The Problem Gambling Foundation is seeking legal advice over a possible High Court challenge to a controversial Government decision to axe funding for most of its services for gambling addicts.
Chief executive Graeme Ramsey, whose own job is likely to be among about 52 jobs to go on June 30, said he had already had "preliminary advice" on the body's legal options.
Wellington barrister Graham Taylor, who wrote a textbook on judicial review in New Zealand, said information made public so far suggested the Ministry of Health could be vulnerable to a legal challenge.
Details are still sketchy. Associate Health Minister Peter Dunne denied allegations of political influence and said on Friday that a public tender for problem gambling services was signalled in 2012 because the sector had developed "in an ad hoc manner with duplication of services from national providers simply not achieving the best value for money".
He said a six-member panel evaluated the 32 bids late last year and the ministry commissioned an independent review by PricewaterhouseCoopers (PWC) before proposing that the major national provider would be the Salvation Army.
But Mr Ramsey said he was unaware of the PWC review and had no inkling the foundation's main contract might be axed until he was told last Thursday that the ministry had accepted "a superior bid or bids". He said no reasons were given.
"We'll be looking forward to finding out the reasons. I have no idea," he said. "It was a bolt from the blue. They go through a contracting period every three years. We've had contracts for a long time. We thought this would be a standard tendering process."
The decision left the foundation with only its specialist contract for Asian problem gamblers, with 11 staff.
Salvation Army addictions director Captain Gerry Walker said he was also unaware that the foundation had lost its main contract until he read news reports on Friday, but confirmed the army tendered to provide "more than we currently deliver".
He said the army has 18 gambling-related staff in six "Oasis" centres, compared with 63 Problem Gambling Foundation staff in 10 centres.
Mr Taylor said recent case law had established that tender processes could be taken to judicial review if a party could show that there was not a "level playing field" for all bidders.
Affected staff were briefed yesterday. Mr Walker said the Salvation Army did not yet know what services the ministry wanted it to take over.