A charitable trust run by the Head Hunters gang in Auckland can continue to run lotteries despite concerns it was being used to launder profits from selling drugs.

The That Was Then This Is Now Charitable Trust was set up in 2001 with senior Head Hunter David Dunn as a founding trustee and run from a gang headquarters in Ellerslie.

Since 2001 it has been granted seven licences to run lotteries to fund support services for rehabilitating prison inmates and fitness facilities.

The trust's latest financial statements show it has more than half a million dollars in assets, more than two thirds of which is cash.

In October 2011 it made an application for a new licence for a lottery with prizes exceeding $50,000.

At that time the Department of Internal Affairs raised concerns that current and former trustees were patched members of the gang with criminal convictions, and that the trust was being used to launder money.

Internal Affairs and police investigations found that trustee Aaron Hiley had a number of criminal and traffic convictions; Wayne Doyle, who was mentioned in the meeting minutes of the trust, had criminal convictions including the sale and purchase of illegal lottery tickets; and Bryan Collett, another trustee, was facing charges including several for drugs and guns.

''The proposed raffle would have the effect of limiting the number of tickets needed to be sold to legitimate ticket buyers and any significant cash subsequently located can be explained away as being takings from the sale of raffle tickets,'' police found.

The trust responded by saying the two individuals of particular concern were no longer involved and that no concerns had been raised in its previous seven lottery licence applications. It offered access to all records, audits, and applications to police to attend and supervise lotteries.

The trust was denied an application for the lottery, but appealed to the Gambling Commission.

The commission reversed the decision after "careful consideration", but said the trust must put all proceeds from the sale of lottery tickets into a bank account operated by the trust and must retain accurate records of all income and expenditure.

"While commissioners would prefer to see more distance between a [lotteries] applicant and an outlaw motorcycle club, in this case, on balance it is not dissatisfied with the suitability of the trust."