

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35.02   Illegal Contracts

Examples of illegal contracts include loans made by TAB agents to gamblers for the purpose of making a bet (credit betting) and claims for gaming machine winnings by an underage gambler or excluded gambler.

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22.03   Relocating 18 Machines to an Existing 9 Machine Site

It is possible to relocate a venue under section 97A to a site that already holds a gaming licence.  For example, it is possible to relocate an 18 machine licence to a site that already holds a 9 machine licence (effectively increasing the number of machines by 9).  All that is required is for the existing venue licence to be surrendered 24 hours before the new relocated licence is granted.  An example of an 18 machine licence being relocated to an existing 9 machine site, is The Flying Mullet Ale House (GMV 1445) relocation that took place on 13 June 2018.

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22.05   Relocating Under the Waikiwi Tavern Precedent

Additional examples of successful and unsuccessful relocations under the Waikiwi Tavern precedent have been included.

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12.14   Obligation to Account for Profits Following a Robbery

In June 2018, the Department approved in part an application to write off a $1,000.00 insurance excess following an armed robbery.  The money stolen was located in both the venue’s safe and the gaming till.  The Department did not consider that the money in the gaming till was covered by the policy as it was deemed to be the venue operator’s float, not GMP.  Because the insurance excess related to both the stolen GMP and the stolen float, the Department allowed a percentage of the excess to be written off, using the following formula: amount of GMP stolen divided by the total amount stolen multiplied by 100. 

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32.23   Misleading and Deceptive Claims Dismissed – Guy v Crown Melbourne Ltd

In Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36, the Federal Court of Australia dismissed claims of misleading and deceptive conduct and also unconscionable conduct against Crown Melbourne and Aristocrat Leisure.

The applicant in the case was a member of the public, Shonica Guy.  The
respondents were Crown Melbourne Ltd and Aristocrat Technologies Australia.  The applicant’s case centred on the Aristocrat Dolphin Treasure gaming machine. 

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29.00   Three-Year Licences

A voluntary process now exists to apply for a three-year licence (both class 4 operator’s licence and class 4 venue licence): sections 53(1A) and 70(1A).

There are no formal statutory criteria regarding eligibility for a three-year licence. Eligibility is a discretionary matter determined by the Department after reviewing the criteria set out in its three-year licence policy guidelines.  The failure to grant a three-year licence is not a matter that can be appealed to the Gambling Commission: ss 61(1A) and 77(1A)

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32.18   Mystery Shopper Project - 2018

In June 2018, the Department outlined the 10 mystery shopper scenarios that will be used and advised of the expected staff responses.  The scenarios and expected responses are detailed below.  The dollar amounts, the time of day and the gender of the mystery shopper will vary depending on the actual circumstances of the mystery shop.  For scenarios involving EFTPOS withdrawals, if a venue does not allow EFTPOS transactions, the mystery shopper will use the ATM and adjust the scenario accordingly.

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37.05   The Pokerstars, Jackpot City and Spin Palace Examples

In 2017 and 2018 the Department received complaints regarding the advertisements for Jackpot City and Spin Palace that were broadcast on the Mediaworks television channels.  The complaints alleged that the advertisements were for gambling websites.  The Department reviewed both advertisements and confirmed that they were both for free-to-play websites and were therefore not overseas gambling advertisements as defined in section 16.

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36.00   Sales Promotion Schemes

In 2017, the McDonald’s Monopoly sales promotion included the ability for persons who had purchased their meal remotely via UberEats to participate.  The Department confirmed that the remote payment via UberEats made the promotion unlawful.  The Department advised, however, that if a complaint was received, given the low risk of harm, it would likely conclude that no compliance action was warranted.  A similar approach was taken in July 2018, where the Department indicated that it was not necessary for online supermarket purchases to be excluded from a sales promotion, where entry to the promotion was also completed online and instant prizes offered.

