The past three years have seen an increase in complex investigations into fraud and illegal activity at clubs and societies with pokies. That, and the declining number of pokie machines, has put severe financial pressure on the Department of Internal Affairs (DIA).
Gambling enforcement is funded through fees paid by gambling operators.
However, the costs of regulation outweighs revenue from fees by $9 million a year.
The proposed fee increases aim to bring in enough money to cover regulation costs, as well as repay this deficit over time - meaning no taxpayer money will be spent.
Pub and club gaming machines dropped from 20,120 in 2007 to 16,717 at the end of last year.
New Zealanders' gambling spend has not fallen significantly, but the DIA's revenue from operators has, as it is tied to the number of machines.
A DIA spokesman said the breaches identified by investigators ranged from not keeping correct records to fraud.
The largest investigation in the history of the gambling sector, "Operation Chestnut", is near completion.
Conducted by the DIA, Serious Fraud Office and the Organised Financial Crime Agency NZ, it scrutinised $30 million in gaming grants made by trusts including Bluegrass.
Bluegrass' licence was cancelled after the DIA ruled its start-up funding was sourced from three racing clubs, rather than from South Canterbury Finance, as claimed.
About 80 per cent of community grants from Bluegrass went to racing, including the three racing clubs.
