Wheeler's annual competition is the biggest fishing tournament in the country with 2100 competitors and more than $220,000 worth of spot prizes, including a boat and a car. The heavily-promoted $100,000 prize for catching a special snapper - tagged by the officials and thrown back in - is alleged to breach the Gambling Act.
Catching a tagged fish requires some knowledge or skill, but Internal Affairs believes winning relies on a large element of chance. Fishing competitions are still allowed to award prizes for catching the most fish, or the biggest fish, because this is regarded as skill.
Internal Affairs spokesman Trevor Henry said the department had been working since February to clarify whether spot prizes were a breach of the law, following a complaint from a pokie trust. The legal position was clarified last month.
"The department immediately wrote to the organisers of as many of these types of events that it was aware of," Henry said. "Prize draws at tournaments and trade have to comply with the Gambling Act 2003 because they involve an element of chance and are therefore gambling."
Wheeler said the spot prizes made the competition a family event, giving even children as good a chance of winning as experienced fishers.
Prizes for catching the most fish, on the other hand, created a bloodthirsty competition.
"The moment we put a big prize on a fish, it turns into a slaughterhouse. It encourages over-fishing and it encourages people to cheat," Wheeler said. "We're running a family event. We want the kids to be able to have a fun weekend - that's the beauty of doing spot prizes."
Wheeler said the event injected around $2.2 million into the Ruakaka economy each year. Accommodation and charter boats were already fully booked for this summer's event, scheduled for February.
Last year's winner, Ruakaka father-of-five Darron Kaiki, was appalled at the threat to the event that he attends every year with his kids.
Kaiki won a grand entry prize of a Ramco boat with a Yamaha motor and assorted fishing accessories worth $41,329.
"Everyone's there fishing and having a good time," he said. "I think it would be sad to lose events like these. This is too controlling - it's like the fun police."
Ninety Mile Beach Snapper Classic organiser Srecko Urlich also received the letter. His event has been on hold for two years but in the past spot prizes included cars, boats and holidays - all donated by sponsors.
Champion fisherman Rob Parker (picture), who won $50,000 for catching a tagged fish in the Snapper Classic, said Internal Affairs' enforcement approach had "got out of hand". "We're talking about fishing, for crying out loud. I've been doing these competitions for 20 years," he said. "As far as gambling goes, it's not really."
Big Boys Toys organiser Dean Wilson said his event also gave out door prizes in a barrel draw, but he has not yet received a cease-and-desist letter. "It seems crazy," he said.
Problem Gambling Foundation chief executive Graeme Ramsey said it was "ironic" that a pokie trust had complained about events that brought families together.
"I don't think problem gamblers are going to be entering these draws," he said. "They are going to be at the pokies, more likely."
