Hooked, page 21
Somehow, dark gambling money found its way to individual politicians. This, at least, was the claim of a former political staffer interviewed by academics from the University of Newcastle; the staffer described the gambling industry’s strategy as follows:
So what they’ll do is they’ll find guys who have a voice in caucus and they buy … we call it mouthpiece money … there’s two or three guys or women in caucus who will argue on behalf of the club [in regards to gambling policy], right. They’ll also then go and find the next up-and-coming heroes who might become the next Premier; he might be a guy on the rise, and they’ll start giving him money too.16
Charles Livingstone agrees. The gambling industry, he says, has a bunch of politicians whom it targets with donations and on whom it can then rely to put their case. ‘What we’re looking at is an industry that is not so much influencing government but is embedded in government,’ he commented.17
With political donations escalating by more than 500 per cent over the two decades to 2023, the assault on democratic principles was becoming a deep concern for those interested in integrity in government. Anthony Whealy, a former New South Wales Supreme Court judge and the chair of the Centre for Public Integrity, lamented that the corridors of Parliament House were being transformed into ‘a virtual den of thieves. True access is only available to big money.’18
We’ve seen how political donations have been used in a number of cases to stymie the democratic process. Another egregious example centred on the granting in New South Wales of a licence in 2014 to James Packer’s Crown Casino Resorts by the Liberal government led by Barry O’Farrell.
Allegations of influence-buying dogged the approval process. The Packer family have been generous donors, especially to the Liberal Party, over many years. Through Crown, James had donated approximately $2 million in Victoria and Western Australia, the states in which his company held a casino licence. However, James’s mother, Roslyn, has been even more generous. Out of her own resources she had donated $1.34 million to the Liberal Party over a 22-year period. Of this, $1.18 million was given after 2012, when discussions commenced about a proposed gargantuan casino project at Barangaroo, on Sydney’s Darling Harbour. A week after Roslyn Packer made a $10 000 donation to the Liberal Party, O’Farrell decided to approve the project without putting it through a competitive tendering process.19
All Roslyn Packer’s donations were legal. In itself, this shows the weakness in Australia’s electoral laws: they allow the perception of influence buying.
A recent analysis of gambling donations shows that perception may indeed be reality. The Commonwealth Parliamentary Library analysed gambling donations over the past decade and found that these had surged by 600 per cent. Just eight gambling companies had together donated $2.7 million over the decade.20 It’s hard not to conclude that donations have reached a point where the major political parties are working behind the scenes for gambling interests.
In fact, this is the view of many experts. According to Anthony Whealy, generous donations are the backbone of a ‘tremendous lobbying exercise’ that has allowed the gambling industry to amass enormous power: ‘They know that they’ll get a return call when they make a phone call,’ he has noted. ‘They know they’ll get an audience when they want one.’21
Lobbying
Gliding quietly around Parliament House in Canberra are a group of special people given special orange passes. These allow them the privilege of unfettered access to the non-public parts of the building. They can also come and go through private entrances. Orange passes are the modern equivalent of medieval keys to the castle, but the identities of those who hold them remains a secret guarded by the Department of Parliamentary Services. All that’s known is that these passes are granted to people who require ‘significant and regular business access’ to politicians.
Most, but not all, of the pass holders are known to be lobbyists who, overwhelmingly, represent the interests of big business. In 2019, an investigation by The Guardian revealed that there were over 2000 orange pass holders, a number that had doubled in the previous seven years.
