Internal Affairs has forced Christchurch Casino to exit the Internet gambling business, but let the company continue operating its two online casinos and bingo and poker sites for seven months after deciding they breached the Gambling Act.

This gave the company time to sell the business as a going concern to overseas owners.

Christchurch Casino launched its first online casino, Kiwicasino.com, in 2000 and later expanded its Net-gaming activities to include a portfolio of sister websites offering online bingo and poker.

The department told Christchurch Casino in August 2006 that its involvement in Internet gambling breached the Gambling Act, passed in 2003, having cleared it after an earlier investigation carried out under previous legislation, which prevented organisations other than the TAB from accepting bets from Kiwis over the Net.

Spokesman Trevor Henry says Interal Affairs never sent a letter asking Christchurch Casino to „cease and desist“.

Instead, Christchurch Casino told Internal Affairs in October 2006 that it intended to sell the business, which it confirmed it had done in a letter to the department in March 2007.

Mr Henry defended the delay.

„The way these thing work, there are always exchanges and argument and so forth. We reached the decision and said `we will be sending a letter‘ and then in the meantime we got advice saying `we are selling‘.“

Internal Affairs Minister Rick Barker says he is satisfied with the process the department followed.

„Prior to taking prosecution action, the department sought Crown Law advice to confirm its view. It received this on 23 February 2007.

„Had Christchurch Casino chosen to keep the website and defend the issue through the courts, the process would have definitely taken longer.“

Mr Henry says the investigation will be closed once Internal Affairs has confirmed that no New Zealand entity now has an ownership interest in Kiwicasino.

The sale of Kiwicasino was not made public till it was mentioned in a report prepared for Mr Barker by the department last month.

The report addressed allegations of loan sharking and other impropriety at the casino that had led to calls for a public enquiry.

Internal Affairs said the allegations had been used to suggest that the casino was not properly managed and that the department was „not an effective casino regulator“.

Internal Affairs began its first investigation into the legality of Kiwicasino in November 2000.

Christchurch Casino ran the company through an overseas subsidiary, Christchurch Casino E-Gaming Investments, using a gaming licence issued by the Government of Antigua and Barbuda.

Papers released to NZ InfoTech in 2002 under the Official Information Act showed Internal Affairs let its investigation lapse after accepting assurances from Christchurch Casino that procedures were in place that made it difficult for New Zealanders to register to use its websites.

Internal Affairs‘ national manager of gaming compliance at the time, Gregory Crott, finally closed the department’s investigation in 2002 after NZ InfoTech requested an update on its status.

He cited „the length of time taken on the investigation“ as one reason for the decision.

Mr Henry says Internal Affairs kicked off a fresh investigation in August 2005 on the initiative of its Christchurch inspectorate, a year after the Gambling Act came into force.

„As NZ InfoTech reported in 2002, the department gave Christchurch Casino the benefit of the doubt. That was under legislation current at that time. The situation changed under the Gambling Act which included a specific provision covering remote interactive gambling.“

Internal Affairs confirmed that its inspectors received free meals at Christchurch Casino’s canteen for 10 years till October 2004, after the practice was reported by The Press, and then paid only NZD 2 a meal.

Inspectors have been told not to eat at the canteen till after a further review.