Fear of poker machine regulation hits Endeavour Group

Findings of billions of dollars of ‘dirty’ money being put through poker machines in NSW by means the likelihood of tougher regulations for Endeavour Group and its rivals.

The NCC has made a series of recommendations around poker machines, including the introduction of a mandatory cashless-gaming card and increased data collection. Picture: iStock

Drinks and hotels giant Endeavour Group has been hit by investor concerns about increased regulation, following a New South Wales National Crime Commission (NCC) report that found “billions of dollars of dirty cash” was being funnelled through the state’s pokies machines.

The NCC has made a series of recommendations around poker machines, including the introduction of a mandatory cashless-gaming card and increased data collection.

“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,” NSW Crime Commissioner Michael Barnes said.

“These basic reforms will help exclude vast sums of dirty cash that are primarily the proceeds of drug dealing,” Mr Barnes said. “I’m sure venues won’t argue they should keep receiving that.”

Endeavour shares fell as much as 7 per cent on Wednesday, before closing down 4.7 per cent at $6.98, on a day when retail stocks such as Coles and Woolworths also fell.

Endeavour owns liquor chains Dan Murphy’s and BWS, as well as a large portfolio of pubs and hotels.

Earlier this month, the company said it had strong trading in the first quarter across all key categories of bars, food, gaming and accommodation, with the food category particularly strong. Macquarie Group rated the company as an “outperform” following its earnings update and Goldman Sachs has a “buy” on the stock.

Endeavour does not break out its earnings from gaming, which falls into its broader category of Hotels. During the first quarter, revenue from hotels jumped over 90 per cent to $538m.

The NCC recommendations follow the Inquiry into Money Laundering via Electronic Gaming Machines, which it participated in along with the Independent Liquor and Gaming Authority NSW, AUSTRAC and the Australian Criminal Intelligence Commission.

The link between money laundering and venues where people can gamble has been in the spotlight since Australia’s two main casino operators, Crown Resorts and Star Entertainment, were found unfit to hold casino licences.

This inquiry looked into whether criminals were using poker machines to “clean” dirty money and whether “dirty” cash was being used to gamble.

While the NCC found that using poker machines for “cleaning” cash earned through the proceeds of crime is not widespread, it said in a statement that “large sums of the proceeds of crime are being gambled by criminals in pubs and clubs across the state, rewarding and perpetuating crime in the community.”

An Endeavour spokesman said the company had participated in four rounds of consultation for the report and would review it in detail before making a statement.

Endeavour has also applied to be part of a Digital Wallet trial currently underway at a number of venues in NSW that the government and regulator are overseeing, whereby customers access their funds for gambling via a phone app.