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Since Australia’s first casino, the heritage-listed , opened in 1973, the industry has grown exponentially. It now has multiple venues in all states and territories.

Casino culture virtually swallowed Tasmania’s gaming market and very nearly its whole government. Its are taking root, city by city, across the country.

Australia’s casino market is estimated to be worth $3.8 billion. With an , operators of larger venues make up to $3 million each day.

generated by casinos for the 2019 financial year was $6.6 billion. This makes it very awkward for regulators to balance legislative oversight and variable risk ratios with politically loaded state and territory budgetary expectations.

With the kind of money involved and wealthy VIP gamblers jetting in from all over the world, lugging large bags of cash on their private jets, casinos always faced a high risk of being used for low integrity transactions by people with unregistered business interests, such as laundering money.

Cash and burn

���ճ�� was a train wreck for James Packer and his company Crown Resorts.

Commissioner Patricia Bergin sensationally heard a deluge of evidence that Crown was allowing its facilities — and at least two of its bank accounts —  to be used to launder enormous piles of Chinese mob money through junket tour operators, and that they had been doing so for some time.

Much was made of Packer’s links to Lawrence Ho — son of the late Stanley Ho — and their alleged Chinese triad connections via the gambling Mecca of Macau.

With Crown’s directors and Packer on the witness stand, repeatedly unable to defend the utterly illegal and indefensible, Bergin ultimately found Crown unfit to hold a casino licence in NSW.

Contagion

It triggered an avalanche, with subsequent inquiries making and .

Crown was catastrophically damaged by the inquiry, eventually realising it had no choice but to implement all of Bergin’s subsequent recommendations.

The Board and executive had a spill and fill. Packer eventually sold his remaining stake in the company to United States private equity firm , which purchased Crown in Melbourne, Sydney (at Barangaroo) and Perth for $3.6 billion.

With a new board, and Packer out of the picture, Blackstone’s business model was deemed  and Barangaroo — still on public land gifted to Packer by former Premier Barry O’Farrell — its gaming floor in August.

As much as the rest of the industry and the government would have been happy for that to be the end of it, the regulatory dominoes were falling.

When it came to money laundering risk in Australian casinos, no one seriously believed Crown was the only one.

The royal commissions into Crown triggered an investigation into its main rival , which was also found unfit to hold a licence in NSW.

An of Star’s operations in Queensland inevitably followed with similar results.

While the Queensland inquiry was still sitting, on August 22 the on the proposed casino development at Queen’s Wharf in Brisbane.

The $3.8 billion mega-project is the largest development to be undertaken in Queensland’s history and the largest casino resort in Australia. It has been heavily criticised for its impact on heritage-listed properties in Brisbane’s CBD.

The ABC’s investigation revealed one of the Chinese investors (who had tried previously to invest in Barangaroo) is alleged to have Chinese triad links, including past associations with the late Ho.

Chow Tai Fook was given to own a 25% stake in the $3.8 billion project, plus 50% of the adjacent apartment tower on which he was to earn commission from Star via VIP gamblers accommodation. Queen’s Wharf precinct is due to open next year.

Star Entertainment Group has now been deemed by the inquiry to be . Its final report said Star had a “one-eyed focus on profit” and serious integrity issues bringing its character and honesty into question.

All the , including money laundering (for example, Star allowed $55 million to be disguised as “hotel expenses” to be gambled using China UnionPay cards), relationships with junket operators and incentivising VIP patrons and high rollers, including those already banned from gambling in other Australian states.

Star Entertainment group is currently considering the “show cause” order as to why it should still be allowed to operate.

Given the Queensland government is in even deeper financial and political water than NSW is with Barangaroo, everyone will have to find a way to double shuffle the regulator’s recommendation with getting the money coming back in the door.  

Never plead guilty

Unsurprisingly, the Queensland government has denied having any knowledge of Chinese triad links with anyone involved in the Queen’s Wharf development. The former Auditor General told the ABC, “”.

The government claims all the relevant due diligence checks were carried out and, of course, Fook’s involvement would not have occurred had it known about it.

This raises two distinct possibilities.

Either the government knew about Fook’s legendary links, but the economic scale of the development and the political kudos were assessed as far outweighing the risks, or its due diligence was so weak and superficial that it completely missed known criminal links readily uncovered by the ABC.

Neither bodes well for the promised “positive cultural change” from what is now dozens of extremely expensive publicly funded commissions and inquiries.

Meanwhile, back at Barangaroo, Blackstone is working hard to rebuild the establishment’s reputation and make its own billions on gifted public land. Whether replacing private Chinese investment with private US investment is an improvement, remains to be seen.

But, there is one thing for sure. The lesson state and territory governments really need to learn is that if you bet taxpayers money against the house, in the end the taxpayer will always lose.

[Suzanne James has a background in writing policy, governance, risk management and regulatory compliance frameworks and in legislative compliance application.]