Watchdog cuts off race clubs' pokie cash

Photo / Hawke's Bay Today

The Department of Internal Affairs is to ban three big gambling machine foundations from giving money to four racing clubs after an investigation into how the clubs were given millions of dollars in grants.

The department is also considering whether to suspend the licences of seven pokie machine venues targeted in the investigation, which came after the four northern clubs received a total of $5.4 million over two years.

Up to the previous year they had received less than half a million dollars between them.

The ban is part of the latest crackdown by the Internal Affairs Department on the way huge sums of money are pumped from pub gambling machines through charitable foundations to trotting clubs.

It is understood the latest investigation centres on conflicts of interest among those giving the money and those receiving it.

Internal Affairs gambling compliance director Mike Hill said yesterday that the investigation came after a "significant jump" in the amount of money going to the four clubs was noticed.

"What we're concerned about is that there's got to be a separation of interest between the key society, the venue and the key recipient of the grants," Mr Hill said.

"The grants should not be influenced by the key society, the venue or the key recipient."

The investigation found the Lion, Infinity and Perry foundations gave $5.4 million between 2006 and last December to the four northern racing clubs.

The Manukau, Kumeu and Franklin Trotting Clubs and the Thames Harness Racing Club had previously received pokie grants totalling around $400,000 up to 2005.

The other party in the investigation is Northern Hospitality Management Ltd, which operates at the seven gaming machine venues.

The investigation looked into the grant application process, the flow of money and the relationship between the three foundations, the venue-operating entity and the recipient of the grants.

"There's a significant amount of money - a significant jump that has occurred - that has been put into these four trotting clubs, and we believe the grants are inconsistent with sections of the Gambling Act," Mr Hill said.

This year, it was alleged that a complicated pub-buying venture had been set up to pump millions of dollars of pokie money into harness racing.

Northern Hospitality Management operates 36 bars around the country and has 624 pokie machines.

It is owned by former Harness Racing NZ executive member Ian Shaw and racehorse owner Alf Wallis. The company could not be contacted last night.

Mr Hill said decisions about gaming machine grants should be transparent, and free from conflicts of interests or conditions.

A new gambling licence condition would prevent the three major societies giving grants to the four trotting clubs.

Seven pokie venue operators in which the clubs had invested could also face legal action and suspension of their licences for 21 days.

None of the foundations or the racing clubs returned calls last night.

Mr Hill said about 11 investigations into similar cases had taken place in the past two years - mostly to do with racing clubs and other sporting groups, including rugby clubs.

The three foundations have 15 days to appeal against the Internal Affairs move to take the case to the Gambling Commission.

Only one has done so.

Mr Hill said because the case was now before the commission, he could not name the group. But if a foundation refused to comply with a commission decision, the department would remove its licence and take the case to the High Court.

IN THE MONEY

* The Lion, Infinity and Perry foundations gave $5.4 million between 2006 and last December to four northern racing clubs.

* Up to 2005, the Manukau, Kumeu and Franklin Trotting Clubs and the Thames Harness Racing Club received pokie grants totalling around $400,000.