The Alliance for Gambling Reform (AGR) was among a range of organisations concerned not only by the number of orange passes being issued, but also by the secrecy surrounding them. There was no public disclosure of who the pass holders were, or of who had sponsored them. As the alliance wrote in its submission to the 2023 Senate inquiry into lobbying, ‘Any scheme involving access to elected representatives which is based on secrecy is open to at least a perception of improper influence.’22
The AGR was right to be concerned. A study sponsored by Transparency International showed that ‘gambling companies hired some of the largest lobbying firms, which potentially gives them access to a huge breadth of influence across the country’.23 And it’s easily seen how such influence is unaccounted for in public debate. A prized orange pass allows lobbyists to ‘bump into’ ministers in parliamentary cafes and bars, or to ‘drop in’ on MPs in their offices. As The Guardian’s inquiries confirmed, those with passes are ‘able to roam the halls of parliament unabated’.24 Outspoken independent Tasmanian senator Jacqui Lambie called the growth in the number of orange passes ‘a win for lobbyists’.25
In fact, critics argue that Australia lags behind comparative countries in devising effective legislation to enforce transparency for lobbyists.26 The Register of Lobbyists provides little effective information; one study called it little more than ‘a tepid gesture towards transparency’.27 The register only includes lobbyists working for designated companies, and doesn’t include lobbyists working in-house for companies. Sportsbet, for example, employs its own lobbyist. The requirements for disclosure of what lobbyists and government discuss are also weak. Lastly, the activities of lobbyists are governed not by laws but by a code of conduct, which is lax and mostly unenforced.
Over recent years, a conga line of retired politicians has left Parliament House to set up their own lobbying firms or find employment in established ones. Former ministers can be very effective lobbyists, as they carry with them intimate knowledge of policy, programs and decision-makers.28
Politicians are increasingly being offered lucrative post-political careers in corporate Australia in a process referred to as a ‘revolving door’ of shared interests. Repeated calls for this movement from parliament to senior private industry positions to be tightened have gone unheard. Since the 1990s, more than a quarter of major-party federal MPs who served in executive government have moved across to peak bodies, lobbying firms or directly into big business in their political afterlife. For example, from 2011 at least eight federal ministers, many senior ministerial advisers (including those in relevant portfolios) and one state premier have taken up roles as gambling lobbyists with peak bodies or major gaming operators.29 Such hirings, one observer noted, ‘are clearly seen as necessary by the gambling industry to protect their revenue’.30
The sheer scale of the gambling industry’s lobbying activity is mind-boggling. The Transparency International study found that the peak gambling body Responsible Wagering Australia had used over 100 lobbyists, Sportsbet over 70, Star Entertainment 60 and Tabcorp over 50.31 This level of lobbying activity is not surprising. As a recent study by the Grattan Institute has shown, ‘individuals and organisations with the most to gain or lose from policy changes push their agenda’.32 And it noted that the gambling industry ‘punches above its weight on donations, commercial lobbying contacts and meetings with senior ministers’.33
Intensive lobbying has been critical in thwarting gambling reform in Australia for the past decade and more. It also helps explain how the industry has been allowed to expand exponentially.
Lobbying was not the only ‘soft power’ tactic in the gambling industry’s arsenal. In 2024 it emerged that the industry had a Santalike habit of generously handing out gifts to politicians. Between 2019 and 2024, the industry had given federal politicians 150 free tickets to sporting events and concerts. The figure is most likely an underestimate, as only those events costing more than $300 are required to be declared. While it’s hard to imagine that the offer of a simple free ticket would dramatically influence a politician’s decision-making, the practice was another part of the grooming of politicians by the gambling industry.34
Targeting enemies
In September 2019, Troy Stolz left his job as an anti-money-laundering and counter-terrorism finance officer at ClubsNSW. A heavy-set man with a full beard and piercing eyes, he didn’t look like someone who’d be easily intimidated. In fact, he decided to walk the dangerous path of a whistleblower, taking a damning ClubsNSW board document with him and contacting independent federal MP Andew Wilkie.
In February 2020, Wilkie revealed the contents of the document to parliament. It showed that ClubsNSW was knowingly allowing criminal gangs to launder money through poker machines, in contravention of anti-money-laundering legislation. Without naming Stolz, Wilkie said he’d obtained from a whistleblower the 2019 board paper, which showed that 90–95 per cent of New South Wales clubs were operating illegally when it came to money laundering – and that no one was doing anything about it. In effect, Wilkie was claiming that the gambling industry was operating as a protection racket for criminal gangs.
