Dozens of Woolworths pubs are being investigated over claims staff illegally gave free drinks to pokie players to keep them gambling longer, as a whistleblower alleges staff were instructed on how to cover up the practice.

Key points: More than 50 pubs majority-owned by supermarket giant Woolworths are being investigated by the NSW gaming regulator

More than 50 pubs majority-owned by supermarket giant Woolworths are being investigated by the NSW gaming regulator Pokies players have allegedly been plied with free drinks to induce them to gamble longer, which is illegal in NSW

Pokies players have allegedly been plied with free drinks to induce them to gamble longer, which is illegal in NSW ALH says it does not provide complimentary alcohol in any gaming room anywhere in Australia

The NSW gaming regulator has told the ABC it is investigating more than 50 venues run by Australian Leisure and Hospitality (ALH) which is 75 per cent owned by supermarket giant Woolworths.

Liquor & Gaming NSW has told the ABC it has "issued coercive notices to obtain a significant volume of information and records, and formally interviewed current and former ALH staff and patrons".

The investigation has been going for close to a year and has been described as "comprehensive" by a spokesman for the regulator.

It is a criminal offence in NSW to provide free or discounted alcohol to induce gambling.

Free drinks put through different till: whistleblower

A former employee-turned-whistleblower, who has provided evidence to the investigation, told the ABC she and other ALH staff were told to give free drinks to poker machine players.

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"If they were a regular gambler, or they paid high dollars on our machines then they'd give them a free drink of whatever they drank," Emma Pearson, a former gaming room attendant, said.

"They'd tell the staff to do the same, and that was right up the line — manager and staff, supervisors, everyone."

Ms Pearson claims staff at a western Sydney ALH hotel she worked at were taught to cover up the practice of providing free drinks to gamblers by putting them through the till at the main bar, rather than the gaming room.

"We were told don't put that through the gaming computer so if we get audited or get checked, it won't come up on that till," Ms Pearson said.

"We were supposed to put it through the [main] bars and cover it by writing on the docket that it was a local's birthday."

No-one from ALH or Woolworths was available for interview.

ALH head of Regulatory and Corporate Affairs David Curry said in a statement: "We are working closely with the NSW regulator. ALH does not provide any complimentary service of alcohol in any gaming room Australia wide".

ALH owns more than 300 licensed venues across Australia, which include about 12,000 poker machines.

The company will not declare how much money it makes from pokies but the Alliance for Gambling Reform estimates that it is at least $1.5 billion per year.

Andrew Wilkie described the alleged behaviour as "scandalous and unconscionable". ( ABC News )

The Liquor & Gaming investigation began after independent MP Andrew Wilkie told Parliament in February last year that ALH and Woolworths were spying on people playing poker machines in their venues.

"Woolworths spies on its poker machine customers without their knowledge, keeps a secret database of personal information, and uses that information to encourage increased gambling," Mr Wilkie said.

Internal investigation labelled 'whitewash'

After Mr Wilkie's speech ALH launched an internal investigation into the allegations which was overseen by its chairman, former Woolworths chief executive Roger Corbett.

The company promised it would brief state regulators about its findings.

Documents obtained by the ABC under Freedom of Information (FOI) show ALH refused to hand over the full report to the regulator citing legal privilege, instead providing the Office of Liquor and Gaming with a summary of the findings.

The document shows an ALH subcommittee appointed MinterEllison to lead the investigation and "provide advice" back to ALH's subcommittee.

The FOI documents reveal the investigation interviewed "in the main, venue managers and operations managers".

Mr Wilkie said the information obtained by the ABC shows the investigation did not meet proper standards.

"It was, on the face of it, a whitewash," Mr Wilkie said.

"It was internal, it was pretty flimsy, they only interviewed senior management, and crucially we now know they didn't share their findings with at least the NSW regulator and presumably other regulators.

"It also calls into question the effectiveness of the regulators. Why haven't they demanded this report?"

The Alliance for Gambling Reform estimates ALH generates at least $1.5 billion per year from pokies.

Ms Pearson said management should not have been the focus of the interviews conducted for the internal investigation.

"They are going to say exactly what they want," she said.

"And trust me, they don't want anybody speaking to the staff."

After ALH's report was completed in August last year a statement released by the company included an admission that at some venues in Queensland there had been free drinks given to gamblers.

ALH said "these initiatives have now ceased" and "the investigation did not find evidence of similar conduct in any other state or territory".

However Ms Pearson, who said she left ALH in mid-August, was not interviewed as part of ALH's investigation.

She said free drinks were being provided to gamblers in NSW before and after ALH released that statement.

Mr Wilkie said he was "shocked" by Ms Pearson's claims.

"I had been assured last year by the chairman of Woolworths no less that they had done a thorough investigation and that they were putting in place remedies for all of the problems," Mr Wilkie said.