Prime Minister John Key says SkyCity must continue its efforts to address problem gambling in any deal struck with the Government.
Talks are continuing on a deal that could see SkyCity fund a $350 million convention centre in Auckland, in return for an extension to its casino licence.
SkyCity chief executive Nigel Morrison says it is absolute rubbish to say that increasing the number of gaming machines would cause social harm.
He says most of the issues of problem gambling are in underprivileged suburbs, whereas people gamble at SkyCity recreationally.
Mr Key will not comment on those claims, but says there are problem gamblers wherever gambling is available.
He says the Government is keen to see the convention centre built, but has been careful in its negotiations with SkyCity that harm minimisation techniques are not watered down a result of a any deal.
Mr Morrison says the proportion of households experiencing harm from gaming machines in casinos is 0.7% compared to 0.9% from Lotto.
"We have the most disciplined approach to harm minimisation of any property that you'll ever come across."
Mr Morrison will not not say how many more machines the casino wants, but says the increase is justified because the machines are very popular.
Mr Key says he is comfortable with what he describes as a modest increase in the number of pokie machines at SkyCity if the deal goes ahead.
Overall, he says the number of gaming machines is reducing across New Zealand.
Many pokie users have gambling problems, says foundation
The head of the Problem Gambling Foundation, Graeme Ramsey says the casino's argument is weak, as much of the revenue generated by gaming machines come from people with problems.
"Forty percent of the revenue that comes through those machines comes from people with problems," he told Nine to Noon.
"When you've got that kind of product then I think the kind of comments which say problem gambling is not good for our business need to be questioned, because quite frankly the business is based on people who have problems."
While there are more pokies in venues outside casinos, Mr Ramsey says, some 10-20% of people who use a gaming machine will have problems to some degree irrespective of its location.
The director of the Gambling and Addiction Research Centre in Auckland, Professor Max Abbott, says people who gamble regularly at casinos are just as likely to have problems as people who use gaming machines elsewhere.
The Salvation Army says says local people are getting themselves into serious difficulties at SkyCity, not just in suburban areas such as in South Auckland.
It says it is also worried about the Government negotiating over a convention centre as it could set a dangerous precedent.
In February, SkyCity announced a record six-month profit of $48.8 million.