Gaming machine societies will find it easier to fund long-term community projects under amended regulations which took effect in mid-September.

The Gambling (Class 4 Net Proceeds) Amendment Regulations 2011 published in the Gazette on 18 August allow multi-year grants, which can be by instalments for one or more years.

The original net proceeds regulations of 2004 allowed societies to make grants only from funds in hand, preventing them from earmarking money from future gaming machine profits.

Additional requirements will ensure that the grants comply with the Gambling Act 2003, and help mitigate risks. Societies need to be aware that a commitment to a multi-year grant is made in principle. Only when all the requirements have been met will the commitment be binding.

Conversely, grant applicants need to be aware that the in-principle nature of a multi-year grant commitment means it would be imprudent for them to rely solely on it for funding. It would also be imprudent to incur other obligations and responsibilities based on a multi-year grant commitment.

Instead, it would be sensible to have alternative funding options.

Improved outcomes

Despite this, the regulations will help promote better outcomes for communities.

The additional requirements are:

• A maximum four-year limit on the term of any multi-year grant. This fits in with typical cycles for large sports and cultural events. It will also help to mitigate the risk of funding capture by a few grant recipients,

• Societies must advise grant applicants on or before payment of the first grant instalment, that future instalments are conditional on the society still having a licence, funds being available and the grant still being lawful.

• Each grant instalment must be reconfirmed by the society before payment. This will allow the society to withdraw if, for example, its net proceeds committee or grant-making policies change.

• The grant applicant, when seeking future instalments of the grant, must provide documentary evidence that earlier instalments were spent for the intended purpose.

• Societies must disclose multi-year grant commitments in their annual reports to the Department. These reports also have to be published on their websites. Societies must also disclose multi-year grant commitments in information the Act requires about available funds, grants made and declined, and grant criteria and policies.

A further amendment prevents societies accumulating residual profits.

The full text of the regulations can be found in the gambling section of the Department's website: www.dia.govt.nz.

Societies and grant applicants are advised to read the regulations in full and to obtain independent, professional legal and financial advice before committing to multi-year grants.

(SOURCE: Gambits - September 2011 Issue)