"Rotorua loses $65,000 a day to pokie machines, the harm is clear in our community," Miss Tapsell said.
"It's a small relief that non-profit organisations in our community receive funding from these proceeds.
"But for councils that set policies on the machines to then receive funding from them is, in my opinion, unethical."
In a list provided by the Problem Gambling Foundation, Rotorua is second in money received only to Christchurch City ($1,135 million). Auckland City Council, as an organisation, does not feature on the list because applications were made from (for example) the Auckland Museum instead of directly from Auckland City Council.
Rotorua Lakes Council strategy and partnerships group manager Jean-Paul Gaston said a lot of the funding council sought from trusts - not just gaming trusts - was to support community or major events.
"For example Crankworx has attracted grants of between $10,000 and $88,000 and Glo Festival has received grants of between $15,000 and $32,500," Mr Gaston said.
"Other events which have received grants from gaming trusts include FreeParking youth events, Tulip Festival, this year's Lions Fan Zone and Rotorua Safety Families activities."
He said it was possible that without gaming trust funds, some events might not go ahead or might be scaled down but any such decisions would depend on factors including what other trusts might fund a particular activity (they all have different criteria) and whether council was successful in gaining funding.
Asked whether rates could be affected if council decided to no longer use gaming trust funds, Mr Gaston said it was not possible to say.
"Elected members strike the rates annually based on the cost of delivering the service levels and work programmes to which they have agreed."
However Mrs Snowden said while the Problem Gambling Foundation acknowledged there were worthwhile causes using pokie funding, it remained money coming from the pockets of those who could least afford it.
"Pokies are more likely to be found in deprived areas. I urge councillors to look at whether people from these deprived areas are the people benefiting from community events funded by pokie money."