Victorian communities are being "robbed" of critical funding by clubs spending gambling profits meant for public investment on themselves.
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About three-quarters of community grants from poker machine profits in the 2022/23 financial year were spent on the venues, according to analysis by the Alliance for Gambling Reform on club declarations to the Victorian Gambling and Casino Commission.
More than $241 million of $311 million in pokies revenue was spent on funding club operations including wages, staff meals, beer, gas and decorations.
Other spending areas included security, TV subscriptions, accounting, legal fees, council rates, pest control, trophies and prizes for members.
Clubs can claim an 8.33 per cent tax deduction on their net gaming revenue if they reinvest that percentage into the community under the Victorian Community Benefits Scheme.
The scheme allows clubs to claim operating costs and capital expenditure as a benefit.
Clubs are "robbing" the Victorian community of critical funding while double-dipping in gambling profits, Alliance for Gambling Reform interim chief executive Martin Thomas said.
"Across Victoria last financial year people lost more than $3 billion to poker machines," he said.
"Under the scheme, which essentially is a loophole, they can grant themselves funding for things like operations, mowing the lawn and redecorating beer gardens."
Community Clubs Victoria chief executive Andrew Lloyd hit back, saying the figures had been cherry-picked and didn't take into account taxes imposed on clubs including the GST, gaming taxes and the regulator charge.
"There are some items in there that are linked to operating costs but that's something that when the scheme was drawn up by government, they felt it was entirely fair and reasonable," he told AAP.
"The clubs work with what the system is and claim what they're legally able to claim."
Mr Lloyd said profits often go back into club facilities for public use or helping the community, including through fundraisers and school events.
The Alliance for Gambling Reform said the scheme was not working as intended and called for it to be scrapped.
"Organisations like this that make a lot of money can spend out of their own pockets to make their facilities better," Mr Thomas said.
"The reality is the damage they are causing our communities far outweighs any good they are doing."
Community Clubs Victoria was open to discussing ways to modernise the scheme but was opposed to scrapping it entirely.
Gaming Minister Melissa Horne has met with councils over their concerns about how gambling harm affected their communities.
"It's important that clubs invest back into the communities they're hosted by, to ensure more people can benefit from the revenue they bring in," she said.
Australia has the highest gambling losses per capita of any nation, squandering more than $25 billion every year.
Gambling losses are disproportionately experienced by the most vulnerable, including people living with financial and other forms of stress, women and children experiencing family violence and people with mental health issues problems.
VICTORIAN CLUBS SPENDING GRANTS ON THEMSELVES
* Amstel Golf Club in Cranbourne - $6.7 million
* Veneto Club in Bulleen - $4.8 million
* Bendigo Stadium - $4.6 million
* Morwell Bowling Club - $4.1 million
* Frankston RSL - $4 million
* Geelong Combined Leagues Club - $3.7 million
* Rosebud Country Club - $3.5 million
* Rosebud RSL - $3.3 million
* Mulgrave Country Club - $3.2 million
*Kooringal Golf Club in Altona - $2.8 million
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Australian Associated Press
