Letter: Pokies

00:01, Aug 15 2013

A good article recently by Nicola Fallow on pokie machine funds left some areas of uncertainty.

Could she explore or do a further article that shows how a pokie machine operates?

Her article referred to $15.2 million lost to pokie players in Invercargill last year.

If there are approximately 20,000 adults in the city, that equates to about $600 a year. This is about the same as playing Lotto weekly for a year. If however, only 20 per cent of those adults play the pokie on a regular basis the loss to those adults who do play is about $2000 to $3000 a year. This is less than what most smokers spend a year.

The way I understand a pokie to operate is as follows:

You put in $10. On average, the pokie returns 85 per cent to the player. So, if you got, let's say $8 in credits while playing and you use the credits, the system rakes 15 per cent off the credits as well.


It would be helpful if the term ''lost'' in her article means what is put into the machine (including the use of the credits) minus the 15 per cent (on average) that is taken by the taxman, the owners of the machine and the community distribution trusts.

But this does not sound right, as the ILT Foundation has about $5m to $6m to distribute.

If that is what they distribute (and it is about 5 per cent to 8 per cent) then the amount put into these machines must be much higher than the ''lost'' totals referred to.


Nicola Fallow replies: Mr Clark is right, the amount gambled in Invercargill's pokie machines is likely to have been much larger than the $15.2 million players ultimately lost.

This is because turnover is the total amount, including GST, wagered by gamblers and includes a ''churn'' factor, or re-investment, where the same dollar is counted more than once.

So, if a player has $10 to spend on a gaming machine and plays until the full $10 is lost, it is likely to be recorded on the machine's meters as $60 or more of turnover.

Whereas expenditure, or players' losses, is the total amount wagered, including GST, minus the amount paid out or credited as prizes.

From the gaming operators' perspective this figure is their gross profit, or revenue, and in the above example would be calculated by the machine's meters to be $10.

The latest national gaming machine turnover figures provided by Internal Affairs are for the financial year July 1 2011 to June 30 2012 are:

Turnover $9245m; prizes $8391m and expenditure $854m.

The department does not break down these figures beyond the national level.

Of the $15.2m players lost in Invercargill's pokie machines we estimated about 58 per cent went to operating costs, including taxes and a problem-gambling levy, and about 42 per cent was available for distributing to the community.

The Southland Times