East Dunbartonshire Council, which faces cuts this year of £3 million, will cover any losses incurred by the Betfred shop in Lennoxtown for five years after its move to a new premises critics say is just yards away from its former home.
As part of the deal, the council has also agreed to provide Betfred with new accommodation at a cost to the public purse of £100,000, temporary relocation costs of £5000 and five years of free rent worth £50,000.
The agreement to also underwrite the profits of the shop for five years has sparked fury amongst opposition politicians, who accuse the council of leaving it at the mercy of the vagaries of the betting market at a time when static shops are losing out to online gambling.
The move is part of the creation of a new £5m-plus community hub in Lennoxtown, which has involved the buy-out of several properties in the town's main street.
The Betfred deal, described by the council as standard, results from the bookmaker having 17 years of a 20 year lease still intact.
Public spending watchdog Audit Scotland said complaints about the deal would be included in any audit of East Dunbartonshire, or wrapped up in an imminent review of the authority's asset management.
Ian Mackay, leader of the SNP group on the council, said he had never encountered such a deal in 35 years of working in development. Mr Mackay, who has written to Audit Scotland about the deal, said: "I can't understand how the administration thinks a deal to subsidise a bookies is good use of public money. Legalities aside, is this best value?"
Council leader, Labour's Rhondda Geekie, said: "The commercial arrangements we have put together with Betfred and other land owners has sought to avoid the need for potential use of compulsory purchase order, which would have taken considerably longer to implement, delaying major investment in the village, and been potentially more expensive.
"It is ridiculous to claim that we are sponsoring a bookies ... we have to treat Betfred the same as any other business."
It is understood another deal to facilitate the new hub involve s the payment to another business of several hundred thousand pounds, with free rent for several decades.