Winner Takes All
Four Corners looks behind the glitz of the gambling industry, revealing the extraordinary tactics used to separate punters from their dollars.
44’25
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Reporter: Quentin McDermott
02:51
QUENTIN McDERMOTT: Gambling is one of the biggest industries in town. It's growing at an explosive rate. It's out there in casinos, pubs and clubs. And now it's in your living room.
03:09
REV. TIM COSTELLO, BAPTIST UNION OF AUSTRALIA: That virtual casino may see some people losing their homes without even leaving their homes.
QUENTIN McDERMOTT: The industry's drive for profit hides a few loose ends.
High rollers, like this major drug dealer, gamble in casinos with the proceeds of crime.
03:26
MARK WELLS, FORMER DIRECTOR, PLAYER DEVELOPMENT, STAR CITY: He was the type of player that every casino would want in there, and ardently sought after.
QUENTIN McDERMOTT: And the gambling industry targets the low roller by trying to squeeze as much as it can out of every poker machine.
VERONICA SLOANE, RUBICON HOTEL MANAGER: The corporations say that we should have everybody lined up, like chooks at little feeding pens, all doing the same thing at the same time of day, all pecking at machines, thinking that this is life.
03:56
QUENTIN McDERMOTT: Tonight on Four Corners, how the gambling corporations stack the odds against the punter.
And how, for the industry, it's a case of winner takes all.
04:23
Gambling is an industry and it's doing extraordinarily well.
Its turnover this year will be $95 billion, but it couldn't survive without its customer base.
Its customer base is gamblers.
And in Australia, in increasing numbers, they are bussed into casinos to play the gaming tables, they are given incentives to visit pubs and clubs to play the pokies, or they simply stay at home to bet on the Internet.
This is a film about how the industry plays hard ball in a never-ending bid to trap us, whether we play $5,000-a-hand blackjack, or five cent poker machines
05:09
REV. TIM COSTELLO: I have met the families who have lost their savings, lost their marriages, in some instances, lost partners who are addicted to gambling.
Suicides have occurred. I've gone to some of the funerals.
I've started to realise that gambling has captured the whole culture by the throat.
05:33
ANDREW SCOTT, HIGH ROLLER: If somebody is a whale, a whale being a very large gambler, if somebody is a whale, then they are used to and they expect from casinos -- and from all around the world it's the same -- they get what they want.
Be that alcohol, rooms, food, service, whatever.
And they expect to get it.
If they don't get it in your casino, they're gonna go to another casino and get it.
So, you'd better give it to them.
05:59
QUENTIN McDERMOTT: Andrew Scott is a former whale who beat the system until the system bit back.
Recognised as one of the most skilled blackjack players in the country, he's been banned from some casinos
because he counts cards and wins.
Now he runs a blackjack school for budding professionals.
Your argument is that the casinos are banning you because you're winning.
09:24
ANDREW SCOTT: Oh, it's not an argument. It's a fact.
Casinos wouldn't deny it.
It's been told to my face, "You're a card counter, so we're gonna ban you."
QUENTIN McDERMOTT: Gambling is a cynical industry.
It doesn't like professional players because they affect its profits.
But it'll go to enormous lengths to attract high rollers who it thinks will lose.
In the industry that's called "player development".
06:48
ANDREW SCOTT: Player development really should be termed "player exploitation".
Player development is all about the casino cultivating its good customers.
Now, its good customers are little walking pots of gold that they can siphon money out of.
GARY BENSON, HIGH ROLLER: The player can, you know, live like a king while he's away gambling.
But the casino knows at the end of the day, or hopes at the end of the day, that they're gonna finish on top.
And they generally do. They generally get the punter's money.
So, he ends up paying for all those things indirectly.
And pays a lot more.
07:22
QUENTIN McDERMOTT: Morality plays little part in this process.
The casino has a database of high rollers and goes after them with a rare determination.
MARK WELLS: You would use that list to track who was coming into the casino and who you'd like to come into the casino.
