The Green Party wants a new online gambling site shut down, saying it threatens the viability of the racing industry.
MP Sue Bradford said today the site, Race-O New Zealand, might be illegal because the Gambling Act passed three years ago outlawed online gambling within New Zealand.
It also made betting on horses illegal unless bets were laid with the TAB, she said.
"Such online activities are illegal not only for the operators but for the participants.
"Perhaps to circumvent these legal restrictions, Race-O is the trading name of a company registered in Costa Rica, while its gaming and betting licence has been secured within the Kahnawake Indian nation near Montreal, Canada," she said.
"The Government should immediately close down the site, and pursue prosecutions vigorously if laws have been broken."
The betting site, whose original investors included leading breeder Sir Patrick Hogan and former top trainer Dave O'Sullivan, is being investigated by the Department of Internal Affairs.
Berri Schroder, a part-owner of Melbourne Cup winner Brew, is a Race-O (NZ) director.
Race-O is registered in Costa Rica in central America and its betting licence has been secured from the autonomous Indian territory of Kahnawake in Canada.
Ms Bradford said sites like Race-O New Zealand could threaten the racing industry because the TAB monopoly guaranteed that gambling profits were returned to the industry "in a reasonably accountable manner".
"Racing seems already to be in such a state of decline that it is reduced, shamefully, to taking the proceeds of pokie money to bulk out major stakes," she said.
"It would be a pity if the advent of online gambling sites like Race-O should even further undermine the distribution system maintained by the TAB through the auspices of the Racing Board."
Ms Bradford said she was surprised that racing figures such as Sir Patrick Hogan and Dave O'Sullivan would lend their names to the site.
It is illegal to set up an internet betting website in New Zealand, and the website has angered the Problem Gambling Foundation, which told the Sunday Star-Times it was a deliberate attempt to get around the ban.
The betting company offered a $1 million prize pool for those who selected the winners of eight races at Matamata on Saturday.
The pool was not struck.
An attempt was made to launch Race-O nearly 13 years ago but was rejected by New Zealand racing officials as it was basically little more than an extension of pick6 betting (selecting the winners of six races).
Race-O has nothing to do with the New Zealand TAB.
Race-O has said it would offer a similar $1 million prize pool at the Auckland Racing Club's meeting at Ellerslie this weekend.