Casino compromises and buying elections

April 13, 2021
Wrest Point Casino. Photo: Damien Ramon Naidoo CC BY-SA 3.0

If you thought the political compromises exposed by the Bergin inquiry into casino operations were bad, what happened in Tasmania should be a warning to us all.

When the final report of the NSW Bergin inquiry into Crown Group’s fitness as a casino licensee was released it exposed explosive evidence of criminal conduct, corporate malpractice and decades of regulatory and enforcement failures.

It found that the Crown Group was unfit to hold a license for the yet-to-open Barangaroo VIP Casino in Sydney and called for major company changes. It also excoriated the regulatory and statutory performance of those governments and agencies involved.

From Southbank to Watergate

The political and corporate fallout has been immense.

Crown lost half its board and what was left of its public credibility.

The numerous and expensive to implement recommendations of the Bergin Inquiry will require a major corporate overhaul to meet any standard of future licensee fitness and propriety. Vulture capitalists are circling with an $8 billion takeover bid from United States private equity behemoth Blackstone already on the table.

In NSW, Independent MLC Justin Field is sitting on a bill that would render Crown’s controversial compensation deal with the NSW government unenforceable.

He previously told Green Left he will bring on debate on the legislation should Crown be so completely deaf to the public and political PR that it ever tries to collect.

Crown now faces a royal commission in Victoria, a high level inquiry in Western Australia and a lot of remedial licensee work in NSW to try and mitigate the contagion risk to the rest of its operations.

State of play

The regulatory failings of the NSW government, identified by Bergin, were so egregious that the commission recommended federalising gaming law altogether. In terms of legislation, that would be in line with online gambling regulation, which is already the responsibility of the Commonwealth.

Those who study the gaming industry are rightly nervous about what happens next. If Crown fails and/or is swallowed whole by its rivals, it would leave any state or territory in which they operate dangerously exposed to the risk of a single operator market and the dominance of corporate money.

The worst case scenario for the state is best case scenario for any monopoly operator — no competition, tax minimisation and a lobby chequebook with the power to buy elections. Just like what happened in Tasmania.

The Manchurian state

There are two casinos in Tasmania — one in Hobart, another in Launceston — both owned and licensed to Federal Group, which belongs to the Sydney-based Farrell family. High-roller traffic is limited, with the bulk of custom coming from Tasmania's half a million or so residents.

There are approximately 4500 poker machines in Tasmania, under a single license, also held by Federal Group. The license was issued by the Tasmanian government in 1973 for 50 years. It expires in 2023.

Apart from the casinos, poker machines are spread across Tasmania in suburban pubs, clubs and RSLs. All of those venues (and their hospitality and accommodation affiliates) have machines under lease from the Federal Group. All of those venues are also members of the Tasmanian Hospitality Association (THA).

Everything was going swimmingly, for Federal Group at least, until Tasmanian gallery and museum owner and professional gambler David Walsh decided he would apply to build a VIP, no-pokies casino on the site of his gallery. He famously outed himself as the second potential casino licensee.

That move triggered an avalanche of public debate over gaming and the massive harm problem gambling does to the community. It was a debate many reformists believed was well overdue.

Fear and loathing in Las Vegas

Breaking up the Federal Group’s license and poker machine monopoly became a hot button election issue. Anti-pokies’ sentiment had as much as 80% support from Tasmanians, many of whom never wanted the pokies at their local venues in the first place.

With support from the Greens, Tasmanian Labor took a major strategic gamble. It vowed to get pokies out of the local venues and into Casinos only, as is the case in WA, and promised license reform to address monopoly issues.

A 50-year monopoly on what was literally a single user license to print money, was suddenly under threat. With an election looming and a second licensee circling, the Federal Group and the THA rallied the troops.

With a bottomless war chest and the country's laxest political donation laws, the Federal Group and the THA decided to go for broke.

They mounted an epic advertising blitz — TV, radio, internet, billboards and posters at every pub, club and THA affiliate in the state. They were all over social media, in the papers, at the bus stop 24 hours a day, seven days a week.

There was nothing in the donation or electoral laws to stop them.

‘Labor Thinks You’re Stupid’ campaign

Tasmanian Greens Leader Cassy O’Connor was there the day the ad campaign started, months ahead of the 2018 election.

O’Connor told Green Left it was frightening to watch.

“The first anti-Labor/anti-Greens ad aired in prime time during the Boxing Day Test match,” she said, adding, “It just never stopped.”

The “Labor Thinks You’re Stupid” and “Love Your Local” campaigns alluded to a dark, dystopian future where the state controls your every move, including putting a bet on while you’re drinking down at the local. It suggested Labor and the Greens thought people were too stupid to be trusted to make their own decisions. “Harm minimisation” morphed into “Nanny State”.

“The ads were all about the claim Labor and Greens were trying to stop individual’s rights,” O’Connor said. “‘Don't Let Them Tell You What To Do’ was one slogan, and it was everywhere.”

With money no object and no channel left for an alternative message, the ad campaign did its work with the Liberals winning a second term with a one-seat majority.

The morning after

In the absence of a formal public inquiry to work out where the millions of dollars came from and the effect it had on democracy, a group of concerned Tasmanians formed the Tasmanian Election Inquiry.

Its aim was to amass evidence of a corrupted election campaign.

“They made a very strong argument for donation law reform,” said O’Connor, noting there has been no sign of donation reform legislation.

“In a nutshell the government has spent two years drafting legislation that would break the federal monopoly. The sticking point has been negotiations with Federal Group over the gaming tax rate on casino poker machines.”

O’Connor said the available Australian Electoral Commission returns show that since the 2018 Tasmanian election, $10.2 million has been received by the Tasmanian Liberal and Labor parties combined.

“About about $7.5 million of that went to the Liberal Party,” she said, and “the origin of most of that money remains unproven”.

Early election

O’Connor believes by calling an early election, Liberal Premier Peter Gutwein has dodged community judgment on the 2018 election quid pro quo legislation that was to be tabled and debated in this term of Parliament.

“That term just ended,” she said, “and still [there is] no political donations’ legislation, we don’t know how much tax Federal Group will pay and we don’t know what the government intends to do about monopoly licensing.”

O’Connor said the whole episode has made the Liberal government look at the relationship it had with Federal Group.

“They just got closer,” she said.

End game

Michael West Media goes further, stating that Tasmania is now effectively owned outright by the alcohol and gambling lobby.

Just five days into the current election campaign, Tasmanian Labor has already made a deal with the THA, which was leaked to the media, showing the extent of its acquiescence.

In the final analysis, it all comes from the same accountability black hole and ethical vacuum state and federal Labor and the Liberals have long since enabled.

The Tasmanian Election Inquiry itself said it best. “Whilst our group exposed the serious implications of our weak electoral laws, raised awareness and widespread concern, our questions about funding sources and deals remain unanswered. A recent University of Tasmania report has shown the source of over 75% of the March 2018 election donations remain undisclosed.”

Without significant legislative reform in political donations and limits on political advertising nation-wide, corporate interests will continue to unjustly influence every election, state or federal.

It remains to be seen if the harsh lessons learned in Tasmania will translate into real reform in a post-Bergin NSW.

[Suzanne James has a background in finance, policy, governance, compliance and risk management frameworks.]

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