Pokies Shutdown Cost New Zealand Charities Millions

Popular pokie machines in New Zealand helped raise hundreds of millions of dollars for the public coffers each year, but following the unprecedented public shutdown of bars and other entertainment venues where the machines are located, charities that receive the funding are under serious financial pressure.

Auckland skyline.

Auckland based charities are under extraordinary financial pressure in the wake of COVID-19 crisis, due to a massive reduction in revenues raised from poker machines across the country. ©darcoil/Pixabay

The machines have been out of action for a few weeks, and their absence is already beginning to cause major problems for various community foundations and charities that benefit from the raised funds. On top of the tough economic situation that is following this lockdown, many community ventures are facing the double-blow of losing most of their gambling funding.

New Zealand has implemented socially benefiting schemes on the gaming sector for many years, significant portions of profit generated from gambling must be allocated towards charitable causes and plowed back into the community. On top of this policy, many charities themselves run and operate so-called gaming societies to raise funds for their community benefiting driven causes, the latest lockdown measures are seriously damaging their financial stability in a variety of ways.

The gaming societies are able to raise a lot of funding through various means, but the main avenue is through the poker machines located in the bars and community centers across New Zealand, these pokies use cutting-edge facial recognition technology to help problem gamblers and prevent underage persons accessing the games. It is estimated that the Pokies raise around $300m in funding for the public sector community causes each year, as required by law the owners of the machines make contributions to non-profit organizations doing local charity work.

As reported in an analysis conducted by the non-profit organization Philanthropy New Zealand, around $3.8bn was raised in funding for societal causes and charities in 2018, of which nearly $400m was a direct result of funds raised from Pokies. Many of the organizations on the receiving end of the funding are sports organizations and local action groups designed to quickly intervene and help people in crisis. Of the 10,000 or so non-profits receiving funding from Pokies, it is estimated around 90% now run at a deficit and are severely struggling to obtain new funding sources in the wake of COVID-19.

There are many case studies that can be drawn upon to drive home this point, and one such example is the South Auckland’s Rising Foundation. This local charity helps local children and young adults in crisis, the charity has already signaled they are in a $1m shortfall and require urgent funding to protect jobs and the delivery of their vital services. This case is one of many, and in New Zealand, there are an estimated 130,000 full-time charity workers representing 27,000 organizations.

Gaming Societies Help Local Communities

More than any other social group, gaming societies help local communities with financial hardships and provide much need funding to crisis management non-profit organizations. The New Zealand legal code enforces that 40% of all profits are donated, these are generated from poker machines across the many pubs, restaurants, hotels and gaming societies, and must be donated to charitable schemes focused on benefiting the local communities.

There are many problems facing these organizations during these unprecedented times, and many have resorted to providing other means of support rather than money as they are working desperately to maintain operations, as the Chief Executive of Philanthropy New Zealand explained,

We are struggling to get funds to the services that are helping communities. A large portion of our budget is now being spent on equipping our people with technology and electronics to allow them to work from home.Sue McCabe, Chief Executive Officer, Philanthropy New Zealand

In addition to these measures, there is a specific set of taxes levied against these pokie machines, of which the yielded revenues go towards funding the Ministry of Health which makes significant contributions to combating the ongoing gambling addiction problems engulfing sections of vulnerable communities. The stark contrast between poker machine tax contributions compared to commercial land-based casinos is astonishing, with orders of magnitude greater relative contributions coming from poker-based gambling.

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