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38.08   The Gambling Act (Instant Game) Game Rules 2004

When an instant game event (gaming tabs, scratch cards, or mystery envelopes) is conducted as class 2 gambling, it is impractical to comply with the requirement to declare and publish the results…

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1.30    Benchmarks – Average Society Cost Per Machine

In the Department’s April 2018 Sector Report on Management Services Providers, it was noted that societies with a management services provider had an average authorised purpose return of 42.94% and average cost per machine of $27,982.  Societies without a management services provider had an average authorised purpose return of 42.22% and average cost per machine of $28,145.

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22.05    Relocating Under the Waikiwi Tavern Precedent

The section on Waikiwi Tavern relocations now includes a video of the new modern Waikiwi Tavern décor and a link to the affidavits and submissions filed in the original High Court case.  The section has also been updated to include several new examples of successful and unsuccessful prior relocation applications.

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23.08    Obtaining a Territorial Authority Consent Which is Inconsistent with the Established Policy

On 9 November 2017, the Auckland Council passed a resolution permitting the East Coast Bays RSA to relocate its gaming machines to a nearby venue.  The reasons given for granting the exemption were…

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16.09    Primary Activity and Alcohol Licences

A tavern is defined in section 5 of the Sale and Supply of Alcohol Act 2012 as premises used or intended to be used in the course of business principally for providing alcohol and other refreshments to the public.  Applications for a tavern on-licence have been declined when the evidence suggests that the primary activity of the tavern is gaming, not the sale of alcohol.  For a summary of how the primary activity test is interpreted under the Sale and Supply of Alcohol Act 2012, see…

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1.10      Examples of Costs Considered Appropriate by the Department

DNA spray (DNA marking technology designed to spray criminals and any goods they are carrying when they exit the venue) is now considered an acceptable society cost at high risk venues.

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1.14      CEO Remuneration and Senior Staff Salaries

New salary benchmark examples are included.

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34.39    Venue Audits/Venue Assessments

In December 2017, the Department developed a new model for auditing/assessing class 4 venues.  The audits are intended to take approximately 90 minutes and include three parts…

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3.11      Licensing Trusts and Licensing Trusts’ Senior Staff

The Department’s position is that licensing trusts providing services to societies, other than those related to conducting gambling at the venue, represent a breach of section 113(1)(c) and potentially also a breach of sections 52 and 67.  The breaches, including the issues surrounding licensing trusts acting as management service providers, are summarised in the Department’s Outcomes & Advisory Board Paper dated 31 March 2017.

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16.02    The Department’s Gaming Shop Guidelines

The Department has advised that it will consider a range of factors when determining whether a venue is “used mainly” for operating gaming machines.  The factors considered are…

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24.02    Venue Relocation and Machine Number Retention Under a Territorial Authority Relocation Policy

It is common for a territorial authority policy to require that all new venues are limited to a maximum of 9 machines.  The amendment anticipated this, and expressly provided that despite any machine number limit imposed by a territorial authority under section 100(1)(b)(i), the maximum number of machines permitted to operate at the relocated venue shall be the same number as the maximum permitted at the old venue.   Section 97A(2)(b) means that any maximum number of machines specified in a relocation consent has no effect.

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31.02    Inactivity Extension Applications

The Buck’s Head ceased operating on 22 February 2011, following the Christchurch earthquake.  The Department granted numerous inactivity extensions, allowing the venue to remain inactive for over six years.  The venue reopened with gaming in late 2017, under the name The Good Goat.

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32.05    Exclusion Order Record-keeping

The Department has indicated that venues and societies should destroy expired paper exclusion orders and delete electronic records of expired exclusion orders shortly after the expiry period, to adhere to the Privacy Act 1993 requirements.  The Privacy Act 1993 provides that personal information must not be kept for longer than is required for the purpose for which it was collected.

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25.06    Club Merger Examples

New club merger examples have been included.

