Auckland councillors will be asked to rethink whether council agencies should continue to seek funding from pokie trusts.
A senior councillor, George Wood, who chairs the council's community safety forum, says he was surprised to hear a pokie trust had part-funded the Volvo Ocean Race stopover, which the council's events agency ATEED managed.
Another councillor, Cathy Casey, says it is ridiculous that funding for small community groups has been diverted to a well-resourced council-controlled organisation.
The Auckland Council has confirmed the agency got nearly $250,000 from trusts towards the stopover. The grants were received at the same time as the council was working on a tougher new policy on community gambling.
Its submission on new legislation aimed at reducing harm from communuity gambling seeks greater power to reduce machine numbers.
Pub Charity says it gave the organisation $200,000 for a free public event in the race village and ATEED also applied for $41,000 from the Trillian Trust to pay for a yachting education programme.
ATEED chief executive Brett O'Reilly says the council requires it to seek external funding.
The agency's acting general manager, Jennah Wootten, says it uses corporate sponsorship and charitable trusts so it does not have to spend ratepayers' money.
Ms Wootten says some money was used to educate 1000 schoolchildren on the sustainability of the ocean and water safety.
The organisation representing community gambling trusts says it is up to the council to decide whether it is morally right to keep seeking funding.
Brian Corbett, the executive director of the Community Gaming Association, says the question is a moral one for the council.