The moral and ethical dilemma of taking money from pokie funding was laid out for Auckland councillors days after they found out their own public servants were getting gaming cash to help pay for "a rich man's sport".
Auckland councillors were also told work on a city-wide gambling policy could include issues involving gambling venues on council land and the use of council facilities by community groups which relied on pokie funding.
The hearing yesterday by the social and community development forum came after the revelation the council's tourism events body used $40,000 of pokie money to help pay for hosting the Volvo Ocean Race.
Outside the meeting, councillor Cathy Casey said she was "flabbergasted" to hear of the funding for a "rich man's sport".
She also questioned the fairness of the application being compiled by Auckland tourism's public servants when competing community groups might not be as well equipped professionally.
The meeting heard evidence from council staff and health experts on the "social implications of gambling".
Only one pokie trust turned up and no community group representatives spoke.
Council staff said the $250 million in gaming machine profits in Auckland should return at least $92 million in grants based on the minimum legal return to the community. Staff said their own efforts to better understand pokie donations were hampered with grant recipients worried involvement would put funding at risk.
But councillors were told half the 180 groups that responded to a survey would collapse without pokie funding. Half of those surveyed also said there were moral implications to taking funding from gaming machines.
The council survey found the moral problems did not stop groups from taking money - except for those that said their own communities were affected. The 10 per cent which did see problems did not apply for grants.
Auckland University associate professor Dr Peter Adams told the meeting those which received pokie money were ethically compromised when trying to deal with the negative effects of gambling.
He said the huge growth in spending on gambling since 1980 had led to huge increases of cash to the Government - through taxes - community groups as beneficiaries and even researchers, such as himself.
He said research showed about 50 per cent of poker machine money came from problem gamblers who suffered "misery on quite a massive scale".
The funding of community groups affected the ability to deal with the problems, he said.
"We are establishing quite a strong relationship between misery and good things in our community."
The Salvation Army-run Oasis Centre, which treats problem gamblers, presented research showing gaming machines in some of Auckland's poorer areas produced the most gambling profits.
Manager Brent Diack said gaming machines produced - on average - $45,000 profit each year. In Auckland, machines in Manurewa pulled in $130,000 while those in Glen Eden made $114,000 profit.
MPs are preparing for the commerce select committee hearing on a private member's bill which would remove the pokie trust system.