Community groups are bracing themselves for a cut in funding from Lotteries Grants.
A lack of big jackpots has seen a drop in Lotto sales and that leaves the grants board with less cash to hand out.
Surf Life Saving New Zealand relies on grants and sponsorship to survive -- a large chunk of its $9 million revenue comes from New Zealand Lotteries Grants.
"Surf Life Saving gets $2.2 million a year from the New Zealand Lotteries Grants Board, and that's been pretty consistent over the past five years," says Surf Life Saving chief executive Paul Dalton.
But that funding could be in jeopardy, with claims Lotto will be handing out fewer grants, after suffering a drop in income.
"I've said figures speculating $20 - 25 million," says Internal Affairs Minister Peter Dunne.
"I can't absolutely verify those, but I think it's somewhere in that ballpark."
"If that was to be reduced significantly obviously it would have quite a big impact," Mr Dalton says.
"At this stage we have no idea if there will be any cuts, but we will be monitoring it very closely."
Lotto says it won't know how much it will have to give out in grants until the end of the financial year.
But it says there have been fewer big jackpots lately and as a result, fewer people buying tickets.
"New Zealanders, as investors, are pretty canny and they don't normally start buying tickets in numbers until the jackpots hit about $15 million," Mr Dunne says.
"They're not hitting $15 million because they're being struck, and they aren't buying tickets."
He admits the impact could be significant for community groups, but the Government won't be plugging the gap.
"When the proceeds are higher than anticipated, that's their windfall," Mr Dunne says.
"Unfortunately this is one year when the proceeds will be lower."
Creative New Zealand has also raised concerns -- around two-thirds of its revenue comes from Lotto New Zealand, and this year it's expecting to receive $11 million less than it was given two years ago.