money laundering at the pokies? get your facts straight!

Lost amongst the deluge of “fingerprinting” stories in the press over the last couple of days, this story appeared in the Sydney Morning Herald. I admit I only gave it a cursory glance when I first saw it. But when one of my regular readers (and apparently I actually do have regular readers!) from NSW contacted me for my thoughts on the article, I decided to give it a closer look.

What I found was a classic exercise in misdirection… which sounds better than calling it a pack of lies.

The article starts well enough, revealing that pokies are being used to launder money by crime gangs, notably in Sydney’s west and south-west. Ok, fair enough. Having lived in Sydney’s west for several years, I can believe that. And it seems that $2 billion is being laundered through pokies across the country every year. Again, that wouldn’t surprise me. Feeding large sums of cash into a poker machine and then collecting a cheque without actually playing is a simple enough proposition.

But that’s where the facts stop and fantasy takes over. The rest of the article, written by Vanda Carson, goes on to describe how money laundering accounts for a large slice of the $14 billion fed through pokies each year; how the amount of money being laundered is far greater than that being spent by problem gamblers; and infers that pre-commitment is being brought in to deter criminals rather than problem gamblers, but that the government is focusing on problem gamblers so as not to further taint the hotel industry’s image.

What an absolute steaming pile of crap. I’m sorry, normally I try to be more eloquent than that but sometimes words fail me.

Let me step through the various points and see if I can’t try and clear this up.

First of all, I don’t know where the $14 billion figure comes from. The recent Productivity Commission report into gambling states that $12 billion was lost on pokies (clubs, pubs and casinos) in 2008/2009, and by all reports the 2009/2010 figure was about the same.

That the $2 billion being laundered through pokies accounts for a large slice of the money (let’s call it $12 billion) fed through pokies every year? A complete lie. That $12 billion is the amount of money lost by gamblers on the pokies every year. The actual amount fed through the pokies is closer to $120 billion every year.

Yes. $120 billion. Think about it; poker machines across the country pay out, on average, somewhere between 85% and 90%. Let’s be generous and call it 90%. Therefore for gamblers to lose $12 billion (which is the 10%), basic mathematics says that the overall amount played is $120 billion. If $2 billion of that is laundered funds, then that’s 1.67% of the money being fed through pokies… and 0.00% of the money being lost.

You see, the $2 billion of laundered money has nothing to do with the amount lost by problem gamblers. It has nothing to do with the revenue collected by the venues. It is simply a case of money in, money out. Carson attributes these claims to anonymous hotel sources; well, these sources are either lying, stupid or fictional.

Then there was this incredible statement:

“The amount fed into machines by criminals by far exceeds that spent by problem gamblers with psychological addictions to playing pokies, the industry source said.”

Unbelievable! Again, according to that Productivity Commission report, roughly 40% of poker machine losses are attributable to problem gamblers. That’s 40% of $12 billion… or $4.8 billion. This industry source (if he or she actually exists) has no idea what they’re talking about. How can Carson get away with writing such blatantly incorrect drivel, and how can the SMH justify printing it?

But the final sting is in the last paragraph of the article. Yet another anonymous hotel source claims the government is “talking about problem gamblers rather than money launderers to avoid further tainting the hotel industry’s image.”

Give me a break. Pre-commitment is designed to help problem gamblers and recreational gamblers control their spending. If criminals lose a money laundering option at the same time, then that’s a bonus.

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1 Response

  1. Hi cyenne…and just how exactly is any sum of $2 billion ascertained? I would like to see their stats / data etc…though I personally think that black money would be a significant chunk…and becomes another valid reason for the pre-commit card! Black money = lost taxes somewhere!

    Yes…far too many anonymous sources…all BS but again it sounds good and people are only used to reading ‘headlines’…so that is what the gambling industry relies upon! I agree with all of what you have said here, but I would like to check on the amount fed through that you estimate as $120 billion. Not sure what that answer is actually or if anyone does record it? xoox

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