If there was somebody you particularly knew about, that was a big roulette player or a blackjack player, you would call them, see if they were interested in coming in -- maybe take them for a game of golf, take them for lunch, take them for dinner, and maybe pay their air fares or do something like that to bring them in for a weekend.
And all that would be based on what value the casino perceived that high roller had in the long term.
08:03
QUENTIN McDERMOTT: Casinos are not at all fussy about the kind of people they attract or where their money comes from.
This is demonstrated by the story of the gambler, Duong Van Ia, known to the casinos as Van Duong.
Van Duong lived in the Sydney suburb of Cabramatta.
When Sydney Harbour Casino -- later Star City -- opened, staff members were detailed to keep him happy.
Mark Wells was the casino's director of player development, and recognised early on the value of targeting
ethnic communities as customers.
08:38
MARK WELLS: We identified Cabramatta as a good area a few years before Star City opened up.
The reason that we chose it was because it had a very high Asian population base, mostly Vietnamese, that were known to be strong gamblers.
The usual process we used with all player development was to use a few key players to introduce us to more players.
QUENTIN McDERMOTT: Duong Van Ia was one of the biggest fish the Sydney Casino caught.
He was one of your very top gamblers?
09:09
MARK WELLS: He was one of the best baccarat players, not just for Star City but in the country.
09:16
QUENTIN McDERMOTT: Van Duong's family ran a barbecue duck restaurant in Cabramatta.
But that's not where he made his money.
A police task force started investigating his role in organised drug smuggling.
DETECTIVE SENIOR CONSTABLE NICK BINGHAM, JOINT ASIAN CRIME GROUP: We believe he was responsible for a large proportion of heroin being sold in the Cabramatta area.
09:36
QUENTIN McDERMOTT: What quantities of heroin are you talking about?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: Well, the streets of Cabramatta were awash with heroin.
Just how much he was responsible for, we don't exactly know.
But we believe that he was responsible for supplying multi-kilo lots of heroin on a regular basis to various dealers throughout that area.
10:00
QUENTIN McDERMOTT: The amounts of drug money passing through Van Duong's hands were huge.
A great deal of it was gambled in the high rollers' Endeavour Room.
These print-outs from Sydney Harbour Casino -- never before released -- show the staggering amounts he was gambling.
Over six months in 1996, his total turnover was $94 million, making him the casino's number two high roller.
In one month alone, his turnover was $24 million.
10:31
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: He was gambling an awful lot through the Sydney Harbour Casino and other casinos around the country.
He could go there every day and spend hours and hours there, all night, in fact.
He'd gamble hundreds of thousands of dollars in one sitting.
I don't think there was a limit.
10:52
QUENTIN McDERMOTT: The casino then had a different owner to the current operator, Tabcorp.
It had heard the suspicions about Van Duong, but treated him like a king.
As Duong was pampered, the police were tracking him.
And he was also being filmed by the casino's own security.
11:11
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: If we felt it was necessary, we would approach them and request them to utilise the surveillance equipment to monitor him for us.
QUENTIN McDERMOTT: In September 1997, New South Wales Police Commissioner, Peter Ryan, decided to ban Van Duong from the casino.
But the casino didn't like the decision one bit.
Mark Wells knew what the rumours were.
But the rumours didn't alter the casino's view of Van Duong.
11:39
MARK WELLS: It was suspected that he was involved with drugs.
But at that stage he hadn't been charged with anything and he'd certainly not done anything, shall we say, to suggest that he was acting illegally within the casino and so, therefore, he was a welcome guest.
11:57
QUENTIN McDERMOTT: Even after he was banned, the casino went to great lengths to maintain contact.
Mark Wells and a colleague from VIP Services took Van Duong and his girlfriend to this restaurant in
Chinatown.
There, they stressed to him that it wasn't the casino's decision to ban him.
