The exercise "clearly shows more focus on identifying and intervening with people exhibiting problem gambling signs is needed", Mr Krishnan said.
The results were disappointing, Maarten Quivooy, general manager of regulatory services, said.
"The mystery shoppers we sent into pubs for example, displayed some pretty clear symptoms associated with stress, for example, holding their hands, sighing, frustration, talking to the machine, banging the machine, even going up to bar staff and saying, 'can I have some more money to carry on gambling'," Mr Quivooy told Newstalk ZB.
"We think they're pretty obvious signals, so in that case we expected those to be taken seriously and they weren't."
The industry needed to wake up to the responsibility it had to gamblers, he said.
"If we think about alcohol, for example, we expect bar staff to take their responsibilities seriously and not to serve people who are drunk or behaving in a disorderly way.
"This is no different. We need to get to that same place where the sector realises that this is part of offering a safe environment, whether it's safe for drinking or whether it's safe for gambling."
How the sting worked
All casinos in New Zealand were visited as part of the investigation, with SkyCity Auckland tested five times during the beginning of July.
Each time a different mystery shopper played out a new scenario, including two situations where the undercover gambler played for around 10 hours - one while showing clear problem gambling signs.
On the first occasion, the mystery shopper spotted two patrons "showing problem gambling indicators", including emotional distress at machines and playing two machines at once, who were not approached by staff.
A second actor sat at the same pokie machine for more than 10 hours without moving, at the end of a row that was clearly visible to staff. Only one staff member talked to him when he displayed signs of frustration after four hours.
"The staff member said, 'not going too well?', to which the shopper replied, 'no, this machine will not let me win more'. The staff member said, 'good luck' as she left," the report stated.
Another mystery shopper who complained to a staff member about another machine being luckier than hers reported the employee "smiled and said nothing".
Other tests included the shoppers clearly stating they had a cash limit and couldn't play for more than three hours, but then repeatedly going back to cashiers asking for more money out and staying for longer than five hours. When a mystery shopper's card was declined the staff member "made no reaction", the report said.
Another included going back and forth to ATM machines regularly to see if the security guards noticed. The mystery shopper reported that despite going in and out seven times in six hours she "saw a lot of different staff, and only saw the same staff twice in a row".
In the pubs and hotels tests, the mystery shoppers would drop a pre-rehearsed line to staff while withdrawing money, including: "I need to go, but I need to win some money back."; "I can't really afford it, but I think I'm getting close to a win."; and "I'm meant to get home to the kids but another few minutes won't hurt."
RESULTS OF THE OPERATION
• Of 102 venues visited only one intervened when an investigator showed signs of problem gambling.
• Only 14 of the 102 venues correctly carried out a "sweep" of the gambling area every 15 minutes, in line with recognised best practice, with 10 venues conducting no sweeps at all.
• A total of 16 visits took place across the six casinos in New Zealand - 14 visits did not result in any direct intervention from staff to indicate they had noticed problem behaviour.
• However, there were a number of conversations between casino staff and undercover gamblers that may have allowed them to assess problem indicators, but these were not recorded in any daily logs, and therefore not counted as an intervention.
• Only one resulted in information about problem gambling being provided.
