Masterbowl manager director Darrin Pilcher said he was not ready to make a comment on the outcome but he was "obviously not pleased".
Scott Simmiss, Pelorus Trust's chief executive, said he respected the council's decision but it was disappointing for Mr Pilcher and manager Angie Flemming.
It was also disappointing for people in the community who were looking for funding, he said.
The trust has given more than $700,000 in grants to Wairarapa community groups over the last three years.
Mrs Terpstra said the concerns raised by the health groups opposing the application had been considered.
The licence was declined particularly because it didn't fit the policy requirements, she said.
The council's "sinking lid" gambling policy means no new gambling venues can be opened.
It also says any gaming machine not used for six months cannot be reactivated, replaced or transferred to a new site under any circumstances.
The trust previously had nine machines at the Aberdeen restaurant and bar but stopped operating them in September 2012.
Later, the trust put in an application to open a Class 4 Gambling Venue at Masterbowl and move the pokies there.
At a hearing in July, the applicants said they were not asking for an increase in pokie machines in Masterton, just to replace them.
If the pokies were granted, it would still only take the number to the maximum amount of pokies allowed in Masterton, said Mr Simmiss.
Representatives from Regional Public Health and CareNZ opposed the application at the hearing, raising concerns about social harm to Masterton.
CareNZ service manager Sandie Finnigan said the gambling team at CareNZ Wairarapa had been working hard to raise awareness of problem gambling in the region.
"We are delighted with the result as it indicates a proactive approach by the council to recognise important community harm minimisation policies that our, and like-minded health agencies, champion."
