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Actual, Reasonable and Necessary

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Actual, Reasonable and Necessary

In New Zealand, all costs incurred by gaming societies must be considered to be actual, reasonable and necessary.

In The Southern Trust decision GC10/10 and The Trusts Charitable Foundation decision GC11/10 the Gambling Commission said that it would not be issuing guidelines as to what is acceptable and what is not. The Gambling Commission also said that societies cannot expect to be given spending entitlements or guidelines from the Department of Internal Affairs in advance. In the Gambling Commission's view, each cost is a "matter of judgement in the circumstances". The Gambling Commission has, however, stated that societies will not be censured for "good faith assessments made on reasonable grounds."

In accordance with the above statement by the Gambling Commission, the Department of Internal Affairs has declined to categorically state whether it considers the cost of Positive Outlook's system to be actual, reasonable and necessary. The Department has however, been kept informed in relation to the Positive Outlook project and the proposed costs. A representative from the Department attends monthly stakeholder meetings.

The Department has helpfully set out the general and specific test that needs to be applied by societies when considering whether to purchase the system.

The Department has confirmed that "necessary" means more than merely desirable, convenient or expedient, but less than essential. A necessary cost is therefore a cost that falls somewhere between what is merely desirable and what is essential: The Southern Trust decision GC10/10 and The Trusts Charitable Foundation decision GC11/10.

Necessary means necessary to the gaming operations. Societies must exercise good business practice and due care to ensure that expenses are clearly related to the society's function and the purpose of the Gambling Act 2003.

The predominate purpose and scheme of the Gambling Act 2003 is to minimise the harm caused by gambling. The Gambling Act's purpose is as follows:
3 Purpose

The purpose of this Act is to—

(a) control the growth of gambling; and

(b) prevent and minimise the harm caused by gambling, including problem gambling; and

(c) authorise some gambling and prohibit the rest; and

(d) facilitate responsible gambling; and

(e) ensure the integrity and fairness of games; and

(f) limit opportunities for crime or dishonesty associated with gambling; and

(g) ensure that money from gambling benefits the community; and

(h) facilitate community involvement in decisions about the provision of gambling.

(emphasis added)

Sections 67(1)(p) and (r) of the Gambling Act 2003 require the Department to be satisfied, before granting a licence, that "the risk of problem gambling at the class 4 venue is minimised" and that "there are no other factors that are likely to detract from achieving the purposes of this Act".

When considering the purchase of Positive Outlook's system the Department has set out a specific three stage test. The Department has stated that for the expenditure on Positive Outlook's system to be justified, it would need to be shown that:

a) There is a significant problem with the harm minimisation system currently being employed at the venue;

b) This problem will be mitigated by the proposed facial recognition system; and

c) There are no alternative, more cost effective ways of mitigating the problem.

The factors below will assist societies when making a decision using the above three stage test.

Question One - Is there a significant problem with the harm minimisation system currently being employed at the venue?

The key problems with the current exclusion system are:

a) It is impossible for hospitality staff to accurately detect a large number of excluded persons, especially when the person has initiated their exclusion from another venue. The 2010 Auckland University of Technology's Gambling and Addictions Research Centre report Formative Investigation into the Effectiveness of Gambling Venue Exclusion Processes in New Zealand found that 30% of people breach their exclusion order (most on multiple occasions). A Nova Scotia study found that rates of detection fell over time. The study found that after three months the identification rate dropped to a mere 13%;

b) It is accepted that for exclusion to be effective it needs to be multi-venue. However, currently excluded players are being discouraged from excluding from a large number of venues, purely for administrative reasons;

c) Self-exclusion is accepted as being an effective treatment tool but is currently reserved by treatment providers for their most high risk clients (clients with mental health disorders). The use of the current self-exclusion system is being limited due to a fear of overloading the system; and

b) Long term self-exclusion (2 years) is accepted as being necessary to prevent relapse. However, due to administrative reasons, excluded persons are being encouraged to exclude for only three to six months.

For societies that would like more information regarding the issues that exist with the current exclusion system, Positive Outlook Limited has prepared a paper headed Implementing the International Best Practice Recommendations for Gambling Venue Exclusion – The Case for Facial Recognition Based Player Exclusion [click to download]. This paper sets out in full the significant problems and limitations with the current exclusion system.

Question Two - Will the current problems be mitigated by the proposed facial recognition system?

Positive Outlook's system addressed all the above concerns and implements the vast majority of the key recommendations made by the Auckland University of Technology's Gambling and Addictions Research Centre. The system automatically detects excluded persons. The system is extremely accurate due to the close proximity of the player to the camera and the controlled lighting that comes from the machine's screen. The system will vastly improve detection rates and enables almost instant enforcement via preventing further play. Because the system is automated, long term multi-venue exclusions for the first time becomes practical and available for all gamblers that have any concern regarding their gambling. The system also addresses the major barriers to help seeking and strongly promotes professional treatment support by facilitating contacts and links with the appropriate treatment providers.

Question Three - Is there an alternative, more cost effective way of mitigating the problems with the current exclusion system?

Given the human limitations on identification of excluded players, a computerised system is required. This conclusion has been reached in almost all of the national and international studies that have been done to-date on the effectiveness of the exclusion process. There are currently no alternative, more cost effective ways of mitigating the existing limitations and problems with the current exclusion system. Positive Outlook's system has been developed from conception with the very clear view that the costs must be reasonable.

Other facial recognition systems use extremely expensive military grade cameras located on a wall or ceiling. Such high grade cameras are necessary when the camera is mounted on a wall or ceiling as they only have a split second to identify a person as the person walks past the camera. Positive Outlook's system uses reliable but economical high definition cameras located at very close range to the subject. The close location of the camera to the player enables a lower cost system to be used while retaining an extremely high degree of accuracy.

Positive Outlook's system has been designed so it will largely be a one-off cost. The system's black box can be unplugged from an old machine and moved to a replacement machine. The only parts required to install Positive Outlook's system in a replacement machine is a new player tracking panel and a new wiring loom. Both of these items can be supplied at a very modest cost.

As opposed to a pre-commit or player tracking system, Positive Outlook's system does not communicate with the software in the gaming machine. There is accordingly no need for expensive software upgrades or full machine replacement in the event that a software upgrade is not available.