Ex-Harness Racing NZ boss says he set up trust at centre of allegations to help clubs starved of funding.

A stalwart of the racing industry among those facing claims of a $30 million pokie fraud has spoken of the sport being starved of cash.

Former Harness Racing NZ chairman Pat O'Brien, 82, told the Herald he set up the pokies trust at the centre of the allegations to get cash for race stakes and other purposes after funding dried up.

"The taxes the government take out of it don't leave enough for the clubs to exist on," he said.

O'Brien, of Blenheim, appeared in court yesterday facing two charges of obtaining funds over $1000 by deception. His son Michael O'Brien also appeared facing 15 counts of the same charge. Paul Anthony Max and another person with interim name suppression also faced the same charges.

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The previously unpublished interview with O'Brien was given two years ago after news emerged of interest in the funding arrangement from the Department of Internal Affairs. The investigation had already been running for at least a year with the Herald tracing facts behind some charges back to 2009.

O'Brien said the Blue Grass Trust, which made grants to racing clubs, was created after complaints over gaming trusts giving racing "too much money".

Politicians speaking on the issue "frightened trusts off making grants to clubs". "So I thought, after talking to a solicitor in Auckland, set up a trust for a pure, only purpose to derive funds for racing which was a legitimate purpose. [Gambling regulator Department of Internal Affairs] never liked it from the word go."

He said he believed the ability to use grant money to pay racing stakes - upheld in court - had set the industry against its regulator. He said officials had a "chip on their shoulder".

But O'Brien said there were other financial pressures, including competing gambling outlets. "When I was growing up you went to the pictures on your push bike and on Saturday there was nothing else to do unless you played football.

"Now everyone goes to the beach or goes to the hills. They've got casinos to go to and pokie machines to go to. The pubs are open to midnight. A day at the races is no longer the attraction it used to be. They're not betting now what they were betting 30 years ago.

"The take for the clubs, particularly those with poor dates and country venues ... they're not getting enough to exist."

O'Brien said competition for pokie money had been partly met by the NZ Racing Board's TAB getting Class 4 gaming licences allowing it to run its own pokies. But he said the money to the industry had dropped from about $19 million from pokies to $9 million and the TAB's pokies picking up only $6 million of the difference.

"It leaves you feeling bloody tired. I feel there was an element in the department who don't like to see racing getting any money."

He said the grant money failed to compensate for earnings lost since casinos were set up and pokie machines allowed. "(Until) the casinos were set up, we virtually had a monopoly on betting."

O'Brien was also critical of the money which went to the Problem Gambling Levy from the racing industry.