12:18
MARK WELLS: Myself and another individual from our department, had lunch with him and explained the situation and told him what section under the act he'd been barred, and that it was beyond our control to do anything about it, and that if he wanted the bar lifted he'd have to make representation back to the Police Commissioner to have that bar lifted.
QUENTIN McDERMOTT: The bar wasn't lifted in Sydney.
But Van Duong travelled instead to Jupiter's Casino on the Gold Coast and Crown Casino in Melbourne to play.
Sydney Harbour's loss was Crown's and Jupiter's gain.
Would it be fair to say that you were very sorry to see him go?
12:56
MARK WELLS: Oh, very sorry to see him go. Very sorry indeed.
He was an excellent player. He was good for the game. He was well-behaved.
He was the type of player that every casino would want in there, and ardently sought after.
13:15
QUENTIN McDERMOTT: You might think that government authorities, at least, would welcome the Police
Commissioner's decision to ban Van Duong.
Far from it.
casino's regrets are echoed by the head of the New South Wales Casino Control Authority.
When he was banned he went off immediately to play at other casinos interstate.
KAYE LODER, CHAIR, NSW CASINO CONTROL AUTHORITY: I understand that's the case.
QUENTIN McDERMOTT: What's your view of that?
KAYE LODER: I'm sorry to see the money go out of New South Wales.
But I'm speaking personally, for myself.
13:47
QUENTIN McDERMOTT: If either the casino or the authorities had any doubts about him, they were
settled in 1998 when the police finally nailed Van Duong.
They secretly filmed him accepting payment for a large consignment of heroin near a school in Cabramatta.
The police used an undercover agent, seen here on the driver's side.
The film shows Van Duong getting into the car and sitting down by a satchel containing the payment of $75,000.
Minutes later, his accomplice arrives and delivers the heroin.
14:38
Van Duong was arrested the same day.
He pleaded guilty to supplying heroin and was sentenced to eight years in jail.
But even this case hasn't led to checks being carried out by the casino on other high rollers who gamble huge amounts of money.
The casino says it isn't usual practice for any business to ask their customers about the origin of their funds.
Under Federal law, casinos automatically report large transactions to AUSTRAC, the Australian Transaction, Reports and Analysis Centre.
They're also required to report any suspect transactions separately.
The casino was unwilling to tell us how many suspect transactions have been reported from the Endeavour Room.
Have you seen people coming in literally with bags or suitcases full of money?
15:36
MARK WELLS: Yeah, sure. Yes.
One guy walked in with I think close to $400,000 in a brown paper bag.
14:53
ANDREW SCOTT: I have never in my life witnessed a casino question where money has come from.
And I suppose they would say, "Why do we have to question?"
But I have seen unshaven, bedraggled guys in dirty tracksuits come in with brown paper bags full of money.
I've seen it with my own two eyes, and they're never asked a question.
16:04
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: If chips were bought in excess of $10,000, that must be reported.
If there was a payout in excess of $10,000, that also must be reported through the AUSTRAC reporting conditions.
16:14
QUENTIN McDERMOTT: If the casino staff were suspicious, they could make a report of a suspicious
transaction, couldn't they?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: I believe so.
QUENTIN McDERMOTT: And it never happened in Duong's case?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: Not that I was made aware of.
16:30
QUENTIN McDERMOTT: If the casino doesn't carry out background checks on high rollers, the Casino
Control Authority doesn't seem to care.
It may sometimes suit the police to stand back and keep an eye on criminals in casinos.
But the question for the public is, should casino profits and State taxes be boosted by the proceeds of crime?
Would you favour some system of checks being brought in, particularly on high rollers who come in with absolutely huge sums in cash?
17:04
KAYE LODER: Not necessarily.
One of the reasons that there is a casino in Sydney and that it is legal is because if there is no legal casino in Sydney, people will gamble at ILLEGAL casinos.
If you have a legal casino, at least you regulate the gaming that is available, and the State obtains some benefit from the revenue.
