Wollongong's arts, sports and community groups have been eligible for $3.4 million worth of funding from the profits of poker machines in the past three years.
But only one project, worth $144,000, was funded in that time.
According to information provided to Wollongong MP Paul Scully in a Question on Notice, the government received 27 applications from Wollongong LGA for a share in the Clubsgrants Category 3 Infrastructure Grants between August 2017 and March this year.
Minister for Customer Service Victor Dominello said 23 of these were deemed eligible for funding, but only one - located in Helensburgh, within the Liberal held Heathcote electorate, received funding.
The Category 3 Infrastructure Grants is a statewide program for larger community infrastructure projects, with recent successful projects including the Dorrigo Dramatic Club's application to redevelop a theatre and funding for the upgrade of the Jervis Bay Museum electricity supply.
They are funded from the poker machine tax paid by registered clubs. According to government data on the last available six month period (June-November 2019), clubs in Wollongong LGA paid $10.6 million in tax to the government, and the LGA ranked seventh in NSW in terms of poker machine losses.
Mr Scully has raised concerns about Wollongong's "strike rate" in the Clubsgrants program - which is less than four per cent of projects submitted - and asked the minister to explain how the city had repeatedly missed out on funds.
The statewide strike rate, according to Mr Dominello's office, was around nine per cent in the latest round of grant applications.
"There must be a reason why so many applications have been submitted... yet since August 2017 only one community organisation in the area has been successful," Mr Scully said.
"Either there is a hitch in the application process, or Wollongong LGA's sport or community groups are being deliberately dudded by the NSW Government.
"An area the size of Wollongong LGA - the third largest city in NSW - should not be missing out on funding under this program."
One of the Wollongong projects which recently missed out was a bid for $200,000 to upgrade the 40-year-old Snakepit basketball stadium.
The Illawarra Basketball Association's assistant operations manager Paul Mosman said they has been hoping to be able to bring the ageing facility up to modern standards, for the benefit of basketball players of all ages from Kiama to Stanwell Park.
"We thought we had a very good case, because this is a regional issue," Mr Mosman said.
"We also have people from the Waratah Basketabll NSW league who come here from all over the state, and the RollerHawks train here and have players that are heading to the Olympics next year, so this facility has quite a significant impact."
"We wanted to do this upgrade for the benefit and welfare of the community, and while $200,000 is not an extravagant ask for a grants application it's well beyond our capability, especially because of COVID."
A spokesman for Mr Dominello confirmed the Minister had the final say over which programs were given funding.
Asked whether projects were funded based on which way their electorate votes, he did not answer, but said the Clubgrants program received many competitive applications.
"Demand for projects far outweighs the funding available, and unfortunately there are many worthy applications that miss out on funding," he said.
"A panel of external subject matter experts scores applications against published assessment criteria of merit, engagement, viability and budget, with the final decision on successful applications made by the Minister. "
"The Minister takes into account the assessment scores and the published priority framework which gives priority to disadvantaged communities, including regional and remote, Aboriginal, CALD, drought-affected and fire-affected communities."
Mr Scully's focus on the Clubsgrants application process comes as the state parliament's Public Accountability Committee established an inquiry into the integrity and value for money of NSW Government grants programs.
'This inquiry is about bringing greater transparency and public accountability to a range of Government funding schemes, including the well-publicised Stronger Communities Fund," Committee Chair, Mr David Shoebridge said.
"It is incumbent on the Government to demonstrate that funding decisions have been made based on sound principles, rigorous/established guidelines and independently of political processes.
"This being public money, it is imperative that Government grant schemes deliver public benefit, not political objectives."