Experts Defend Australia's Bloodied State Gaming Regulators

October 20, 2022
Gaming industry experts have defended Australia’s state government casino regulators, hinting that at least one federal agency left regulators hanging as dysfunction and disgrace enveloped the nation’s two largest casino operators.


Gaming industry experts have defended Australia’s state government casino regulators, hinting that at least one federal agency left regulators hanging as dysfunction and disgrace enveloped the nation’s two largest casino operators.

In response to judicial condemnation and legislative punishment of Crown Resorts and The Star Entertainment Group, state regulators were also scrutinised in public hearings and have since been transformed.

New South Wales and Victoria states have created new gambling regulators and Western Australia has made key changes to regulatory practices.

But gaming lawyers and a former official have come to the defence of the regulators, saying that a rapidly growing body of law and overlap of duties inhibited their efficacy as casino executives and managers went rogue.

Peter Cohen, director of regulatory affairs at The Agenda Group and a former Victoria gambling regulator, said media and other blame has been heaped upon the former Victorian Commission for Gambling and Liquor Regulation (VCGLR) and other regulators over casino anti-money laundering (AML) failures.

Cohen told delegates at the International Association of Gaming Regulators (IAGR) annual conference in Melbourne on Monday (October 17) that this was unfair given that AUSTRAC, the federal government financial transactions regulator, is responsible for the AML space.

“Unfortunately the state-based gaming regulators in Australia have been blamed for not doing anything on money laundering,” Cohen said. “And it’s not their job.”

“The [Victorian] government has actually changed the legislation here to tell the regulator that it must report to AUSTRAC” if the regulator suspects money laundering, as it is obliged to do if it detects “drug-running or loan sharking in the casino”, he said.

The Victorian government responded to media probes and whistleblower claims on Crown Melbourne misconduct with a Royal Commission that savaged Crown, while replacing the regulator with a gambling-only overseer, the Victorian Gambling and Casino Control Commission (VGCCC).

But the new regulator carries the same burden in its dealings with AUSTRAC.

“It’s a wonderful law when you think about it, because, firstly, they’d be [reporting to AUSTRAC] anyway. And secondly, what does the government propose if they don’t do it?” Cohen said.

“Are they going to lock [inaugural VGCCC chair] Fran Thorn up or something if it’s not done?” he said to audience laughter.

“There’s a lot of nonsense legislation going on. One of them is the money laundering question, all it requires is for AUSTRAC to do its job, and it wasn’t.”

John Stawyskyj, a Melbourne-based partner with the Ashurst law firm, said that state regulators could be policing AML to their detriment.

“These are areas that are regulated federally and have a huge body of legislation on AML, a huge body of reporting requirements, [as well as] AUSTRAC — a very well funded regulator that looks at AML.

“Yet [state] regulators are adding that into the mix of their job, which to me is a bit counter-intuitive,” he said.

“We may have got into a situation where regulators don’t know what they’re looking at. [It] got broader than it needed to be.”

Stawyskyj identified cyber and data protection as additional areas that can bedevil state regulators despite coming under federal regulation.

“So there’s a bit of a bleeding out of the Royal Commissions into the roles adopted by some of the regulators,” he said, adding that regulators should work on better interaction with federal agencies tasked with overlapping areas.

“There isn’t such great inter-governmental cooperation,” he said.

“If we could get some greater cooperation between regulators and information-sharing, not just about licensees and what they’re doing and what they’re not doing, but also best practice and how to communicate with the licensees so as to ensure compliance throughout Australia as opposed to just in their patch, then that would clearly be beneficial.”

Stawyskyj said state regulators “got slammed in some of the press” over casino AML breaches “when clearly it was the federal regulator that was responsible … that seemed to escape [attention]".

Yet even now, “the response of the regulators … is to put AML conditions on licensees, when really it should be looking to the appropriate authority to do that”.

An additional problem for regulators is that AUSTRAC investigations into casino abuses require them to go silent on those cases, potentially damaging their public image.

On the second day of the IAGR conference on Tuesday, AUSTRAC deputy CEO Peter Soros delivered a presentation introducing the agency’s activities, including a very brief discussion of gaming and a recent joint operation with the Victorian gaming regulator and the Australian Federal Police.

But Soros did not refer to the experts’ misgivings of the previous day on interagency cooperation and division of responsibility. This was despite him being informed of them in advance, according to sources who spoke to VIXIO GamblingCompliance.

An unplanned theme of regulation in isolation has emerged at this year’s IAGR annual conference, with expert critiques of the Australian experience following the UK Gambling Commission chief executive’s call for substantial new collaboration between regulators.

Alcohol and Gaming Commission of Ontario CEO Tom Mungham also spoke of uncooperative Canadian state and federal agencies ahead of the full launch of the province’s online gaming market on October 31.

Mungham said he would consult with other regulators on the track record of current and prospective licensees.

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