A dispute that erupted inside an illegal New York casino has left four people dead and three wounded after an exchange of shots sent patrons fleeing onto the street

The mayhem erupted at around 7am after what had been an all-night gambling session in the nondescript streetfront club on Utica Avenue in the borough’s Crown Heights section.

At least 15 people were still betting on dice and card games at the Triple A Aces club as scantily clad strippers circulated through the gaming tables when the shots rang out, police said.

Investigators were unsure if the shootout began as a dispute over winnings or if the deaths were the result of “a robbery gone bad”.

Chief of Detectives Dermot Shea said investigators were trying to determine if a gambling dispute, a robbery, or something else was to blame for the violence.

“A bit of a chaotic scene,” Shea said. “We’re trying to piece together exactly what transpired inside.”

Police sources told reporters they believed one man began shooting, prompting another patron to pull out his own weapon and kill the initiator.

Two handguns, a 9mm and a revolver, were recovered.

The victims, who have not been identified, ranged in age from 32 to 49, Shea said.

Landlord Samuel Revells told the New York Post he had leased the building two years ago to the operators and claimed to have no idea gambling was taking place at the address.

Operated by the city’s organised crime families, clandestine casinos have long been part of New York City’s underground nightlife despite decades of police efforts to shut them down.

They move house regularly to avoid raids and are usually far more security conscious than their legal counterparts in Las Vegas and Atlantic City.

Gamblers are usually frisked upon arrival and their guns held by the door staff.

-with AAP