The Department of Internal Affairs has received a complaint that gambling trusts are using money to lobby against a bill before Parliament that seeks to give power to councils to control gaming machines.
A private member's bill spearheaded by Maori Party MP Te Ururoa Flavell and before a select committee aims to give local authorities more power to control gaming machines in their areas.
Under new laws, councils would have the power to limit, prohibit and even abolish them.
The Problem Gambling Foundation says some gaming trusts are using money intended for the community to lobby against the bill.
Spokesperson Graeme Ramsey told Radio New Zealand's Nine to Noon programme it has lodged a complaint with the department that money from the gaming machines that should be given to communities is being used to lobby against the bill.
Mr Ramsey said letters are going to grant recipients asking them to submit on the bill. He said there has been a long history of bad behaviour by gambling trusts and the system needs to be overhauled.
But New Zealand's oldest gaming trust, the Pub Charity Incorporated, says it has used less than $10,000 to campaign against the bill.
Chief executive Martin Cheer says that is not money earmarked for the public, but for business funds. He believes the bill is flawed and should be dumped.
Submissions on the bill close on 21 June.