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18.19    Small Clubs – Reduced Licensing Fees

The Department’s licensing fees are a significant cost.  Clubs that reduce their machine numbers to seven or less are able to take advantage of reduced licensing fees. 

The Gambling (Fees) Regulations 2015 define a “small club” as a club that operates no more than seven gaming machines at a venue that it owns or leases and is mainly for the use of club members.

In the 2018/2019 period, the annual fee per gaming machine for small clubs is $323.00.  For all other societies, the annual fee per gaming machine is $697.58.

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38.15    Non-Gambling Events – Free Entry Events and Events Where Players Do Not Seek to Win Money

The definition of gambling provides that the paying or staking of consideration must be done to seek to win money.  In October 2017, the Department confirmed that an online sports betting product that resulted in the winner not receiving any money, but the loser being encouraged to make a donation to a charity of the winner’s choice, fell outside the gambling definition.

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36         Sales Promotion Schemes

In 2017, the McDonald’s Monopoly sales promotion included the ability for persons who had purchased their meal remotely via UberEats to participate.  The Department confirmed that the remote payment via UberEats made the promotion unlawful.  The Department advised however, that if a complaint was received, given the low risk of harm, it would likely conclude that no compliance action was warranted.

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31.02    Extension Applications

The Department has adopted a set of internal guidelines setting out how it would deal with extension applications under s 71(1)(g).  The guidelines list the following “acceptable reasons” for an extension…

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22.09    Relocation of 18 Machines Under s 97A – Venue Licence Required at the Time of Relocation

If a venue relocation occurs under section 97A and the new venue wishes to be granted the right to operate the same number of machines as the old venue, the old venue licence must remain in place pending the new venue licence being granted.  It is not necessary that the old venue be actively operating gaming machines, but a venue licence must remain in place.  If the old venue has closed, it is therefore necessary to obtain an inactivity approval under section 71(1)(g) to keep the old venue licence in place.

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38.20    Online Gambling, Gambling Apps, Text, and Phone Gambling

The fact that a gambling activity may be run in accordance with the private gambling, class 1, class 2, or class 3 requirements does not entitle the gambling activity to include any form of remote interactive gambling such as participation via a website, mobile phone app, text or telephone.  Section (9)(2) confirms that remote interactive gambling is illegal and not authorised by the Gambling Act 2003.

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3.06      Landlords

In 2017, the author enquired of the Department whether a society key person who also held the role of a landlord for one of the society’s venues, breached the prohibition in sections 52(1)(j) and 67(1)(m) on being both a society key person and a venue key person.  The Department advised: “we believe there would be significant potential for such an arrangement to fall foul of sections 52(1)(j) and 67(1)(m)”.  

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30.34    Redemption Terminals/Automated Kiosks

A redemption terminal must be situated within a gaming venue in sight of venue staff.

The redemption terminal must be individually powered from a single three pin general power outlet located close to the redemption terminal.  The use of double adapters, power boards, extension leads, and expandable modular power systems is not permitted.  The power supply to the redemption terminal must also not be able to be accessed by players.

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18.15    Clubs – 37.12% Return

The Department’s policy guide notes that an initial one-off licence condition breach is unlikely to constitute sufficient grounds to refuse to renew the licence.  The document also states that the Department should exercise a degree of leniency when non-compliance is due to one-off compliance costs that have been imposed or arisen unexpectedly. 

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38.15    Non-Gambling Events - Free Entry Events and Events Where Players Do Not Seek to Win Money

Loot boxes are items found in video games or apps, where the player purchases the ability to open the box when the exact content of the box is unknown at the item of purchase.  The content of the box is determined by the game programme partly based on chance.  By letter dated 26 January 2018, the Department advised that it did not consider loot boxes to fall within the definition of gambling as it was considered that players do not purchase loot boxes seeking to win money or something that can be converted into money.  It was considered that players buy loot boxes so they can use their contents within the game and thereby have a better gaming experience.

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