Watchdogs within the Australian government have expressed concern about the potential level of money laundering that occurs in the country’s gambling venues – specifically through poker machines or slots.
New South Wales alone has nearly 100,000 pokie machines and NSW gaming investigator David Byrne says that hundreds of millions of dollars might be laundered each year in the Sydney area alone with nationwide numbers likely to reach over a billion dollars.
Reporters for The Age, The Sydney Morning Herald, and 60 Minutes have provided CCTV footage of highly organized crews of criminals using pokie machines to launder ill-gotten gains into ‘clean’ money.
An article in the SMH explains in detail the two primary techniques used by the money launderers which they have dubbed the “feeder method” and the “link method”. Multiple instances of using pokies to exchange dirty money, presumably derived from organized crime activities, for clean money from the gambling venues were captured on the CCTV footage.
The Feeder Method of Pokie Money Laundering
Surveillance video captured one man inserting over $25,000 into machines before processing a single $1 bet and then cashing out a ticket. He takes the voucher to the cashier’s cage and exchanges it for fresh, untraceable cash.
This method works in large and small venues using any number of operatives. Byrne says he has a simple solution to put this and other pokies-based laundering schemes in check: Cashless gambling cards.
The Link Method
The other method documented in the videos was dubbed the “link method” because operatives use pokies with a linked jackpot to funnel dirty cash in and pull clean cash out.
Small local area progressive jackpots are fed by a portion of each bet made on all machines in the linked network. If enough money goes into the pot it is almost guaranteed to payout. All it takes to be certain a member of the syndicate will be the one to win is to keep any other players off the bank of interconnected machines until the jackpot is awarded.
Cashless cards would also prevent this sort of money laundering because player data would be associated with each bet and each cashout, as well as take away the anonymity the money changers take advantage of in order to launder funds with impunity.
Byrn spoke with the Herald in a rare public interview in which he said inter alia the cashless cards would, “…negate the ability for people to walk in with a bag of cash and put $30,000 into a machine.
“It’s definitely a disruption if nothing more and would go a long way to reducing the frequency of this type of behaviour.”
Widespread Problem in NSW
According to Byrne, investigators from the NSW Gaming and Liquor department surveilled activity at clubs and pubs in the four weeks following the COVID-19 lockdown and identified 140 venues and 130 individual gamblers who were involved in illegal money laundering.
Byrne eluded to the scope and gravity of the problem when he told the SMH: “That was only in the Sydney metropolitan area and not the entire New South Wales landscape. You’re talking about, at the worst level, child exploitation, human trafficking, firearms trafficking and terrorism funding; all of those can be packaged up in the same conversation as money laundering.”
As Australia comes to grips with the possibility that organized crime syndicates are using one of the country’s favorite pastimes to launder illicit funds, Byrne notes that only 5.5% of places with pokies or slot machines have filed suspicious transaction reports with the Australian Transaction Reports and Analysis Centre (AusTRAC) dating back to the start of 2018.
In November it was reported that the Chairman of Burswood Limited, the company that oversaw operations at Crown Perth in the adjacent state of Victoria where much larger scale money laundering has been suspected, failed to attend a single board meeting of the company from 2013 through 2016. Australian billionaire James Packer told commissioners in a rare public interview that in hindsight he should have attended those meetings or resigned earlier [than 2018]
but that “he did neither”.
Hundreds of millions of dollars of illicit funds are suspected of having been funneled into Crown casino accounts through two companies in the early to mid-2010s; Riverbank Investments and Southbank. Riverbank accounts were frozen in 2014 by Australia and New Zealand Banking Group (ANZ) on suspicion of money laundering.
Byrne wants to see smaller operators subject to the same levels of scrutiny as mass gaming providers such as Crown Resorts and Star Entertainment Group.
Byrne said: “I don’t think that clubs where good, family-orientated people across New South Wales go to have dinner, want patrons to be walking past organized criminals laundering cash. I think, based on what we’re finding, the venues with ‘pokies’ definitely need a wake-up call.”
Cashless Cards are Controversial
The proposed solution of using cashless cards for gambling will not go over easily with the industry or even some players. A requirement to register for a card, tracking player spending, and limiting the number and amount of transactions the cards could perform are ideas that do not sit well with some.
While the constraints could be of use to help curb problem gambling, many players would prefer to keep their activities private and free from the possibility that the government could impose limits on their betting as other social welfare organizations in other countries do.