Amateur rugby clubs will buckle or be forced to bump up their fees by 500 per cent if gambling proceeds are cut under a proposed law change, the New Zealand Rugby Union says.

NZRU chief Steve Tew said 22 per cent of clubs' funding came from gaming machine money, and removing this lifeline would seriously undermine community sport.

He applauded the Maori Party's efforts to curb problem gambling but worried the harm to sport would outweigh the legislation's benefits.

Maori Party MP Te Ururoa Flavell's bill would limit the way pokie proceeds could be distributed and phase out the "pokie trusts" which managed gambling money.


Tawa Rugby Club chair Dave Banks told a select committee yesterday 35 to 40 per cent of his club's income came from gambling trusts, which paid for uniforms, training equipment and maintenance of club rooms.

If the club was deprived of half this funding, it would become insolvent in two years, he said. Alternatively, if it tried to replace this funding, sub-scriptions would have to be hiked to $450 per person. At present, juniors paid $45 and seniors paid $80.

"It can be a nightmare getting that much from people," Mr Banks said.

Mr Tew said Mr Flavell's plan to make sure 80 per cent of gambling proceeds returned to the community they were lost from could stifle sport funding at a national level.

He predicted this funding model would put at risk the Queenstown National Sevens, Maori Rugby inter-regional events and a range of provincial and amateur competitions.

Labour MP Ruth Dyson said the debate over gambling proceeds was like the 1980s loss to sports clubs of tobacco sponsorship.

Submitters, including healthcare groups, charities and sports teams, told the committee the "world was a different place" after the global financial crisis, and community groups depended more on gambling proceeds.

Asked what rugby clubs did to raise money before gambling sponsorship, Mr Tew said "cake stalls and sausage sizzles", and although these small fundraisers were still popular, clubs' finances were no longer boosted by high profits from clubroom bars.

Mr Tew said the place of sports clubrooms at the heart of New Zealand culture was diminishing, in part due to people not drink-driving anymore. Mr Flavell has said he wants to drastically reduce problem gambling, which disproportionately hurts Maori and Pacific communities.