Community Clubs Victoria launched a campaign against the Victorian government in response to a May tax increase on poker machine venues on Wednesday. As revealed by Fairfax Media, the association warned clubs would close, jobs would be lost, and charities and sporting clubs would lose funding.

The government has reacted angrily with Gaming Minister Edward O'Donohue pulling out of the launch of Community Clubs Victoria in two weeks. The body is only nine days old and is the amalgamation of Clubs Victoria and Community Clubs Association of Victoria.

A senior government source said "there are always consequences when picking political fights; [CCV executive director] Leon's [Wiegard] members might only now be realising that''.

Treasurer Michael O’Brien stood by the tax increase, saying it was designed to return the government's share of pokies revenue to historical levels, which had been botched by Labor.

He also dismissed the campaign as nothing more than a "political stunt".

"This isn't about going backwards and grabbing tax from the past, this is simply correcting the tax rate going forward," Mr O’Brien told 3AW radio. "It's fixing a Labor mistake and that money is going to schools and hospitals."

The tax increase was opposed by the Labor opposition in the Parliament and when asked if they would repeal the changes, a spokesman said policies and costings would be released "in plenty of time before the election".

Doctors joined in the criticism of the new campaign, with Australian Medical Association Victoria president Dr Tony Bartone outlining the damage gambling addiction causes the community.

"They can argue as much as they want that money from the clubs goes back to the community – but this is degenerative when you consider the overall cost to the community and the devastation that gambling can cause," Dr Bartone said.

"We are talking about anxieties, tension and worries for the partners. The stresses that are associated with gambling, the financial ruin, the family breakdown, the fear – all of this can lead to mental health problems, including depression."

The Victorian InterChurch Gambling Taskforce condemned the move from the lobby saying it was trying to blackmail the government.

"This is typical blackmail from the clubs. Any time their revenue is threatened they say community groups will be hurt. It is a cynical move. It is nasty," chairman of the taskforce Dr Mark Zirnsak said.

"I think the clubs should be looking to diversify their operations so that they aren't so dependent on pokies revenue."

CCV executive director Leon Wiegard said the campaign had been a last resort and was taken after demand for action from members.

He dismissed the government's argument that it was simply returning the tax rate to historical levels arguing that income for venues was dropping while costing were going up.

Mr Wiegard said it was acting in the best interests of clubs.

Anti-gambling campaigner Paul Bendat, who has self-funded a series of ads in marginal seats calling for a $1 maximum bet on poker machines, said clubs already had a good deal on tax rates.

"The poker machine lobby should be known as the 'Anti-Community Clubs' as they destroy communities with their dangerously addictive gambling machines.

"Problem gambling costs Victoria as much as $2.8 billion every year in financial loss, health and emotional problems, family breakdown, domestic violence, gambling-related crime and suicide," Mr Bendat said.