One of the organisers, Fraser McCullough, said he thought the event would be unaffected by the crackdown because the top prize of $10,000 was awarded for catching the heaviest kahawai.
However, he was less than impressed by the department's actions.
Mr McCullough said spot prizes encouraged participation and they should be continued. He did not believe they were a form of gambling.
Tauranga Coastguard operations manager Simon Barker said it was "a shame'' that it had come to this.
Nationally, the organisation had two raffles a year where they gave away four boats of varying values.
Mr Barker did not believe the raffles would be affected by the Internal Affairs crackdown.
"It's a shame because these things get people to attend events. It's a huge shame, that's the only way to put it. I think it's a bit heavy handed but we'll just have to wait and see what happens from here.
"My thoughts are spot prizes encourage participation and if someone knows they can't win a competition, they might get a chance at winning something _but is this gambling? I think it's a bit far-fetched.''
The Tauranga Coastguard is set to hold a charity golf event on Friday, November 9. Mr Barker said there were spot prizes but none were over the value of $500.
Facebook users were quick to pronounce the Internal Affairs crackdown as "completely mad and totally ridiculous''.
Commenting of the Bay of Plenty Times Facebook page, Shona Dellow asked ``How friggin' big brother is that''.
"Life is hard enough and we average kiwis love to enter competitions that have a prize that we certainly would not be able to afford otherwise . . . to the internal affairs . . . go find someone who is cheating the system . . . leave the rest of us to figure out if we have a gambling problem or not!''
