"Our point of difference is not only the face-to-face meetings with clients but also the health teams we have working in the community. This decision will affect at least 63 staff," she said.
The foundation - which has dealt with 25,000 clients since 2000 - will lose threequarters of its income.
"We've developed an enormous amount of knowledge in this area but now it's in jeopardy of being lost," Ms Froude said.
"Problem gambling is a hidden addiction. One person with this problem can directly affect the lives of between five and 10 others.
"Very few people fully understand this problem in our community but, as long as there are pokie machines, there'll be a problem."
In 2012, Wanganui gamblers dropped $9.8 million into pokie machines, $26,850 a day.
Karney Herewini, the Maori problem gambling health promoter at Nga Tai o te Awa in Wanganui, said his concern was the impact the funding change could have on services for those with gambling addictions.
Mr Herewini said his organisation directed people to the foundation as well as other providers, including the Salvation Army.
"The Salvation Army run a group service in Wanganui while the foundation is more face-to-face," he said. The issue was access to forms of gambling and that included not only the 257 pokie machines but horse and greyhound racing and Lotto outlets.
"And the advent of high-speed broadband opened up another opportunity for people to gamble as well. It's this increasing opportunity that's the real worry," Mr Herewini said.
The ministry said it was confident that people experiencing gambling harm will be able to continue to access regional and national services when the changes take place from July 1.
