Conducting Class 1 and Class 2 Gambling

Lotteries, prize competitions, games of change and instant games

If you are conducting a lottery, prize competition, game of chance or instant game and the total value of prizes offered or awarded to winners of the gambling, or to winners in one session of the gambling is less than $5,000, you do not need to obtain a licence from the Department of Internal Affairs.

However, you must adhere to the Gambling Act 2003 and relevant regulations and game rules for the type of gambling you are organising.

Gambling Act 2003

Lotteries, prize competitions, games of chance and instant games may fall into either class 1, class 2 or class 3 gambling, as defined by the Gambling Act 2003. To run class 1 and class 2 gambling you do not require a licence.

Lotteries

A lottery is gambling that involves a random draw that takes place after all participants have entered. Raffles and sweepstakes are common types of lotteries.

Prize competitions

Unlike a lottery, a prize competition is gambling that requires participants to exercise some knowledge or skill.

Games of chance

A game of chance is gambling that does not include a lottery, prize competition, instant game, gaming machine or casino gambling.

Instant games

An instant game is gambling where a winning ticket or entry is determined before or simultaneously with the sale of tickets randomly or wholly by chance.

Consideration must pass from a participant to the organiser for the activity to be considered gambling covered by the Gambling Act 2003. For a full definition of these forms of gambling, please consult the Gambling Act 2003 and relevant game rules.

Class 1 gambling

• Prizes and turnover do not exceed $500

Class 1 gambling may be conducted by either individuals or societies. If an individual is conducting gambling, the turnover of the gambling less costs must be applied to reward the winners of the gambling.

If a society is conducting gambling, the net proceeds of the gambling must be applied to authorised purposes.

If the gambling is conducted in sessions of more than one game, no more than one session may be played per day.

Class 2 gambling

• Prizes exceed $500 but do not exceed $5,000
• The potential turnover of the gambling exceeds $500, but does not exceed $25,000

Unlike Class 1 gambling, only societies may conduct Class 2 gambling. Societies can be either corporate or unincorporated societies. As with Class 1 gambling, net proceeds of the gambling must be applied to authorised purposes.

Unlike Class 1 gambling, the Gambling Act 2003 sets out a number of point of sale requirements, amongst other matters, for the selling of tickets or entry forms when gambling is conducted at the Class 2 level. Organisers conducting Class 2 gambling should familiarise themselves with section 25 (requirements) of the Gambling Act 2003.

No remuneration or commission to be paid

The Gambling Act requires that for Class 1 and Class 2 gambling no commission is offered or paid to, or received by, a person for conducting the gambling. In addition, no remuneration is to be offered or paid to, or received by, a person for conducting the gambling, except to an authorised representative of a society if the gambling is conducted by a society.

Regulations

Regulations made under the Gambling Act 2003 impose additional requirements on the organisers of various classes of gambling. Regulations setting out prohibited prizes must be adhered to when running your gambling activity. For a current list of the prohibited prizes, please visit the Department of Internal Affairs website www.dia.govt.nz.

Game rules

In addition to adhering to the Gambling Act 2003 and relevant regulations, gambling organisers must adhere to game rules for the particular game that is being organised. Game rules are a form of regulation. As of 1 July 2004, there are game rules for lotteries, prize competitions, instant games and games of chance.

There are a number of rules that cover games played in all classes of gambling. However, Class 2 and Class 3 gambling is subject to more rules than Class 1 gambling. For example, there are core sets of rules that must apply to all lotteries, however lotteries played at the Class 3 level are subject to a number of additional ticket, record retention and audit requirements.

In what circumstances will a licence be required to conduct these forms of gambling?

If the total value of prizes offered or awarded to the winners of the gambling activity, or to winners of one session (if the gambling is conducted in sessions of more than onr game) exceeds $5,000 then a licence must be obtained from the Department of Internal Affairs.

Need more information?

The Gambling Act 2003 is administered by the Department of Internal Affairs.

The Gaming Compliance Unit (Licensing) can provide application forms, assistance with your licence application, and advice on any questions you may have.

Gaming Compliance Unit (Licensing)
46 Waring Taylor Street
PO Box 10-095
WELLINGTON

Telephone: (04) 494 0700 or 0800 257 887
Fax: (04) 494 0656

Website: www.dia.govt.nz

Email: gaming.compliance@dia.govt.nz

See also: Gambling Act 2003: Fact Sheets