Gaming Machine Venue Suitability - Tenpin Spared by Gambling Commission

Jarrod’s article comments on the successful appeals made to the Gambling Commission regarding gaming machine venue suitability and the implications for other venues in New Zealand.

The Department of Internal Affairs (“DIA”) investigated five tenpin bowling centres and proceeded to cancel the venues’ class 4 venue licences (gaming machine licences) on the grounds that the venues were unsuitable. DIA was of the view that the tenpin bowling centres had an “all ages focus” and accordingly breached Regulation 4 of the Gambling (Harm Prevention and Minimisation) Regulations 2004 (“Regulation 4”). Regulation 4 provides that a venue’s primary activity must be entertainment, recreation or leisure focused on persons 18 years and over.

Three of the venues’ appeals were placed on hold while two appeals were pursued, one by the Perry Foundation and one by Scottwood Trust. The writer represented both the Perry Foundation and Scottwood Trust at the Gambling Commission.

Prior to cancelling the venues’ licences DIA was provided with evidence that:

• The sport of tenpin in New Zealand is dominated by adults;
• Over 80% of the venues’ income from tenpin bowling is from adults;
• Over 95% of league bowlers are adults;
• Over 50% of the venues’ operating hours are outside of times which children would normally attend;
• The vast majority of people who visit the venues are over 18 years;
• Over 90% of the venues’ marketing budget is spent attracting persons over 18 years; and
• The management of the venues concentrates on the adult market.

Although DIA accepted the above statistics, DIA took the view that catering for children and having 20% of revenue from children, and children freely accessing the venues made the venues unsuitable.

The Gambling Commission held that the word “focused” in Regulation 4 did not carry a particular legal meaning. The term was given its ordinary meaning of “a centre of interest or activity” or “close or narrow attention; concentration”. The Commission noted that while the focus of the primary activity must be on persons over 18 years of age, exclusive attention to, or participation by, persons over 18 is not required. The Commission was critical of DIA’s narrow approach of requiring the venue to be analogous to a pub. The Commission confirmed that a venue is not rendered unsuitable merely because of the presence of persons under 18 years. Regulation 4 requires an assessment of the focus of the primary activity (i.e. tenpin bowling), not an assessment of the venue as a whole.

The successful appeals have set a valuable precedent. DIA have been advised that their previous approach was too narrow and that a less stringent test should be applied. The Gambling Commission decision is also useful in that the Commission has not set any percentages of turnover or patronage that are required. Other venues which have turnover and patronage figures which are not as strong as the above statistics will still be considered suitable if they can show that they place interest, close attention and/or concentrate on their adult customers. Given that the adult market is the market with the highest disposable income, this should not be a difficult test for venues to satisfy. Most (if not all) tenpin venues in New Zealand should now be deemed by DIA as suitable. The decision is also of considerable assistance to restaurants and other non tavern type venues which have gaming machines.

The Commission in the Perry Foundation decision also looked at the interesting issue of whether a bar within a tenpin complex is the “venue” or whether the complex as a whole is the “venue”. It is not uncommon for tenpin venues or restaurant venues to have their gaming machines located within a self contained and defined bar. If the tenpin centre is deemed to be the “venue”, the venue’s primary activity is tenpin bowling and it will be subject to review by DIA. If the “venue” is not the centre as a whole, but simply the bar area, the venue’s primary activity is the sale of alcohol. If the venue’s primary activity is the sale of alcohol the venue without question will be considered to be focused on person over 18 years of age.

The Gambling Act 2003 defines “class 4 venue” as “a place used to conduct class 4 gambling.” The definition of “place” includes a building and a room. In a previous decision (GC10/05) the Commission confirmed that it is possible for a licence to be granted by DIA for individual parts of a building.

The Commission in the Perry Foundation decision held that it did not need to determine the issue of what constitutes a “venue” because it was satisfied that the entire complex was suitable. The Commission however gave some indication as to how the issue may be considered in the future. The Commission noted that an examination would be held as to whether the various activities undertaken in the building were sufficiently co-ordinated so that the entire building appeared to be one business or whether the activities were separate with the result that several businesses appeared to operate within one building. In making such an assessment the Commission will adopt the view point of a consumer, i.e. would a member of the public gain the impression, from the get up, advertising and operation of the activities at the complex that the activities formed one enterprise or more that one. The Commission will look at the size of the bar, whether it is walled off from the rest of the venue (except for some limited access way), whether there is an external access and the positioning of the machines.

The writer is of the view that the Commission’s formula as detailed above is too restrictive and may not be followed in future decisions when the issue is required to be formally determined. As detailed above, it is possible for a room within a building to obtain a class 4 licence. If that room (i.e. the bar area) is separated from the other areas of the building (apart from an adjoining access), the bar should be treated as a separate venue. The bar is the place where class 4 gambling is being conducted, not the complex/building as a whole.

The Perry Foundation and Scottwood Trust appeals are a positive step forward for venues which are not a typical tavern type venue or a Club. The Commission’s decision sets a valuable precedent regarding the interpretation of Regulation 4 and may lead to some further debate and rulings of the issue of what constitutes a venue.