Health Health officials told Lotto bosses they were driving up the numbers of poor people with gambling problems by targeting sales at the country's most deprived areas, documents show.
They told the Lotteries Commission there appeared to be a link between spikes in addiction figures and big Lotto jackpots.
The claim was revealed in letters released by the Ministry of Health through the Official Information Act. It came after a surge in problem gambling statistics was challenged by the Lotteries Commission.
Other information released showed the Lotteries Commission was relying on jackpots to drive sales and deliberately restructured its games to attract more people to the big prizes.
The spat between the Ministry of Health and the state-owned Lotteries Commission came after statistics showed there had been a doubling in the number of problem gambling cases in which Lotto and related games had been cited.
The statistics had a direct financial impact on the commission with problem gambling services funded out of a levy applied to the gambling industry. The increase meant the commission was going to have to pay more money to fix problems it maintained were statistical errors.
The ministry's gambling harm minimisation manager Barbara Phillips told the commission in 2009 its share of problem gambling reports had gone from 3 per cent to 6 per cent.
"It is noted that the increase coincided with a period which included a much-publicised $30 million Big Wednesday draw," Ms Phillips wrote.
In a later letter, she said the spikes in data could be caused by the "extensive marketing campaign" by the Lotteries Commission "particularly in vulnerable areas".
She said data showed "a majority of New Zealand Lotteries outlets were located in high deprivation areas in which Maori and Pacific populations are over-represented".
The statistical jump had been narrowed to figures from Hauora Waikato, the ministry's largest contracted Maori problem gambling service provider. Ms Phillips dismissed concerns from the commission that the statistical jump was driven by one information source.
She said Hauora Waikato's focus on Maori and the high Maori population in Waikato meant the increase was "not necessarily surprising".
Ms Phillips backed Hauora Waikato, saying the service was highly regarded with excellent clinical leadership.
Hauora Waikato chairman Wayne McLean said the mental health provider had expressed concerns to the ministry over the location of Lotto outlets in "high need, high deprivation areas".
The commission described the ministry's response as "disappointing", stating it was "unfairly disadvantaged" by Hauora Waikato's statistics.
It also said it was difficult to plan a problem gambling strategy which worked when the problem seemed to come from "a highly regionalised gambling issue concentrated in one ethnic group".
One letter flagged an upcoming meeting between then-Lotteries chief executive Todd McLeay and Internal Affairs Minister Nathan Guy.
The letter said the statistics would increase the commission's share of the problem gambling levy, lowering profits. The author, whose name is deleted, said Mr McLeay would be explaining to Mr Guy the reason for the impact on business performance.
* Todd Mcleay is now chief operating officer at Herald publisher APN News & Media.