The former Victorian senator last year quit parliament before taking up a role as executive director of the newly formed Responsible Wagering Australia, which represents the interests of the James Packer-backed Crownbet, Betfair, Bet365, Sportsbet and Unibet.

Mr Conroy, a major factional player especially in Victoria, remains on Labor's national executive which has the power to overturn preselection and party rules made by state branches.

A long term critic of Labor's factions, Mr Rudd told Fairfax Media that the two roles could represent a conflict of interest.

"It would be unethical and unacceptable if Conroy was effectively working as a lobbyist for the gambling industry, while holding a position on the National Executive of the Labor party," Mr Rudd said.

"If this is the case, it would also be a conflict of interest.

"This would also amount to the absolute abuse of the factional system of which Conroy is a major leader and its principal exponent."

Mr Conroy and RWA are listed on the Victorian government lobbyist register but not the federal register because the group is considered an industry body rather than a third party lobbyist.

Under the federal code people who sit on the executive of a political party cannot be registered as lobbyists.

In Victoria, former Commonwealth ministers who lobby must be registered. Mr Conroy served as a minister, including a stint as communications minister which controls online gambling laws and advertising.

There are no rules prohibiting lobbyists being a member of Labor's national executive.

Mr Conroy said he had fully complied with the Ministerial Code of Conduct introduced by Mr Rudd.

"I fully comply with the Lobbying Code of Conduct, which was an initiative of Kevin Rudd's government," he said. "I fully comply with the ALP national rules."

Responsible Wagering Australia is pushing for a reduction in gambling advertising, given the growing public outrage at the proliferation of betting ads particularly during sports broadcasts.

Many in the sector acknowledge that the community is increasingly frustrated with the number of gambling ads on television.

Other policies RWA is pursuing includes a national self-exclusion register for problem gamblers, a crackdown on inducements and ending the practice of bookies offering credit to punters.

His appointment to the gambling body has been an issue of concern for many inside the ALP, particularly in Mr Conroy's home state of Victoria.

Many others in the ALP privately share Mr Rudd's view.

However some have defended the position saying the national executive is purely an administrative arm of the party and is not a policy body.

Mr Rudd's comments come amid factional manoeuvring within the Victorian Labor Party over upcoming state preselections before next year's state poll.