Research published in the Australian and New Zealand Journal of Public Health found just 1.5 per cent of gamblers' losses in Victoria went to welfare services over a 10-year period until 2019.
Out of the 50 RSL venues licensed to have poker machines in the state, less than 10 per cent of reported community contributions went directly on veteran support.
Study lead Louise Francis, from Curtin University, said the insight was particularly concerning as veterans often had more harmful gambling habits than the general public.
Research found gambling profits are spent on venue operational costs rather than veteran services. (Dave Hunt/AAP PHOTOS)
"There is an argument any ties to gambling - and more specifically, high-risk electronic gambling machines - run counter to the RSL's position as a benchmark ex-service organisation," Dr Francis said.
Licensed not-for-profit organisations including RSLs are granted tax concessions for funding programs and initiatives that benefit the community.
However, in order to receive these concessions, the clubs need to spend 8.3 per cent of their gambling revenue on "community contributions" each year.
Total gambler losses at RSL venues in Victoria during the researched period hit $9.75 billion but less than 0.002 per cent of funds went specifically toward preventing or treating gambling-related harm.
"Our research shows in this instance, spending on charitable services from gambling revenue is very modest among Australia's principal veteran's organisation," Dr Francis said.
"Most funds are spent on venue operational costs rather than veteran services, which fails to align with the RSL's core mission of supporting veterans and raises ethical concerns."
RSL Victoria chief executive Sue Cattermole said there are significant funding gaps to meet the growing demands of veteran support.
"To meet the funding gaps, some sub-branches choose to operate food, beverage, and entertainment options to generate funds," she said.
"These operations, and costs associated with them, do align with RSL Victoria's core mission of supporting veterans because without them the gap in funding would be even larger."
"The result of sub-branches reducing these operations would be fewer veterans receiving the support they need."
Total gambler losses at Victorian RSL venues during the researched period hit $9.75 billion. (Tracey Nearmy/AAP PHOTOS)
Ms Cattermole said the state government requires sub-branches with gaming machines to submit an annual community benefit statement demonstrating at least 8.33 per cent of net machine revenue is helping the community.
"RSL Sub-Branches direct significantly more than 8.33 per cent of gaming machine revenue towards community benefit, of which veteran welfare is the priority," she said.
"Support for veteran welfare comes from a number of different activities at sub-branches.
"We assume the study has only focused on that one area of sub-branch operation and is therefore not reflective of the full financial contribution made to veteran welfare."
Dr Francis said the RSL risked potentially harming its reputation and public trust by adopting practices from the gambling industry.
"Globally, funding 'good causes' is a legitimation tactic for gambling operations: they use apparent acts of philanthropy to divert attention away," she said.
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