Bookmaking on horse racing events was made illegal in New Zealand in 1911. Until 1949, the only legal form of betting was on-course at race meetings. When off-course betting was legalised in 1949, consistent with the statist approach of the time, a single national agency, the Totalisator Agency Board, was established to regulate and control betting in New Zealand.

Like most aged, monopolistic government agencies, it has struggled to keep up with the times, including the growth of on-line, offshore betting on sporting events other than just horse racing; on-line casinos; and other forms of gaming, like Lotto. The TAB’s ongoing financial viability has been an issue for some years now.

But because of mounting social concern about the proliferation of gaming opportunities and the impact on vulnerable people, as well as potential links to organised crime, no government has been prepared to abolish the TAB in favour of a competitive, properly regulated private sector market for betting. So, the current antiquated monopoly has remained, and increasingly frustrated punters have sought better returns from the range of mainly Australian and other offshore betting agencies now available online.

Against that background, the government’s announcement of a new strategic 25-year partnership between the TAB and the British betting Entain that will guarantee our racing industry additional funding of nearly $1 billion over the next five years seems sensible. At the same time, the government is proposing to extend the TAB’s current monopoly for racing and sports betting to cover online betting.

In other words, all forms of betting, other than through the TAB, are likely to be outlawed, effectively entrenching the intent of the establishment of the TAB, three quarters of a century ago. It is not clear whether this is a component of the Entain deal or separate from it. How this might be achieved without resort to Chinese-like censorship of New Zealanders’ online access is another matter altogether, raising its own questions about the extent to which the government is prepared to go to protect the TAB monopoly.

The racing industry’s delight at this latest windfall is drowning out other more concerning aspects of this new deal, specifically related to conflict of interest.

This has been a problem that has dogged the Hipkins’ government in recent months. First came the unfortunate case of former Minister Stuart Nash who proved himself incapable of separating his private connections from his Ministerial responsibilities. Then there was the situation surrounding Minister Kiri Allen and her now infamous speech at the Radio New Zealand farewell to her partner. In both cases, Prime Minister Hipkins was very slow to act, only dismissing Nash when it became impossible to retain him any longer, and declining any action regarding Allen, even after it became clear her speech was no accident.

In doing so, the Prime Minister appears to have relied on an overly literal interpretation of the Cabinet office rules regarding conflict of interest. There was arguably no material gain for both Nash and Allen from their actions, apparently explaining Hipkins’ reluctance to act. Nash fell in the end more because the egregious nature of his overall conduct, rather than any specific benefit gained, made it impossible to retain him. Allen’s remarks have so far been ignored by those at whom they were aimed and consequently, the Prime Minister.

However, the Cabinet Manual also makes the point that “public perception is a very important factor” in dealing with Ministers’ interests. In other words, the perception of a potential conflict of interest is as important as an actual conflict. This latter point is relevant to the government’s decisions regarding the TAB, specifically the proposal to extend the TAB’s current monopoly for racing and sports betting to cover all online betting.

Racing Minister Kieran McAnulty, who made the announcement, was previously a bookmaker for seven years with the TAB. There is no suggestion that he stands in any way to gain materially from the extension of the TAB’s bookmaking monopoly, but his involvement in, and presumably as Minister leadership of this plan, is of concern. It fails the Cabinet Manual’s “public perception” test and simply looks like an ex-bookie looking after his former colleagues.

While McAnulty’s expertise in the area is relevant to the issue, and should not be disregarded, it was unwise to have him fronting the issue, given his career background. At the very least, to avoid any perception of conflict of interest, the announcement should have been made by another Minister, possibly the Minister of Internal Affairs who already has responsibility for gaming matters.

Beyond that, and again from a perception perspective, given the sensitivity of matters relating to the TAB, it was unwise for Hipkins to have made McAnulty the Minister responsible for the TAB in the first place. But, given the lax approach he took to Nash and Allen and their potential conflicts, it is probably not surprising.

There is a danger in all governments of Ministers being seen to be the captives of the sector groups they represent. This is especially so when Ministers come from the sector group concerned. The Minister of Education, a former principal and teachers’ union official, has already risked looking like the unions’ plaything when it comes to the current salary negotiations. Similarly, the Minister of Health, a former Ministry of Health medical officer, comes across as more the protector of current health sector vested interests than the leader of the changes the public health system so desperately requires. McAnulty now risks being cast in the same light with respect to the current proposed TAB changes.

For his sake – he has so far proved to be an effective Minister in other areas – and for the government’s credibility, given that it is already riven by conflicts of interest, perceived or otherwise, the Prime Minister needs to move McAnulty aside from matters relating to the TAB. Otherwise, once again, perceptions risk becoming reality.

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