New Zealand's pokie trust sector is facing further scrutiny after the Department of Internal Affairs (DIA) identified up to NZ$28m that should have been available for community grants but was instead used for other expenses.
The regulator has been investigating the sector for two to three years and found around three-quarters of the 32 trusts were non-compliant to some degree. About a third were found to have engaged in deliberate "creative accounting".
Some trusts used funds for assets such as new gaming machines, with the DIA finding that certain operators had prioritised growth and competitive positioning over money intended for community distribution.
As of last week, NZ$11.5m has been recovered, however the DIA believes around NZ$20m could ultimately be returned. Repayment plans have been established with some trusts, which could require operators to reduce spending in the coming years.
Industry representatives have acknowledged problems but raised questions over how the rules were communicated and the period covered by the review.
Pub Charity said some trusts may have misunderstood regulatory requirements, although it acknowledged that individual organisations remained responsible for complying with the law.
The Gaming Machine Association also argued that the NZ$28m figure should be viewed across the roughly 10-year period examined by the DIA, making it a relatively small proportion of the overall money handled by the sector.
However, the industry has also backed consequences where misconduct goes beyond accounting errors, including potential prosecution for trusts found to have broken the law.
The DIA has indicated it does not intend to push a significant portion of the industry out of business, but expects misspent funds to be returned to communities within a reasonable timeframe.
Pokie (slot) machines generate about NZ$1bn annually in New Zealand