Allegations revealing money laundering through poker machines and casinos had surfaced at least since the late 1990s, but no action had been taken. In September 2006, the Australian Taxation Office, police and hotel executives held urgent meetings in Sydney after The Daily Telegraph exposed suspected money laundering through poker machines by organised criminal gangs. The newspaper had demonstrated how simple it was to ‘clean’ money through machines by feeding in large amounts of cash and pushing ‘collect’ without gambling. The then New South Wales police minister, Carl Scully, admitted that technology was in place to prevent money laundering but it was not being used. Although he didn’t explain why this was so, it’s not hard to reason that neither the hotels nor the clubs industries wanted intervention to keep away cashed-up gamblers, some of whom were also gambling with the illegal money before cleaning most of it.35 Both sectors continued to claim that money laundering using poker machines was a myth.
By the time Stolz made his claims, money laundering appeared to be occurring on a large scale. In fact, he claimed that the reason he left his position at ClubsNSW was because the organisation had ignored his efforts to improve anti-money-laundering systems in clubs.36
Money laundering has been around as long as criminals have. The term itself is attributed to 1920s mob boss Al Capone, who set up laundromats to disguise the origin of the cash he earned from illegal liquor sales. In recent decades, as concerns grew over the funding of terrorism and of the sexual exploitation and abuse of children in countries including the Philippines, international law required countries to enact national legislation to monitor overseas transactions of funds, especially those involving relatively small amounts, to countries that raise suspicions. In Australia, reports monitoring such transactions had to be lodged with AUSTRAC, the government agency charged with preventing money laundering.
The same day Wilkie made his bombshell revelations in parliament, Stolz revealed himself as the whistleblower in an extended interview with the ABC, in which he detailed how criminal elements had infiltrated the clubs industry.
He explained how low- and mid-tier drug operations were exploiting club pokies rooms.37 As cash remained king in poker machine venues, it was not surprising that criminals targeted them. In New South Wales the credit limit or ‘load up’ limit for poker machines is $5000 for machines in use since 2020. In older machines the allowable credit limit can be as high as $10 000. These were higher limits than occurred in other states. What this means is that someone can put between $5000 and $10 000 into a New South Wales poker machine as credit, place a $5 bet and then redeem $4995 in what now appears as legitimate winnings. There is no requirement for a gaming ticket issued by a poker machine to display the amount of money inserted, the amount wagered or the amount lost during play. Gaming machine tickets are also anonymous, which means someone who has used a poker machine to launder money can use a gaming machine ticket as ‘proof’ that their cash winnings are legitimate. In other words, any criminal questioned by authorities about illicit gains had a ready-made explanation.
One case came to light that defied belief. A Vietnamese-born woman – known as ‘the cleaner’ – was a professional money launderer, using pubs and clubs in New South Wales and Canberra. She had washed $38 million through the machines on behalf of clients involved in crime. Her case highlighted, yet again, how the pubs and clubs industry operated with impunity because both sides of politics, at state and federal levels, had ‘cosied up to the pokies lobby’, grateful for the fistfuls of political donations and in fear of organisations like ClubsNSW.38 In the wake of the revelations around ‘the cleaner’s’ case, former federal MP Kelvin Thompson delivered a pithy reminder of the power wielded by the pokies sector. It was ‘ruthless’, he said.
