Casinos reined in, but will NSW club pokie palaces ride high on their money laundering losses?

The NSW casino regulator has beaten the casinos into submission, including mandatory cashless gambling measures. Meanwhile, the pokies clubs enjoy the freedom from the same regulations, making them a haven for money laundering. Whistleblower Troy Stolz with the story.

The legislation for pokie venues and the reporting requirements for the regulator AUSTRAC have been around since 2006, when the AML/CTF Act was passed. However, while cash is still legal tender in these clubs, the current regulation remains ineffective.

Going back to 2011, AUSTRAC identified the vulnerability of the gambling sector, where money laundering is concerned, stating that “Money laundering cases in the gaming sector generally involve cash proceeds from drug trafficking and fraud committed by domestic and international organised crime groups.”

To address this, the NSW Government established the NSW Independent Casino Commission as a result of multiple inquiries into the casinos. The casinos are now forced to mandate cashless gambling as well as having strict reporting requirements imposed, reducing their attractiveness as channels for money laundering significantly.

Not so for the pokie clubs.

Action from ALP on pokies, gambling, more long-shot than sure bet

NSW Crime Commission recommendations

According to the NSW Crime Commission, “criminals are funnelling billions of dollars of “dirty” cash through poker machines in pubs and clubs every year in NSW, but there are no effective controls or data collection to identify or prosecute those involved.”

Approximately $95 billion in cash flows through poker machines in pubs and clubs in NSW each year, making this the gambling capital of Australia.

In October 2022, the NSW Crime Commission delivered  the ‘Project Islington report‘, with a number of recommendations to address the issues known about for years.

The recommendations included the introduction of a mandatory cashless gaming card and enhanced data collection. According to Commissioner Michael Barnes, “poker machines offered criminals one of the last remaining safe havens where cash from criminal enterprises could be “cleaned” or gambled with virtual impunity. “At the moment, serious offenders can enter NSW pubs and clubs, sit down next to patrons in gaming rooms,

and openly feed large sums of cash from their crimes into poker machines with no real fear of detection.

So far, none of the recommendations have been acted upon by the NSW Government.

Instead, Premier Chris Minns established an Independent Panel on Gaming Reform. The Panel will oversee a cashless gaming trial on electronic gaming machines in a range of venues across NSW. The Panel has been operating in secret until it releases its report in November this year.

When it comes to compliance, enforcement and regulation, the special treatment of pubs and clubs by the NSW Premier is what NSW voters should be questioning. It is worth pointing out that thanks to pokies taxes, which are in the billions, the state government can reasonably be described as an accomplice of the predatory club casinos.

Big money, even bigger harm

According to the state budget, NSW will collect $3,466B in gambling tax this year. $2.474B of that is from club and pub pokies.

At the end of 2023, NSW had 87,545 poker machines in pubs and clubs, 895 more machines than at the end of 2022, despite a commitment from the NSW government to reduce the number of poker machines in the state.

According to Wesley Mission CEO Reverend Stu Cameron, the people of NSW lost $8.129B to poker machines in 2023, an increase of $29m on 2022 and

the equivalent of $1,000 for every adult and child in the state.

There are glimmers of hope, however, and Reverend Cameron says NSW has already seen a positive impact from reforms introduced by the NSW government in 2023, and the revenue from Clubs appears to be plateauing.

However, “we wait for the outcome of the current pre-implementation testing of cashless gambling in NSW; there are a range of reforms the government can introduce this year that will have an immediate impact on reducing harm.”

Let night harm

He also highlights the particular dangers of late-night gambling, “The government’s own research shows the increased danger of harm occurring to people gambling after midnight. We urge the government to act now on powering down poker machines between midnight and 10 am.”

This was backed up by the NSW Liquor and Gaming Authority in a study released in May 2023, stating that “The Impact of Electronic Gaming Machine (EGM) Late Night Play on EGM Player Behaviours study found that people with gambling problems represent the majority of late-night poker machine players, with almost two-thirds of people playing poker machines between 2 am and 8 am experiencing significant negative consequences.”

Vibrancy Reforms make a more vibrant pokies scene

Meanwhile, the Minns government has passed the Vibrancy Reform bill, which came into effect on July 1. The bill is set to improve the regulatory landscape for night-time economy operators. Welcomed by ClubNSW, the pokie clubs lobby group, it makes it easier for clubs to get approval to operate at all hours.

This has already led to later trading for pokie venues due to special events such as the Olympics overseas and by extending trading hours for pokie venues that have live music, meaning pokie venues are rewarded by having their pokies switched on for additional hours.

So the NSW Government, gambling minister David Harris and ‘Premier PokieMinns’ are now 14 months on from their own report stating “late night gambling is bad” on the premise of “bringing back live entertainment”, extending the pokie hours!

An earlier version of this article published on whistleblowers’ website thepublicinterest.com.

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