The Department of Internal Affairs says the use of facial recognition technology for problem gamblers at gaming machines raises privacy issues.
The technology, developed by the company Positive Outlook, takes photos at the machines and locks them down when an excluded gambler approaches.
It is being trialled at a Hamilton pub and may be used at other pubs and clubs around the country.
Regulatory services general manager Maarten Quivooy says significant issues need to be worked through before the technology is used more widely, as there are concerns about who manages and has access to the database that stores people's images.
He says there are also questions about the speed and level of accuracy of the camera technology, and the cost.
Positive Outlook says the technology does not breach privacy. A company director, Bruce Tevarthen, says as it is an opt-in system, only images of those who have elected to formally enrol are held.
He says the images database is administered by an independent party.