Rotorua gamblers dropped more than $20 million into poker machines in the past year - the equivalent of about $56,712 a day.

But figures released by the Department of Internal Affairs show the region's total gaming spending was down 3.3 per cent in the year to June - from $21.41 million the previous year.

The number of poker machines operating in Rotorua remained unchanged at 416.

The figures come amid a Government proposal to give more pokie profits back to local communities. This is finding favour with problem gambling experts, though some question whether the proposal goes far enough.

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Organisations that distribute pokie proceeds must give 37 per cent back to community groups, and they distributed an estimated $300 million in community grants in the 2011-12 financial year.

However, a discussion paper issued by Internal Affairs last month proposed an increase in the minimum threshold to between 40 and 43 per cent within four years.

The review of Class 4 gambling, or gaming machines, aims to make the sector more transparent and fair, and would build on harm reduction changes introduced in a bill sponsored by Maori Party co-leader and Waiariki MP Te Ururoa Flavell.

Mr Flavell said he had seen first-hand the effects of problem gambling in Rotorua.

"I've seen the devastation that it has caused for a couple of families.

"Their relationship held together but people had to move out of town because of the stigma of being caught in that web.

"We don't want people gambling because that just simply feeds into the amount of money [lost by gamblers] but on the other side of the coin there are a lot of organisations that are worthy of getting money."

Internal Affairs Minister Chris Tremain said he wanted the minimum amount trusts gave away to increase. Many of the big trusts - such as Lion Foundation and New Zealand Community Trust - already gave more than 40 per cent, he said.

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New Zealand Problem Gambling Foundation chief executive Graeme Ramsey said that while he supported the raised threshold, the proposed reforms did not address a critical flaw in the system.

"For far too long we've seen rort after rort, bad practice after bad practice and grants really not reflecting necessarily what community priorities are."

While an aspect of Mr Flavell's original bill seeking to ensure 80 per cent of gaming machine profits was returned to the immediate community was scrapped after select committee amendments, the bill did give the Government power to introduce those limits later on.