Pokie trusts used up to $28 million that should have gone to community groups to cover their own costs instead, including buying new gaming machines, the Department of Internal Affairs says.
The department released the results of its investigation into the pokies sector on Friday 11 September. It has secured commitments from gambling operators to return an additional $11.5 million to community organisations through grants, suspended one operator’s licence for six days and issued new financial guidance to the sector, according to its announcement.
The department said it found widespread issues across the sector, including cases where money that should have been available for community grants was used to cover trust expenses such as gaming machines.
The $28 million figure came from the department’s director of gambling, Vicki Scott, who told RNZ’s Nine to Noon that about three-quarters of the country’s 32 pokie trusts were non-compliant to some degree. About a third engaged in deliberate “creative accounting”, she said.
“We’ve been investigating for two to three years now. Many were essentially prioritising their own growth and their own competitive advantage over the interests of the community. They were spending beyond their means on things like gaming machines,” Scott told RNZ.
The only trust the department named is One Foundation. It issued a six-day suspension of One Foundation’s operator’s licence after identifying “accounting failures relating to gambling proceeds and a failure to surrender a licence for one of its pokies venues when required by law”. The announcement did not name any other trust.
The trusts, which the regulator calls class 4 gambling operators, run pokie machines in venues such as pubs and are meant to pass the proceeds to community groups as grants. The department says its job as the regulator is to make sure gambling proceeds are managed lawfully and that communities receive the benefit intended under the Gambling Act. Scott said about $340 million goes back to communities every year through the trusts.
She was hopeful about $20 million of the misspent money could eventually be recovered, with repayment plans worked out with some trusts.
“Our role isn’t to put a significant section of the industry out of business but we are really firm that the money needs to be back in the community’s hands in a reasonable period of time,” she said.
The findings come as pokie spending rises. The department’s latest figures, updated this month, show gaming machine profits reached $271.5 million in the April to June 2026 quarter. Gaming machine profits are the amount players lose, which the department describes as the operators’ profits. That was up 8.45 percent on the March quarter and the highest June quarter since the department began reporting in its current format in 2015.
After adjusting for inflation, though, the department said it was the third lowest June quarter since reporting began. Over the year to June, pokie profits totalled $1,051.2 million, up 1.58 percent.
There are fewer machines, and each one is taking more money. The number of pokie venues fell by three to 948 during the quarter and the number of machines fell by 48 to 13,613, continuing a decline the department has recorded since 2015. Average profit per machine rose 8.8 percent to $19,949 for the quarter. Porirua had the highest average per machine, followed by Auckland, Tauranga, Queenstown-Lakes and Hastings.
Those figures help put the $28 million in context. At June quarter rates, people lost close to $3 million a day on pokies, so the misspent amount equals a little over nine days of spending on the machines, by Newswire’s calculation. It is also about 8 percent of the $340 million that Scott said reaches communities in a year. The $11.5 million committed so far is about 41 percent of the total.
Responses from within the sector were mixed. Pub Charity chief executive Martin Cheer told RNZ some trusts may have misunderstood the rules, but said ignorance of the law was no excuse.
“There’s an element of hand in glove really; the industry is regulated and we need guidance from the regulator. But also these are sovereign entities with governance structures and management. They should have done better,” Cheer said.
Gaming Machine Association chair Peter Dengate Thrush told RNZ that mistakes were made in the accounts, but the problem looked worse than it was because of the review’s timeframe.
“If the total figure that the department is now saying needs accounting for is $28m, while that’s a lot of money, spread out over the 10 years that the department has now gone back … it’s only a very small proportion of the total flow,” he said.
He said it was the regulator’s job to keep the industry clean, and that there should be consequences for any trusts that did engage in creative accounting.
“There will be some societies who are in deep trouble, for which this is not just an accounting readjustment. The department occasionally finds some people breaking the law. If there are any at that end of the scale, then they should be prosecuted,” Dengate Thrush said.
The public health organisation Hāpai Te Hauora said the findings raised questions about the whole funding model. “This is not free community money,” chief operating officer Jason Alexander said in a statement. “Giving back money that should never have been misspent is not a penalty. It is the bare minimum.”
The department said most operators had cooperated. “Most operators have worked constructively with us to address historical issues and improve their practices,” Scott said in the announcement.
The investigation is still going. Scott told RNZ the trusts would have to tighten their belts in the coming years to get the money back to communities, and the department said further funding may still be recovered.
“While we’ve made substantial progress, our work is not finished. We’ll continue working with operators to recover funding for communities, improve compliance and maintain public confidence in the integrity of class 4 gambling,” Scott said.
For the clubs and charities that apply for pokie grants, the department says the $11.5 million committed so far will be returned to community organisations through gambling grants.
Does your club or community group rely on pokie grants, and do you think the system works? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply