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A pokies trust recently stripped of its gambling licence has pumped more than $2 million into southern racing clubs over a two-year period despite having no gambling venues in Otago or Southland.
Of the $30 million in pokie grants distributed in Otago/Southland between April 2010 and March 2012, $5.3 million (18%) was granted to the southern racing industry.
This was followed by grants for sport stadiums $3.3 million (11%), and community groups $3.16 million (10%), the figures from the Problem Gambling Foundation show.
The biggest gaming funder of the southern racing industry was the Bluegrass Trust, which despite having no pokie venues in Otago and Southland granted $2.167 million to local racing clubs.
Over the same two-year period the trust, which has 117 poker machines in bars in Auckland, Lower Hutt, Blenheim, Nelson and Christchurch, granted $4.5 million nationwide.
Earlier this month, the trust's gambling operator licence was cancelled by Internal Affairs, as the department's secretary was not satisfied it could meet its obligations under the Gambling Act (2003). An Internal Affairs spokesman said the decision to cancel the trusts's licence came after it was found it supplied false or misleading information about three trotting club loans used to establish the trust.
A key person involved in the trust was also found to be "unsuitable because of his previous poor compliance with the Gambling Act". The person involved, Mike O'Brien, is expected to appear in court next month. The trust was also found to have received funds, with conditions attached, from grant recipients.
The department declined to provide further details.
Pokie trusts are required under the Gambling Act to determine their own criteria and policies for distribution of funds to community purposes.
Trusts also have to publish their criteria and policies and review them annually, with the Bluegrass Trust stating it was able to grant funds for promoting, controlling and conducting race meetings.
The spokesman said smaller trusts tended to return more to local communities, while larger national trusts tended to distribute around 80% locally and 20% nationally.
Asked if the department was concerned about money flowing from one region to another, the spokesman said the primary interest of Internal Affairs was to ensure trusts complied with the requirements of the Gambling Act, including that grants matched their authorised purpose statements.
Green Party gambling spokeswoman Denise Roche said she was "particularly concerned" that money was flowing from northern communities to southern racing clubs.
The proposed Gambling Harm Reduction Bill would ensure money was returned to the community in which it was raised and end the funding of racing stakes, she said.
Otago Racing Club chief executive Andre Klein said Bluegrass had supported racing clubs around the South Island, and "elsewhere over the years, there is no question about that".
The Otago Racing Club had worked hard to develop a sustainable financial model "without income from gaming".
"I am subsequently confident that the club will survive without income from Bluegrass or any other trust, although it may take longer for us to raise funds to enhance our facility and amenities without gaming grant support, especially in regards to larger projects."