A department of Internal Affairs investigation is under way after a rural Dunedin pony club secured half a million dollars in pokie grants last year.
Last week, the Otago Daily Times reported the Taieri District Pony Club was granted $488,458 from the Trusts Charitable Foundation, a pokies trust and large funder of the racing industry.
The grant enabled the pony club to drain part of Wingatui racecourse and construct a cross-country course.
A source alleged the grant was used as a front for racing interests, as it allowed the racecourse to become a venue for jumping races after an absence of four years.
Both the Taieri District Pony Club and the Otago Racing Club denied the pony club was used as a front for the Wingatui upgrade, and was a "win-win" for both groups.
The Taieri club had the right to use Wingatui on non-race days, free of charge, as part of its 20-year-lease.
An Internal Affairs spokesman confirmed yesterday the national investigations unit was looking at the grant.
Documents relating to the case were inside Internal Affairs' Christchurch office, which had been cordoned off since the Christchurch earthquake.
Those documents were likely to be retrieved in the coming weeks, and the investigation would recommence, he said.
Calls to the Trusts Charitable Foundation were not returned.
The pokie trust returned to the community $17 million from its total proceeds of $44 million, for the year ending March 31, 2010.
Problem Gambling Foundation of New Zealand chief executive Graeme Ramsey said he was pleased Internal Affairs was investigating the grant.
"It just doesn't pass the smell test, and it needs to be investigated."
