A female participant in the event, who the Herald has agreed not to name, said she witnessed the woman performing sex acts on several men and believed the interactions were consensual.
She confirmed the incident was videoed by several people and had occurred at a "paddock party" around midnight.
"There was no struggle.
"If I felt like she was in danger I would have stepped in and done my part. I would not have let anything happen."
She said there were hundreds of people at the event.
The woman who spoke to the Herald said she had not been intoxicated and was well aware of what was happening around her.
The allegations gave "drifters a s*** name".
She understood the alleged victim and the male participants were spectators at the event and not drivers.
After witnessing some of the sex incident she left the paddock party around midnight to return to her motel in the city.
Social media posts seen by the Herald suggest the video is being shared and has been viewed by several people.
The Herald has asked the police if they were aware of the video and whether it formed part of their investigation.
Police said as their investigation was ongoing they would not be able to comment further.
However, they warned that anyone who had footage of the incident should ensure they do not breach another person's privacy.
"Possessing or sharing an intimate recording may be an offence," a police spokesman said.
Drift Matsuri NZ event organiser Chris Howard told the Herald yesterday he was contacted by police a day after the drift event about an alleged sexual assault.
Howard said park security had also contacted him about the alleged incident.
Howard said he understood the interaction was between a man and a woman.
He did not know if the alleged incident involved drivers or spectators.
Howard said he was out picking up rubbish around midnight when the alleged incident occurred during camp drinks after the event had wrapped up.
He had spoken to the woman involved.
"This is the first time anything of this nature has happened," he said.
Taupō area crime prevention manager Senior Sergeant Tony Jeurissen confirmed police were investigating "an allegation of a sexual nature with a number of alleged offenders".
Motorsport New Zealand chief executive Brian Budd said the drift event was not sanctioned by his organisation.
Bruce McLaren Motorsport Park has been approached for comment.
