The Lessons to be Learnt from the Latest Stinging Gambling Commission Decision

In the latest decision of the Gambling Commission issued on 4 August 2009 the Commission not only upheld the Department’s suspension of five of Eureka Trust’s venue licences but then proceeded to impose larger suspensions than what the Department had originally sought. The Commission also made an interesting ruling requiring each and every venue agreement to be formally approved by the Department even when the agreement used was a generic pre-approved form which had simply had the expiry term recorded.

Eureka had failed to promptly advise the Department of changes to its venue operators and venue managers and failed to seek formal approval when a standard venue agreement had been re-signed. The delays ranged from three months to eleven months.

Given the Department’s totally unreasonable and unlawful current requirement for all trustees and adult discretionary beneficiaries of family trusts to complete key person forms it is not surprising that some notifications can take up to three months to complete. The Commission held however that notification did not require a formal licence amendment and supporting personal information forms. The Commission confirmed that notifications can be made by phone or email. It is then up to the society to subsequently file a licence amendment application with the supporting personal information forms to enable the Department to continue to be satisfied that the venue personnel are suitable. If the suitability information is not subsequently provided the Department can then take formal steps to suspend or cancel the venue licence.

The one day suspension proposed by the Department for the three month delay was doubled by the Commission to two days. The two day suspension for the eleven month delay was increased to three days. The Commission also publicly labelled Eureka as having “systematic disregard for sections of the Act and a general culture of tardiness and neglect”.

The lessons learnt from the decision for societies and venues are:

• Ensure the Department is notified within two weeks by email of any change in venue operator or venue manager;
• Forward all venue agreements which are signed to the Department by email for formal approval (regardless of whether the main content is identical to a previously pre-approved generic venue agreement); and
• Be aware that when Gambling Commission appeals are filed the Gambling Commission will look at the matter afresh and is totally within its rights to increase any sanction previously imposed.

Was the Commission right? Were the penalties imposed fair and reasonable?

The requirement to submit pre-approved generic venue agreements for re-approval each time the expiry date is filled in is pedantic and a waste of time and money (community money and tax payers’ money). Section 69(1) could have easily been interpreted as requiring a pre-approved generic venue agreement to be only re-approved when key content is changed.

The penalties imposed on Eureka were light having regard to the maximum six month suspension but are disproportionate to the two previous suspensions made. In the Whitehouse Tavern case and the Dunedin Casino case modest suspensions were imposed for issues a lot more serious than Eureka’s. These decisions are summarised as follows:

• In the Whitehouse Tavern decision the Department proposed to suspend Whitehouse Tavern Trust’s licence for one month relating to four blatant payments of gaming funds for non-authorised and illegal purposes. The offending was of a serious nature, not a technical breach. The one month suspension proposed by the Department was reduced to four days by the Gambling Commission.
• In the Dunedin Casino case Ms Keenan, an accounts clerk, stole money from her employer. Over a three year period Ms Keenan’s gambling turnover reached a staggering $6,313,370.00. The Casino was aware of Ms Keenan’s level of gambling but failed to offer her the prescribed information or advice about problem gambling. Although this was one of New Zealand’s largest cases of fraud involving a problem gambler and a casino, a suspension of only two days was imposed.

The Commission had the opportunity to address the real reason for notification delays but failed to do so. It would have been valuable for the Commission to rule on the Department’s unlawful practice of deeming adult discretionary beneficiaries of family trusts to be venue key persons and requiring each beneficiary to complete a key person form. This battle will have to wait until another day.