By Nick McKenzie and Harriet Alexander
The gambling of billions of dollars in dirty cash through NSW poker machines could be combated by the mandatory use of cashless cards, according to the findings of a joint law enforcement agency inquiry set to cause shockwaves through Australia’s gaming sector.
An inquiry, Project Islington, led by the secretive and powerful NSW Crime Commission, found “a significant amount of money which is put through poker machines is the proceeds of crime”, including drug dollars, and called for the introduction of cashless gaming cards.
Mandatory cashless gaming cards would hinder money laundering, report finds.Credit: Nick Moir
“Billions of dollars gambled in NSW in the year to 30 June 2021 was dirty money,” Project Islington found, while warning that some pubs and clubs were failing to do enough to stop drug cash entering their machines.
The inquiry’s conclusions about the rampant breaches of money laundering laws are significant because it is the first time any dedicated law enforcement investigation has unequivocally said poker machines are being used by criminals to gamble vast amounts of tainted cash, shattering claims by the gaming lobby there is no dirty money problem in pokies venues.
They will also heap pressure on Premier Dominic Perrottet, who pinned his integrity on reforming the sector when he said this month he was not going to stand by while society’s most vulnerable were “throwing their life’s savings down a poker machine” and would decide on a course once the commission had released its recommendations.
The findings will resonate across Australia, as will crime commissioner Michael Barnes’ call for major reforms to “make it significantly more difficult for criminals to place their ill‐gotten gains into” poker machines and “easier for regulators and venues to detect, and law enforcement agencies to investigate and prosecute, money laundering”.
The inquiry’s key finding is the call for the introduction of mandatory cashless gaming cards. The cards “will minimise money laundering associated with EGMs [Electronic Gambling Machines] by removing anonymity and increasing traceability of EGM related transactions,” the commission found.
“This will enable law enforcement to identify and respond to money laundering and will improve data analytics around gambling and money laundering.”
Project Islington was launched after a joint investigation by this masthead and 60 Minutes last November into the criminal exploitation of poker machine venues. In September, Tasmania became the first state in Australia to introduce a mandatory cashless gaming card.
The technology was slated to be introduced to NSW by former minister for gaming Victor Dominello, but the powerful gaming lobby, ClubsNSW, resisted calls for the card to be mandatory and allegedly threatened to cruel Dominello’s career if he proceeded with the plan. Dominello was removed from the portfolio in December and the government is trialling a voluntary cashless card.
But Project Islington found a “voluntary system (where gamblers can opt to use either cash or a player card) will not address money laundering as criminals dealing with the proceeds of crime will simply use cash”.
“A hybrid/voluntary system will likely make pubs and clubs more attractive venues for money launderers as hybrid player card systems could be exploited to make ‘cleaning’ easier.”
Australia owns 75 per cent of the world’s gambling machines outside casinos and claims the world’s highest gambling losses per capita. Last financial year, the average punter lost $2800. In NSW, which is home to nearly half the country’s poker machines, average losses were more than $4500.
ClubsNSW is suing its former compliance manager, Troy Stolz, for breaching the confidentiality clause of his employment contract after he released documents that showed 95 per cent of clubs in NSW were not compliant with anti-money laundering laws. Stolz has terminal cancer.
The findings will heap pressure on Premier Dominic Perrottet to act.Credit: Rhett Wyman
The Crime Commission said Project Islington used the agency’s special powers to conduct coercive hearings with criminals and their associates as part of extensive criminal investigations. It was backed by the Australian Criminal Intelligence Commission, the Australian Transaction Reports and Analysis Centre (AUSTRAC), the NSW Crown Solicitor’s Office and the NSW Police Force.
The project also data mined law enforcement intelligence holdings and interviewed industry stakeholders and Electronic Gaming Machine (EGM) venue staff.
“Based on an assessment of this material, the inquiry found that most dirty cash being used in EGMs is being gambled, rather than being used to extract ‘cleaned’ money.”
The commission said gambling with dirty cash was still a serious criminal act of money laundering. “EGMs constitute a money laundering risk because they primarily accept cash and because cash continues to be the primary method by which criminals obtain wealth from dealing in illicit commodities.
“The extent of money laundering via EGMs cannot be precisely quantified, but the inquiry assesses it to be widespread and significant.
“Based on multiple sources of information, the inquiry was able to assess that there are likely billions of dollars of proceeds of crime put through EGMs in NSW each year.”
The inquiry also found “compelling evidence that drug dealers were gambling on a large scale via EGMs with the money obtained by their offending”.
“They were not seeking to disguise or ‘wash’ the origin of the cash but, instead, were using the cash proceeds of their crimes to gamble.”
The commission said “this ‘spending’ of proceeds of crime is illegal under the Crimes Act and currently some clubs and pubs are failing to take sufficient steps to prevent this.”
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.