He said councillors needed to step up on decisions they know are right.
"You are saying these decisions are right and then you're justifying it by saying less money is coming in [through pokies], when more money is coming in. It just doesn't make sense and you are convincing yourself on something that is not the truth."
After his motion was lost, he proceeded to ask governance to read out the names of who voted and which way, something that has been rarely done this term.
The council took submissions on the policy, with only 34 received. Of the 34, 93 per cent said they wanted the current policy to continue, while 5 per cent wanted the adoption of no relocations of pokies machines.
Councillor and mayoralty candidate Paula Southgate said she supported the sinking lid policy, but could not support pulling the rug underneath community organisations which receive funding from pokies.
"The views were quite clearly expressed in public consultation," Ms Southgate said. "Other candidates will no doubt go out and attack me on a moral basis but let me make it clear, I do not like gambling."
Ms O'Leary, who is also running for the mayoralty, said the community groups that council heard from rely heavily on the funding from pokies.
"Option B was a slightly stronger option, but because of the relocation clause and listening to the community groups I will support continuing the current sinking lid policy," Ms O'Leary said.
"I am concerned for the clubs that do rely heavily on the funding."
Councillor Ryan Hamilton said making the sinking lid stricter should be a priority for the council.
"I do not think that the sky will fall down," Mr Hamilton said.
"This decisions is part of a long-term step which will be better for our community."
Councillor Dave Macpherson, who has been lobbying for "no more pokies" in this year's election said he helps run an amateur sport in the area, and that they do not get one cent of pokies money.
"We do not need, and amateur sports do not need pokies money to run as long as they organise themselves well," Mr Macpherson said.
Councillors O'Leary, Southgate, James Casson, Siggi Henry, Rob Pascoe, Leo Tooman and Garry Mallett voted in favour of retaining the current policy.
Mayor King, deputy mayor Martin Gallagher, and councillors Macpherson, Hamilton, Geoff Taylor and Mark Bunting voted for the change to no relocation or mergers.