How Lawful Gambling Provides Crucial Funding for Charities

Every year, millions of dollars are returned to the community through grants and other fundraising in New Zealand. This wouldn’t be made possible without the heavily regulated gambling industry, primarily used to bankroll charitable causes.

Jarrod True is Author of Gambling Law, a comprehensive resource published by Thomson Reuters on the various forms of gambling in New Zealand. As Director of his specialist legal advisory practice, True Legal Limited, Jarrod is an expert on the gambling regulatory framework and has been involved with policy development in this area. Legal Insight New Zealand caught up with Jarrod to get his perspective on how the legislation is going and what organisations and businesses ought to be mindful of when getting involved.

The industry making a difference

The Author and Director’s initial involvement into legal gambling territory began in 2001, when he reviewed one regulator’s key policy decisions, in which the outcome of that case was successful. Since then, Jarrod has had a string of successful Gambling Commission decisions, with many setting valuable precedents for the industry.

His passion for the area of the law stems from the tremendous benefits it offers to New Zealand charities, where he cites non-casino gaming machines as one, great example. Consisting of non-profit organisations, in 2018 they made 28,000 grants, totalling $276 million, to 11,000 recipients.

“This funding is crucial for these community groups, many of whom would not be able to provide services and support in their community without it. It is fantastic to be involved in an industry that makes such a positive difference,” said Jarrod.

Background and comparison to other jurisdictions

For those not closely familiar with the rules and regulations, we asked Jarrod to sum up the legal background.

“Gambling in New Zealand is currently governed by two large pieces of legislation, the Racing Act 2003 and the Gambling Act 2003. The Gambling Act 2003 replaced the Casino Control Act 1990 and the Gaming and Lotteries Act 1977,” he explained.

“As a general rule, gambling in New Zealand is conducted in order to raise funds for charitable or community purposes. The exception to this is private gambling, licensed casinos, gambling conducted by the Racing Industry Transition Agency under the Racing Act 2003, sales promotion schemes, and some instances of class 1 gambling.”

The New Zealand gambling function, fondly described by Jarrod as a “community fundraising tool”, stands out compared to the rest of the world.

“In other countries, gambling is a commercial operation, done to raise commercial profits, with the only public benefit being the taxation revenue generated,” he added.

“The New Zealand model ensures that the harm that comes from the very small percentage of people who are problem gamblers is outweighed by the significant good that comes from the large amount of community grants, employment, and taxation revenue generated.”

When organisations breach gambling regulations

The benefits that gambling profits offer many organisations is clear. But those who host lotteries and fundraise through gambling can break the rules if they are not careful, Jarrod warned.

“It is common for schools and other non-profit organisations to sell lottery tickets as a fundraiser. Many of these organisations are, however, getting themselves in trouble with the regulator by selling the tickets via an online method (such as email, Facebook, or bank transfer). Fundraisers such as lotteries and raffles may be advertised online, but the purchasing of the ticket may not be undertaken remotely via a website, app or over the phone.”

So what about the lawyers reading this article, with clients at risk of doing the wrong thing? Jarrod urged lawyers to remind their business clients that sales promotions fall within the gambling regulatory framework, too.

“A number of large companies have recently been advised by the regulator that their sales promotions are unlawful. For example, it is unlawful for a store to offer a promotion that includes an instant win, if the goods can be purchased remotely from the store. It is therefore unlawful for a supermarket to allow its online shoppers to participate in an instant win promotion. It is also unlawful for restaurants to allow Uber eats customers to participate in a promotion that includes an instant win,” he said.

For legal counsel advising clients on avoiding a brush with the law when it comes to raffles and gambling, Jarrod’s top tips are…

  • Make sure the lotteries and raffles done by your clients as a fundraising tool do not include any ticket sales via an online method.
  • Make sure your commercial clients’ sales promotions that include the ability to have an instant win exclude the ability for customers to participate when they have purchased the good or service online.
  • If you act for non-profit organisations, encourage them to apply for grants from the local gaming trusts, and learn how to improve the likelihood of an application being successful. The gaming trusts have a very simple and prompt grant application process and are always looking for good causes to fund. Gambling Law offers an extensive section with tips to help you improve the chances of your grant application being successful.

Online gambling undermining the current model

It is Jarrod’s view that the current community fundraising model is being undermined by the amount of online gambling that is being undertaken on offshore-based platforms.

“In the last 18 months, New Zealanders spent approximately $381m with offshore gambling providers. The Government is currently looking to address this by exploring the option of establishing a licensed online gambling regime in conjunction with the establishment of tools to deter participation with unlicensed providers,” he added.

With internet usage and behaviour not being an easy thing to regulate, we asked Jarrod what else the government has considered putting in place to stop unlawful gambling.

“The new measures that may be introduced include geo-blocking unlicensed online gambling sites and a prohibition on credit card payments to unlicensed online gambling providers,” replied Jarrod.

Are you a legal practitioner in need of a one-stop resource for gambling in New Zealand? Written to meet the needs of counsel who receive enquiries regarding gambling events, Councils who review gambling venue policies and non-profit organisations who seek gaming funding, look no further than Gambling Law published by Thomson Reuters.

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