The New Gaming Machine Venue Transfer Process, a Positive Step Forward

Jarrod True, a Partner in law firm Harkness Henry explains and comments on the new venue transfer process.  Jarrod’s article discusses the new procedure and what additional improvements could be made.

Prior to March 2006 the Department of Internal Affairs refused to process any class 4 venue transfer between Societies unless the outgoing Society provided an unconditional release.  The Department would not accept a release which was subject solely to a final audit being undertaken and final bankings being made.  Most Societies were understandably reluctant to provide such a release.  The net effect was that an outgoing Society would remove its machines, undertake a final audit and when the final bankings were made, then provide an unconditional release.  The venue would then be without machines while the new venue licence application was subsequently submitted and processed, a period of at least a month.

The problems with the venue transfer were discussed with the Department by Grant Paterson from the Perry Foundation and Community Gaming Association Chief Executive Francis Wevers.  Grant and Francis were successful in negotiating with the Department and obtaining a new venue transfer process which reduces considerably the risk of a venue being without machines for a considerable period during a transfer.

The Department no longer requires an unconditional surrender.  The Department will accept a letter from the outgoing Society as follows:

“The Northern Foundation Trust releases Dave’s Bar and Lounge, 34 Victoria Street Hamilton, effective from 2 July 2006 [a future date – e.g. a date in one months time].”

Upon receipt of the above surrender and new venue licence application the Department commences processing the application.  On the date of the surrender the Department will not contact the outgoing Society to ensure that gaming has ceased, and the Society has effected the surrender.  The Department will rely on the date provided in the surrender notice, unless otherwise advised.  The outgoing Society may however advise the Department that they are withdrawing their surrender notice prior to the date given.  The outgoing Society can therefore undertake a final audit 5 days before the surrender date and if the gaming proceeds have not been promptly banked withdraw their surrender notice.  This process provides the necessary protection for the outgoing Society while still enabling the new venue licence application to be processed and issued at the time of the scheduled changeover date.

If a surrender notice is withdrawn by the outgoing Society due to late banking, the Department will not permit gaming to re-commence at the venue until the outstanding gaming machine proceeds have been banked.

The Department has a policy of processing new venue licence applications within 20 working days.  The Department has confirmed that they are achieving this goal despite current staffing shortages.  Inquiries can be made as to how the Department is progressing with the new venue licence application.  In the event that the new licence application is unlikely to be processed by the surrender date, the Department is happy for the outgoing Society to extend their surrender date to enable the new venue licence application to be processed.  Further, in the event that the outgoing Society has ceased gaming at the venue prior to the specified surrender date and all gaming proceeds have been banked, the Department will accept an amended surrender letter with an earlier date to enable gaming to immediately re-commence at the venue.

A flow chart detailing the new venue process is attached below.

The above process provides protection for the outgoing Societies while enabling a transfer to take place with minimal downtime for the venue operator.  The process confirms the Department’s willingness to cooperate with Societies and to assist with a smooth transition.  The new process still however require the outgoing Society to provide a written surrender.  Without a written surrender letter the Department will refuse to process the new venue licence application and return the same as being incomplete.  There is no means to require an outgoing Society to cooperate and provide a written surrender with a future surrender date.  It is not uncommon for an outgoing Society who is aggrieved with the lost of its venue to simply refuse to cooperate and provide any written surrender.  Given that the Department will not commence processing applications until the surrender is received, the failure on the outgoing Society to cooperate will result in the venue being without machines (and thus venue payments) for at least a month.  The process accordingly still has its difficulties.

A simple method of reducing the downtime when the outgoing Society is uncooperative would be for the Department to process a venue licence application prior to receiving a written surrender letter, but to hold granting the licence until the surrender is received.  Once the surrender letter is eventually received the new licence would be able to be immediately issued.   Given that outgoing Societies are likely to become more and more uncooperative it would be appropriate for the Department to continue with its commitment to work with the Industry and look at processing venue licence applications at the time of receipt and withholding the issuing of the licence until the surrender letter is received.  Such an approach can be achieved within the current legislation and is a sensible solution to what will otherwise be an ongoing problem for all Societies and venues.