Lottery Grants System Under Serious Fire

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The New Zealand Department of Internal Affairs (DIA) has released documents for the lottery grants system. It is the first time the paperwork has been made public since inception. Many reviewing the paperwork have declared that the system used is nothing short of incoherent. Some have said the model is broken while others are declaring that changes need to be made immediately.

Jan Tinetti the Minister of Internal Affairs has suggested that the link between charity and gambling be cut. She pointed out that organisations getting their funding from Lotto have expressed hesitation. Sports NZ, Creative New Zealand, the Film Commission and Ngā Taonga Sound and Vision currently receive 42% of total profits. If the connection between gambling and charity is cut these organisations would be needing new funding.

According to Tinetti there is a better way for these groups to get funded.

A Big Reliance On Gambling

Looking closer at profit allocation the mentioned groups rely on Lotto. Creative New Zealand currently gets 72% of its funds from Lotto. Sport NZ gets 40%, the Film Commission 32% and Ngā Taonga Sound and Vision 16%. It is funding that would be lost should Tinetti’s words be taken to heart.

Breaking down grant allocation reveals why Tinetti is so upset. Of all Lotto’s profits education and research receive just 1.7%. Environmental and animal welfare groups receive 1.2%. It is a big question as to why such a small amount is going to the organisations that need it the most. Especially considering how much emphasis Lotto puts on gambling funds going back to communities.

Anonymous experts have previously come forward to declare that Lotto’s are misleading. The released documents make clear why these experts have been so vocal.

How The Dollars Are Split

Experts have problems with how Lotto is run even before profits are allocated. Breaking down how a Lotto dollar is split puts a light on some startling realities. The truth is that 25 cents of every dollar is actually counted as profit. The majority of the money goes to taxes, commissions, prizes, advertising, and other overheads. Hence the reality is that most Lotto money does not go back to the community.

Even still $1.5 billion was spent at New Zealand online casinos and other gambling services. This equates to $370 million going to the Lottery Grants Board. In more detail this means that since 1987 $5 billion has been allocated to various groups.

Systematic Bias

Looking at the DIA analysis of the lottery grant model reveals more details. According to the DIA the model heavily favours some groups over others. The DIA claims that Māori, Pacific peoples and other ethnic groups receive less funding. A reality that is shocking due to Lotto saying that it favours these groups.

The DIA reported that applicants from these groups have experienced bias against them. A spokesperson from a Māori group explained that proposed initiatives are not recognised by the lottery grant model. Some Māori and Pacific groups have also admitted that they feel disproportionate scrutiny put on their applications.

Who Is The Community?

Meanwhile Edmond Fehoko of the University of Auckland made a statement of his own. He pointed out that the idea of Lotto giving back to communities is flawed. He stressed that Māori and Pacific people are buying Lotto tickets but not seeing the money returned. Fehoko concluded that with 70% of Lotto sales coming from poor communities the money should go back to the poor.

The DIA had similar findings. It was found that although the richest communities provided just 26% of Lotto sales they receive 88% of the funding. The poorer communities see just 12% of the funding.

Discomfort With Gambling Funds

Beyond the disproportionate funding model there are other issues. The DIA found that many communities refuse gambling related funding on principal. Selah Hart spoke for the Hāpai te Hauora Māori public health agency. She explained that her organisation deals with gambling related harm.

As such she expressed discomfort at getting any funding from Lotto profits. She said that although the money is accepted the concept did not sit well with her. She concluded that there must be a better way to help those in need.

As to whether changes are made to address all of these problems and a better way is found remains to be seen. In the meantime it is clear that many are unhappy with the grants model for numerous reasons.

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