Illegal casino raids are on the rise in Australia as the debate surrounding industry regulation rages on.
As reported by the Australian media group News Ltd, authorities raided five illegal casinos in Sydney last year, indicating the increasing threat of the black market. There has also been a stark increase in private poker games taking place across Sydney.
In one incident, police raided an unlicensed casino after a player contacted the police claiming he was being held hostage for outstanding debts. Upon arriving at the venue, the police discovered the casino was operating numerous gaming tables and had hostesses serving food to customers.
Tobacco wars
According to the reports, players are flocking to unlicensed venues in light of the increasing restrictions placed on the regulated market in Australia.
The news comes as one of Australia’s largest casino operators, The Star Entertainment Group, faces significant financial difficulty and talks of an international buyout.
The group has cited rising regulatory costs and a decline in player volumes as reasons for its decline. Among the new measures in place, or in the process of being implemented, are mandatory carded play and cashless gaming.
Earlier this month, The Star confirmed that its shares have been automatically suspended from trading on the Australian Securities Exchange after it failed to publish its 1HFY25 report.
Mark Morri, Crime Editor for The Daily Telegraph, who was involved in breaking the story, likened the situation to Australia’s growing “tobacco wars”, which has seen stringent regulations and excises applied to tobacco products leading to organised crime groups flooding the market with illegal products.
This sentiment was also shared by the former head of the Australian Criminal Intelligence Commission (ACIC), Michael Phelan, who warned that the market is edging towards a dangerous tipping point due to excessive regulation.
Speaking at Sydney’s Regulating the Game conference last week, he said: “The issue is that if the market or taxation gets to a point beyond the equilibrium – if you get to a point where you tax the industry so much and you overregulate – then people will look to other markets to go to and we’ve seen that happen in [the Australian tobacco] industry where regulation falls off a cliff and you have zero visibility.”
Reflecting on his experience with the ACIC, Phelan stressed the need for law enforcement agencies to have visibility of the gambling sector, something that is complicated by black market involvement.
The unregulated gambling industry can often be seen as an easy target for crime groups due to a lack of KYC and AML protocols that are a hallmark of the regulated market.
According to Phelan, AU$64bn is laundered in Australia each year through various methods.
“I have zero visibility on any of that if it’s done in a warehouse that’s been hired for a week to run a casino or if the exchange of money is done in a McDonald’s carpark, which is what happens when you bet with an offshore site. All that leads to an environment that is not healthy,” he explained.
