The Society for the Prevention of Cruelty to Animals (SPCA) sealed up the three controversial Catcha Cray machines operating in Auckland pubs. It believes a handful of others are scattered around the country.
In the $NZ3 ($A2.38) game, patrons snag a lobster from a tank of six. The creature is then dropped down a shoot and can be cooked up on site or taken home for dinner.
The SPCA's CEO, Garth Halliday, said a crustacean expert had "studied the game closely" and deemed it harmful to the animals.
"In his expert opinion, the animals undoubtedly are suffering stress and worry by the way in which the claw works," Mr Halliday said.
"For the claw to be consistently going up and down trying to grab them and the fact that it may grab a leg, it may grab a fin, it may grab any part of the body rather than actually lift the whole thing up ... is cruelty to animals."
Game 'cruelty to animals'
SPCA inspectors taped up the coin slot on the three machines on Tuesday, and Mr Halliday said it was illegal for that seal to be broken.
Andrew Jackson, the manager of The Albion which has one of the machines, said the game had been operating at his establishment for about 12 months, adding "it's quite popular".
He said the SPCA and Ministry of Agriculture and Forestry had approved the arcade game in the past.
"They're just closed at the moment," Mr Jackson said. "The owner of the machine apparently is talking to his lawyers. It's all up to the owner of the machine."
The owner of the Catcha Cray machines said experts had advised him the arcade game didn't torment lobsters.
"Given the strength of our evidence supporting our viewpoint that the crayfish are not ill treated, we will be vigorously defending any action taken by the SPCA in relation to this game," he said.
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