Introduced in 2011, category 3 of the ClubGRANTS program established a tax of 0.4 per cent on gaming machine profits over $1 million. According to the scheme's guidelines, proceeds would go towards funding large-scale sporting and health projects in disadvantaged communities.

Instead, all of the money raised - more than $14 million - has been spent on the state government's election commitments, including an upgrade to "soccer infrastructure" at Lambert Park, in Leichhardt, and improvements to Pluim Park football ground, near Gosford.

"They are pork-barrelling," says Fairfield mayor Frank Carbone. "It's as simple as that."

Fairfield is the third most disadvantaged local government area in NSW, with an unemployment rate twice the state average. Its residents also put more money through the slots than any other suburb in NSW, generating $298 million in poker machine profits in the year to August 2013, making it the biggest single contributor to the category 3 fund.

As a "culturally and linguistically diverse area", Fairfield qualifies by ClubGRANTS' own guidelines in the "priority group" for project

funding. Yet not one dollar has made its way back to the area.

"They should put at least some of the money back into the area where it was generated, which also happens to be the area of greatest need," Cr Carbone said.

A report by the NSW Auditor-General last year criticised the government's management of ClubGRANTS. It said the minister responsible, George Souris, had neglected to establish an independent committee to administer the fund.

"We found a lack of information on details on the projects and justification of funding," the Auditor-General wrote, as well as a lack of transparency as to "what basis these grants were given except that it was an election commitment''.

The report also found that public reporting on the scheme could be "significantly improved", and recommended that grant application and management processes be publicised.

The funding committee was finally appointed in February, 2½ years after the scheme's launch. But Mr Souris retains the right to reject the committee's decisions for grants given under category 3, and is not bound under the legislation to seek the committee's advice before making a decision.

Of the $14.2 million spent so far, $2.2 million went to upgrading football infrastructure in Leichhardt, which ranks in the top 10 per cent of the state's most well-off areas. Some $3 million was given to Pluim Park, in The Entrance, a Labor electorate won by the Liberals at the 2011 election. Another $5 million has been spent on upgrading Football NSW's headquarters at Valentine Sports Park in Blacktown, a multi-purpose sporting complex that already has five playing fields, lecture rooms, an indoor sports hall, indoor pool and dining room.

"We're extremely disappointed at how this money has been spent," Wollongong lord mayor Gordon Bradbery, pictured, said.

Wollongong residents contributed $121 million in club poker machine profits in the year to August 2013, making it the fifth biggest contributor to the category 3 funding pool. It also has pockets of crippling poverty, with suburbs such as Warrawong and Cringila rating below Brewarrina in terms of socio-economic disadvantage.

"Yet we got nothing," Cr Bradbery said. ''As a city we've been dudded because we're a Labor area.''

A spokesman for Mr Souris denied allegations of pork-barrelling, noting the government's election promise to fund ''certain commitments'' from the ClubGRANTS fund.

He also said that the Auditor-General's recommendations have been "completed" and that "funding is not allocated based on the local government area from which it was derived''.