Problem Gambling Foundation sues NZ government after losing funding

New Zealand's Problem Gambling Foundation (PGF) has initiated court proceedings against the government after losing its national contract to prevent and reduce gambling harm.

The non-profit organsation is predominately funded by the Ministry of Health, with funds received from a gambling levy, and is the largest single treatment provider for problem gambling in Australasia. It has over 60 locations throughout New Zealand and has been providing its services for the past 20 years.

However, the New Zealand government notified PGF in March that its contract for most of its services would come to an end in June, with more than 60 staff expected to lose their jobs.

PGF has now initiated court proceedings against the government to delay handing services over to the new provider, the Salvation Army, which already provides gambling harm counselling and other addiction and social services across the country.

"The Ministry of Health is seeking a prompt resolution of a legal challenge by the Problem Gambling Foundation and has acted to ensure current services will not be affected while a judicial review is held," the government said in a statement.

The Ministry said it was satisfied that the tender process to select the Salvation Army was "fair and transparent", which has been confirmed by an independent review by PricewaterhouseCoopers, but considers that it is inappropriate to sign contracts with new providers until the Court rules on the challenge later in the year.

"In delaying the introduction of any new contracts until the judicial review has been decided, the Ministry believes that the Court will be able to consider the matter without the signing of contracts with new providers being a complicating factor," it said. "This process will enable the challenge to be heard substantively but quickly, without the need for interim proceedings."

The Ministry said that the planned changes, set to commence on July 1st, would have seen an improved delivery of services to prevent or minimise gambling harm in New Zealand.

"Implementing the problem gambling strategy through a new mix of service provision is a priority for the Ministry," the government added. "The Ministry’s decision to delay signing new contracts is a direct consequence of the court proceedings, and not any merits of the case."

Affected service providers have been advised that new contracts for services will not be signed with a view to commencing July 1st, as originally planned. Instead, existing contracts for problem gambling services will be extended until February 28th 2015.

"The Ministry realises delays and uncertainties around services can create disruption in this important area for both service providers and service users," it said. "Maintaining services for current and new problem gambling clients is a priority for the Ministry, and this commitment will continue, with the Ministry providing assurances of the continuing availability of services."