A selection of gaming machines in the Bay of Plenty will be shut down for 16 days following a gambling society's failure to comply with gambling laws.

A total of five facilities in Rotorua and Whakatane are among the 21 establishments affected by Grassroots Trust's discrepancy.

Gaming machines in the Bay of Plenty will be shut down for 16 days.

This penalty is the most severe suspension a class 4 gambling society has faced.

Internal Affairs gambling compliance director Debbie Despard says Grassroots was sanctioned for breaches in the financial year ending March 2010 after the society failed to distribute a minimum of 37.12 per cent of gaming machine proceeds to authorised purposes – a shortfall of $561,482 and overpaying venue expenses by $79,359.

The department initially decided to cancel Grassroots' licence in December 2011, but Grassroots was entitled to continue operating while it appealed the decision to the Gambling Commission.

A negotiated outcome has resulted in the trust distributing a minimum of 40 per cent of its gaming machine profit to the community and limiting the expenses it pays to its venues in a year to 14.5 per cent of GMP, rather than the statutory cap of 16 per cent.

Debbie says the community will ultimately benefit because Grassroots will provide more funds for grant distribution.

She says while some pubs may see themselves as being punished for a society's misdemeanour, venue operators to exercise caution in entering into an agreement with a society to operate gaming machines in their pubs.

'We are satisfied that Grassroots has taken an appropriate response to the compliance issues.

'Gaming trusts exist to maximise gaming machine proceeds to the community and ultimately the community will benefit from the commitments that Grassroots has made.”

The select gaming machines will be shut down for four periods of three days and two periods of two days, between July 18 and August 24.

Internal Affairs was unable to say how much money the pubs stood to lose from the closures.

The facilities involved in the Bay of Plenty are Whakatane Hotel and Cobb & Co in Whakatane, as well as Hennessey's Irish Bar, Locker Room Sports Bar and The Kalah Bar in Rotorua.