The press latched on to the issue, publishing articles that purported to show money laundering occurring in pubs and clubs. The revelations led to two official inquiries: one conducted by AUSTRAC and published in 2021, and the other by the New South Wales Crime Commission the following year. Both revealed extensive criminal activity – involving funds amounting to billions of dollars – occurring in pubs and clubs. However, they differed in the nature of the criminal activity involved. AUSTRAC acknowledged that money laundering was being undertaken by criminal gangs and by drug dealers gambling their profits. It argued that washing cash through gaming machines at venues was more common than people thought. Across multiple venues, criminals often engaged regular customers to launder cash in between their own legitimate play, to avoid arousing suspicion. In some cases they would collude with or work to gain the trust of venue staff, to avoid having to provide identification when collecting their ‘winnings’.39
By contrast, the New South Wales Crime Commission found that it was mainly drug dealers gambling their profits that formed the bulk of the rivers of cash going into poker machines. It was still a crime, the commission noted, for drug dealers to gamble with money obtained illicitly.
The lax controls around cash transactions in poker machines made it hard to tell whether funds were being laundered, gambled or a combination of the two. AUSTRAC gave the example of Sally, a Queensland club staff member. She noticed a customer who had been visiting the club’s gaming room twice a day during the week. The customer spent a large portion of time in the gaming room and was seen inserting large sums of cash into poker machines, and subsequently cashing out and requesting a cheque after only a few plays. When the customer requested to cash out, Sally said, ‘he is reluctant to provide identification, he appears to be nervous, avoids eye contact and doesn’t appear to want to engage with any of the staff’. Sally recalled her money-laundering risk awareness training and recognised the customer’s behaviour as suspicious.40
Sally was one of the relatively few AUSTRAC-compliant club or pub officials. An investigation by Sydney Morning Herald journalist Vanda Carson found a thriving money-laundering racket going on, with the tacit approval of management and staff.41 Loyal patrons were welcomed. Vanda claimed that money launderers – often the members of bikie gangs – had converged on hotels in Sydney’s west and south-west. To the discerning observer, they were easily spotted: they were typically heavy-set types wearing long coats, with large inside breast pockets. It was a simple operation to ‘clean’ money – the speed of poker machines meant that $10 000 could be fed into a machine using $100 notes in the blink of an eye.
Under the strict anti-money-laundering rules, club and hotel staff are supposed to report large and suspicious payouts, as Sally had done. But in reality, many pubs and clubs were willing to turn a blind eye, because management got a cut of the amount that had been ‘gambled’. Many staff were young and insufficiently trained in their anti-money-laundering obligations, and there was a high compliance cost that the industry was reluctant to pay.
Whether actual money laundering was taking place through poker machines or drug dealers were gambling away their profits, pubs and clubs were hiding serious criminal activity. Stolz argued that the clubs industry had been supressing their concerns about the practice out of fear that, if the extent was known, the industry would face increased regulation and punters would ‘take their money down the road’.42
In its investigation, The Sydney Morning Herald went straight to the heart of the matter. As journalists Nick McKenzie and Joel Tozer wrote, the money-laundering activity in pubs and clubs not only plunged Australia’s pokies industry in the middle of a scandal, it raised ‘major questions not only for lobby groups such as ClubsNSW – which is dismissive of allegations of a large money-laundering problem facing clubs – but for politicians from both Labor and the Coalition who appear intent on ensuring the pokies industry avoids the same level of searing scrutiny as the big casinos’.
The article’s punchline had long been in the making. Politicians, McKenzie and Tozer wrote, ‘have insulated poker machine venues from reform’.43
Cleaning up the pokies
By the time Stolz dropped his bombshell on the pokies industry, ClubsNSW had a well-deserved reputation as a ‘take no prisoners’ organisation.44 It was rated by political insiders as the most powerful lobby group in the country.45 It was never likely to let Stolz walk off into the sunset. Firstly, it slapped a gag order on him to stop him making any further comments to journalists; clearly it worried that he might have taken other documents with him. This was only a temporary measure, however, while they sued him for breach of confidentiality in removing the board paper. He returned the favour and slapped a writ on his former employer for defamation, bullying and underpayment, under the Fair Work Act. Thus began several years of litigation between Stolz and ClubsNSW.
