TAB to get more pokies, run virtual horse races in 2020

Community groups, sports bodies (again) and problem gamblers could be the big losers in a second round of racing industry reform due to become law at the start of 2020. 

Two of the most controversial reforms designed to boost revenue for the horse and dog racing industry – the removal of restrictions on the TAB operating pokie machines and the introduction of virtual horse racing - are set to be introduced in a second round of gambling reform legislation to come into effect on January 1.

The changes – which sparked opposition and alarm when first mooted as part of the recently passed Racing Reform Act – were withdrawn from the first round of Minister For Racing Winston Peters’ sweeping reforms due to concerns their complexity might delay an immediate revenue boost for the racing industry, documents published by the Department of Internal Affairs reveal.

A DIA briefing to Peters notes that all but five of 1187 public submissions on a sub recommendation in the Messara Report into the state of the racing industry opposed removing restrictions on the TAB’s operation of Class 4 gaming (pokie machines).

The common theme of the submissions against allowing the TAB to operate more gaming machines was that pokie money currently used for community projects will instead be siphoned off by racing interests.

The five submissions in favour of the change were from interests aligned with the racing codes.

The DIA advice is dismissive of the level of opposition to the repeal of clause 33(3) of the Gambling Act – which prevents the Racing Board from acquiring licenses from existing Class 4 operators – noting many of the submissions were “templated” and sent by community bodies with a vested interest in opposing the change.

“The submissions came from charities, schools, volunteer organisations, community groups and sports clubs who rely on Class 4 Gambling to provide services to the community, and from individuals, many of whom benefit as a result,” the advice states.

The report’s summary of the objections states the key themes were:

* The difficulties in fundraising and the importance of class 4 funding with their prime concern being the recommendation will result in less funding for their organisations and clubs.

* Moral objections to funds generated from gambling and ‘pokie machines’, as one submitter described: “I think it’s important that communities receive the funding so good can come from something that can be so destructive with families. I believe it is unfair to give the funding to the one particular group that actually encourages this.”

* Another submitter noted: “with demand for social services in our communities at significant levels, reducing community funding to redirect it to the racing industry would be at odds with the Government’s stated position on improving New Zealand’s health and wellbeing”.

The report predicts a “likely negative reaction” to the law change and suggests this could be tempered by capping the Racing Board’s national share of pokie machines at 10 percent – an increase from the current level of three percent.

With Sport NZ one of the key objectors to allowing the racing industry to claim a larger share of Class 4 gaming revenue, the proposal potentially pits Minister for Sport Grant Robertson against Minister for Racing Winston Peters.

“Sport NZ considers the removal of the current restriction would result in a transfer of funds from contestable community good projects, including sport and recreation initiatives, to racing should the number of NZRB venue increase,” its submission states.

That potential loss of funding will further alarm sports bodies already fearing a decline in their share of sports betting revenue following the passing of the Racing Reform Act, which grants the Minister for Racing total discretion over how sports proceeds are distributed.

Despite the opposition, the law change allowing the Racing Board to acquire more pokie machines was “strongly supported” by the Ministerial Advisory Committee (MAC) appointed to assess recommendations in the Messara Report.

The five-member MAC appears to have accepted a claim in a submission by the Racing Board that its operation of pokie machines would lead to less gambling harm due to factors including better trained staff and the absence of alcohol sales on TAB premises.

That claim, however, was flatly rejected by the Problem Gambling Foundation.

“The TAB has no lesser, or greater, responsibility to train its staff in host responsibility than other providers of gambling products and in fact there is no evidence that this claim is the case,” a PGF spokesperson said.

“There is no proven link between the sale of alcohol and the desire to bet on horse racing, football or other events. It is also unclear how the TAB proposes to buy a whole lot of pubs with pokies and not serve alcohol."

The PGF agreed that money currently granted to community projects would likely go instead to racing interests - however pokie machines created the highest level of gambling harm regardless of who operated them and how the proceeds were spent.

“If Section 33(3) of the Gambling Act is repealed the racing board could buy the venues that have pokie machines and those profits will go to racing board interests," the PGF spokesperson said.

"Under the Gambling Act, pokie trusts are required to return a minimum of 40 percent of gross machine proceeds to the community in the form of grants. This doesn’t apply to the NZRB; it retains most of the proceeds and returns 20 percent to amateur sport (an arrangement made under the previous Government).

“However, there is absolutely no amount of charity or community funding that makes up for the harm that pokies cause in our communities. Pokies in pubs and clubs are still the most harmful form of gambling and, while they are in our communities, they will still be causing harm, no matter who holds the licence to operate them."

The MAC also “strongly supported” legislating to allow the TAB to introduce virtual horse racing as a means to boost revenue to support the racing industry.

Betting on virtual horse racing, which is already commonplace in Australia, operates in a similar way to live horse racing, with punters wagering on computer-generated horses in races in which the outcome is randomly generated by a computer.

Its attraction to the gambling industry is that it means race betting can be offered at times when race tracks are closed.

The PGF’s assessment of virtual horse racing is that its introduction would carry a high risk of increasing gambling harm.

“It’s accessible 24/7, can be literally carried around in your pocket, and can very easily be hidden,” the spokesperson said.

Plans to include legislation allowing virtual horse racing in the first Racing Reform Act were scrapped due to DIA advice that the fact that race outcomes were computer generated meant they were not actually races.

As such, the DIA “considers that any work on virtual racing games may be more appropriately dealt within broader work on the policy and regulatory settings relating to online gambling”.

That complexity meant any legislation would be better introduced in the second round of racing reforms.

Minister for Racing Winston Peters told Newsroom via a statement that he did not have a "predetermined view" of the proposed legislation.

“While the interest by sport groups on these topics is understandable, as the Minister for Racing I don’t have a predetermined view." Mr Peters said.

"This is because there is a lot of water to flow under the bridge before the key features of the next bill are landed. Firstly DIA officials need to provide advice, papers for Cabinet have to be prepared, and cross party political consultation needs to be undertaken. Even then, the legislation will be subject to a select committee process, which always has the potential to shape a bill. All interested stakeholders will have an opportunity to provide feedback on the future bill.”

Newsroom is seeking comment from Minister of Sport Grant Robertson.

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