The Department of Internal Affairs says it can be difficult to police a rule that gaming trust money should not go to professional athletes.
The Perry Foundation and other gaming trusts which raise money from gaming machines are being investigated over accusations they broke the law by giving grants to racing bodies and professional sportspeople.
The Perry Foundation, which last year granted $4 million to racing clubs, says every grant was lawful.
Internal Affairs deputy secretary Keith Manch says some grants to racing are allowed, but not to professionals.
He says some franchises are a mix of professional and amateur, and trusts have to fully investigate which activities their grants are contributing to.