Lottery bosses carried out an investigation into a mental health provider which linked Lotto to an increase in problem gambling, raising questions about how it used taxpayer money.

The investigation report said the finances of the mental health provider "should be of immediate concern" to the Ministry of Health. It also rubbished statistics showing Lotto-related harm.

The report was handed to the Internal Affairs Minister at the time, Nathan Guy, with a request he pass it to fellow minister Peter Dunne, whose portfolio deals with problem gambling.

It came during a stoush between the Lotteries Commission and the Ministry of Health over problem gambling figures.


Figures from Maori mental health provider Haurora Waikato showed an increase in problem gambling, leaving the Lotteries Commission faced with paying more under a levy applied to the gambling industry.

The commission challenged the Ministry of Health, which stood by the figures. Officials told lottery bosses they were targeting "high deprivation areas in which Maori and Pacific populations are over-represented".

In a 2010 letter obtained under the Official Information Act, the Lotteries Commission chief executive at the time, Todd McLeay, said his concerns over statistics had been brushed off by health officials.

He said the lack of "reasonable explanations" led to Deloitte being hired to investigate the statistics.

The report from Deloitte went further and looked into the finances of the health provider, raising concerns about similarities between individual problem gamblers, the amount of profit declared by Hauora Waikato and loans to a company which held the provider's health and training facilities.

Mr McLeay told Mr Guy the investigation "does not support the conclusion" of an increase in Lotto-related gambling harm.

A Ministry of Health spokesman said the figures from Hauora Waikato were now replicated in 14 of the 19 health providers dealing with problem gamblers.

The figures showed that punters having problems with Lotteries Commission products, including Lotto and Instant Kiwi, had gone from 2.1 per cent of total problem gamblers to 5.4 per cent.

The spokesman said the ministry had investigated and dismissed concerns about finances or repeat reporting of individual problem gamblers.

Lotteries Commission spokeswoman Karen Jones said the spike in problem gamblers had never been fully explained.

She said the numbers of problem gamblers who used commission products had remained constant.

* Todd McLeay is now chief operating officer of Herald publisher APN News & Media.