Labor was elected in 2023 promising to buy back 9500 poker machines over five years in answer to a landmark crime commission report and demands for industry reform.
But that pledge was dead in a ditch on Tuesday as NSW Gaming Minister David Harris said the government now had proper evidence it would not work.
NSW has about 87,770 poker machines in operation, including 74 clubs operating a pool of 200.
"It's not the number of machines that's the issue - it's the intensity of play," Mr Harris told a parliamentary hearing.
"So the state could pay $60 million to remove (2000) machines and make no difference other than that, $60 million out of the budget that could have been spent on harm minimisation."
He put the promise breaking down to it being made in opposition without all of information available to government.
But the latest ditching of an element of pokies reform "shows capitulation to the AHA (Australian Hotels Association) and Clubs NSW," gambling reform advocate Tim Costello told AAP.
"NSW is the belly of the beast, if American politics is captured by the gun lobby, the AHA and Clubs NSW have captured NSW politics," the Alliance for Gambling Reform chief advocate said.
"The rest of the world looks in disbelief at our gambling losses."
The cashless gaming or pre-commitment technology had been recommended as early as 1999 by the Productivity Commission, Reverend Costello said.
But the current NSW government was failing to address that or reduce the "excessive" number of pokies in community venues, he said.
"What they're doing is deceitful on two counts," Rev Costello said.
"On intensity of play, they've done nothing.
"On numbers, NSW has 35 per cent of all the world's pokies that are in pubs and clubs."
A trial of cashless gaming in 2024 was ridiculed after it emerged only 14 "genuine users" were inducted - three of whom were willing to engage further with researchers.
But the chair of the government's gaming reform panel, which oversaw the trial, said the evidence showed players resisted account-based gaming out of concern banks and governments could monitor their gambling.
The same panel also warned against a buyback scheme, saying it would likely come at huge cost while not significantly affecting machine numbers.
The panel suggested increased forfeiture was a more sustainable and cost-effective approach.
Opposition gaming spokesman Kevin Anderson said the buyback backdown was another complete miss by a Minns government "that clearly doesn't know what a promise is".
"It's not clear who to believe, but what is abundantly clear is Labor has done nothing to address problem gambling in this state," he told AAP in a statement.
"Industry and communities across NSW deserve better than a growing list of broken promises."
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