The Department of Internal Affairs says difficult economic conditions are responsible for a fall in spending on gambling.
In the year to June 2010, $1.9 billion was spent on gambling - a decline of more than 5% on the previous year.
Spending on Lotteries Commission products, including Lotto and Instant Kiwi, fell by 14%, while spending on gaming machines, or pokies, was down by 4.5%.
The department says this is the third consecutive year that expenditure on pokies has fallen.
TAB racing and sports betting was the only sector to report an increase, largely due to betting on the FIFA World Cup in South Africa in June - July.