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Gaming Machine Association Of NZ: Dramatic Fall In Class 4 Spending Causes Concern

The Gaming Machine Association of New Zealand is concerned that annual spending on Class 4 (gambling machines) dropped by 5.4 per cent compared to the previous year according to the most recent DIA Gaming Machine Profits’ (GMP) quarterly update. Coupled with inflation at 4% for the year to March 2024 means the total drop was effectively 9.4%. This represents the most significant fall in spending since the Global Financial Crisis and could be a material risk to many small venues that host gaming machines and those local community groups who receive funding from grants.

GMANZ Independent Chair, Peter Dengate Thrush, said he had spoken to his members and some community groups, many of whom were worried for their future.

A significant feature of the decline in spending is that figures for the quarter ending March 2024 are 8.8% down on the previous quarter. “While some of this is part of a regular seasonal dip, the implications for our hospitality and entertainment sector is ominous” said Dengate Thrush.

“Many of our smaller venues and a lot of community groups rely on C4 funding. A drop of this size could mean that small hospitality businesses and organisations so important to a thriving community could face closure,” says Dengate Thrush.

“On top of this, central government will now see a decrease in tax revenue, at a time when it seems so many people and organisations are already struggling.”

The money raised from C4 machines is distributed as paid-out prizes, government fees, GST, and a contribution to the (recently increased) Problem Gambling Levy. After that, venues use the money for costs, then 100 per cent of the remainder is provided back to community groups in the form of grants.

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“Our members are responsible for providing roughly $330m per year to nearly 10,000 community groups around the country. These community grants, funded by Class 4 gaming, are used to pay for rescue helicopters, sports and cultural groups, disability support groups, and vital services like ambulances and defibrillators.

“We know from surveying grant recipients that they rely very heavily on those grants, and nearly all have said they would not be able to find another source of funding. This means a reduction of this size is a real cause for concern,” says Dengate Thrush.

GMANZ also notes that there has been no increase in the rate of problem gambling in nearly two decades, with the estimated rate in New Zealand being consistently 0.02% of the adult population, of which less than half relates to C4.

“We acknowledge that there are those who are at risk of harm and we hoped that the increased levy contribution would mean more people could get access to the help they need, while also giving venues more modern technology to help staff identify potential problem gamblers. Sadly, that sort of considered and helpful approach appears to be being ignored, and flawed policies like “sinking lids” that reduce the number of gaming machines in a region are being increasingly used instead. This is despite the fact that sinking lid policies have not led to a material reduction in problem gambling."

“Over the last 20 years, there has been a drop of approximately 10,000 C4 machines in New Zealand, while at the same time the rate of problem gambling has remained the same. Clearly, what we have been doing isn't working. All it has done is put venues under pressure and reduced funding for community groups.”

“Targeted support services that are measurable and accountable, combined with the use of technology would be far better to address potential harm, instead of crude and blunt policies like sinking lids. We know that central government will be unable to replace the funding that C4 grants provide, so we hope that the hospitality industry can rebound during the rest of the year. Until then, we will be doing everything we can to help our members through these tough times" says Dengate Thrush. 

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