Millions of dollars of pokies cash has stopped flowing into the coffers of the racing industry as a major joint agency investigation unfolds.
Last year, Operation Chestnut was launched by the Department of Internal Affairs, the Serious Fraud Office and police into the alleged manipulation of $30 million of gaming grants.
The investigation involves several trusts named previously by the Otago Daily Times as the New Zealand Community Trust (NZCT), Bluegrass, and Infinity Foundation.
Those trusts have previously granted large sums to the racing industry, including Southern racing interests, but since confirmation of the investigation, some have pulled back their funding.
Figures released to the ODT show between 2005 and 2014, more than 50 charitable trusts had pumped $130 million in the racing industry; from a high of $23 million in 2009, to $7.5 million last year.
NZCT pumped $18.6 million into racing between 2005 and 2014, including grants totalling $3.8 million (2009), $3.3 million (2011), and $2.4 million (2012).
However, NZCT gave no grants to racing this year, and only $371,000 last year.
NZCT chief executive Mike Knell confirmed ''once we were made aware of the investigation around the racing industry, NZCT placed a voluntary moratorium on funding the sector pending the outcome of the current investigations''.
Internal Affairs, police and the Serious Fraud Office last week declined to comment about the investigation.
However, sources confirmed the racing industry figures heavily in investigators' line of questioning.
The New Zealand Racing Board also declined to comment because Operation Chestnut was an ''active investigation''.
Gallop South general manager Malcolm Little said since ''[the investigation] has been going, we haven't applied for any grants''.
''I can't answer for all the clubs, because they can do their own applications outside of us, and that is what we have been trying to review for some time.''
Last year, the Internal Affairs and the Serious Fraud Office staff executed search warrants and seized computers, with Southern racing club representatives also interviewed as part of the investigation.
Internal Affairs gambling compliance director Debbie Despard said ''white-collar crime is a complicated area because it often involves elements of technical sophistication, concealment and influence''.
Asked whether trusts under investigation had been asked to stop their funding to racing, she replied: ''Gaming machine societies are charged with issuing grants to authorised purposes for community benefit.
''While racing is an authorised purpose, we expect societies to exercise their responsibility to ensure the integrity of the grant funding process, including the use of grant funding by recipients, and to manage their operations and risks.''
A recent decision by the Gambling Commission supporting Internal Affairs' decision to refuse a gambling licence for another trust, Eureka, was ''significant'' for the sector, she said.
''It indicates we are serious about denying gambling licences to individuals that attempt to conceal their activities or to mislead the department.
''We are determined to uncover underhand activities that have the potential to deprive community organisations of much needed funding.''
