Poker machines used to launder cash and avoid tax

Law enforcement experts believe poker machines in NSW are being used to launder money and avoid tax as drug dealers and cash-based businesses wash dark money in pubs and clubs.

Authorities have not launched action under anti-money laundering (AML) laws against any of the 2400 clubs and pubs across the state since 2010. The last prosecution of a poker machine operator for suspected breaches of AML resulted in George Thomas Hotels appointing an external auditor for failing to undertake customer identification.

Proceeds from pokies gambling can be turned into an electronic funds transfer or a cheque for a bank account at any stage. This does not need to be reported to the tax department. Clubs worry that intervening with a potential money launderer could drive their customer to a pub.

While poker machine numbers have fallen in NSW, revenue is rising, especially in pubs, which netted more than $1.4 billion in profit over six months to December 2019. The state government also made nearly $500 million in tax from the 22,690 machines in NSW pubs in that six-month period.

Money laundering is a "substantial contributor" to pokies in NSW because of the high load-up limit. A recent ANU study of poker machine data concluded at least 10 per cent of turnover in NSW clubs and pubs is likely to be laundered from proceeds of crime or work off the books for tax-dodging purposes.

Liquor and Gaming NSW confirmed there are no current investigations into any pubs or clubs.