17:34
QUENTIN McDERMOTT: Even if that revenue is coming from heroin deals?
KAYE LODER: I think it's a matter of debate, and a matter of policy for others to decide, but if that money is coming from heroin deals and is going into casino gaming and is coming back to the State in the way of revenue, it's a matter of debate about whether or not that's a good thing, or an acceptable thing.
18:09
QUENTIN McDERMOTT: So, how did it go?
MARK WELLS: As expected. 3.5 hours of discussions with them.
QUENTIN McDERMOTT: Mark Wells no longer works for Sydney's casino, and the casino has a recent new owner, Tabcorp.
But Wells joins a growing list of former staff and players who've given recent evidence in relation to gambling matters to the Casino Control Authority.
The Authority is carrying out a statutory investigation into how Sydney's casino is run.
You got the impression they were taking the allegations seriously?
18:39
MARK WELLS: Yes, I think they would like to take them seriously.
Whether anything comes of it, I'm a bit cynical.
There's too much money at stake here for it to be in their best interest to find that the casino operator isn't a fit and proper person to do it.
18:53
QUENTIN McDERMOTT: So there's no question, you think, of them losing their licence or anything like that?
MARK WELLS: I'd be very surprised if they lost their licence, yeah.
QUENTIN McDERMOTT: Legalised casinos were sold to Australians as fresh, glamorous and safe, a better option than underworld gambling joints.
Yet, in addition to tolerating dirty money, legal casinos still seem to tolerate vices habitually found in illegal gaming.
Soliciting and loan sharking are supposed to be frowned upon.
Allowing drunken customers to gamble is illegal.
But all seem to thrive.
19:36
GARY BENSON: I have seen hosts basically ordering drink after drink for some of the large punters, who are getting quite inebriated and losing large sums of money.
I'm sure these people wake up the next day, thinking to themselves, "What have I done?"
19:54
MARK WELLS: People do get drunk and people -- depending on who they are -- are tolerated, because they are a big player and their action is important to the casino.
There's a "let's not upset him" syndrome that will permeate through the place if he's a big player.
20:08
MICHAEL MAIMANN, GAMBLER: I've been approached three times in the last 12 months by hookers working, once in the Endeavour Room and twice downstairs.
20:20
QUENTIN MCDERMOTT: In the Endeavour Room, there are stories of moneylenders and of prostitutes and pimps.
Is that true?
MARK WELLS: Yes, it is. The short answer is, yes, it is.
But we really should categorise it by saying that it is almost impossible for any casino to police such actions within its boundaries.
20:47
QUENTIN McDERMOTT: Star City says it doesn't tolerate loan sharking, prostitution and money laundering.
But there's evidence loan sharking has been going on for years.
A few loan sharks have been barred by the Police Commissioner, though none by the casino itself.
One high roller details how loan sharks operate.
For his protection, we've used an actor's voice and hidden his identity.
21:13
HIGH ROLLER: The standard rate is 10 per cent per week.
QUENTIN McDERMOTT: What would happen if you didn't repay that?
21:18
HIGH ROLLER: If you didn't repay it, you'd get leaned upon and you'd get fairly pressurised to repay it by whatever means you could find.
If you didn't repay it, there were threats of violence against you.
QUENTIN McDERMOTT: Have you ever been threatened?
HIGH ROLLER: I've had the occasional conversation that's been very heavy and very uncomfortable.
In that sense, it's been, "Unless you get this to us tomorrow, that's it."
21:41
QUENTIN McDERMOTT: Four Corners was told that the practice is still going on, despite notices which have gone up while this program was being made.
HIGH ROLLER: They've had signs go up which said that if anyone's been forced to, being asked to either lend money or being offered money, or being asked to borrow money, that to advise Endeavour Room management.
But despite the signs, it's business as usual.
QUENTIN McDERMOTT: Business as usual in what sense? What have you actually observed?
22:07
HIGH ROLLER: I've observed people lending money to other people on a professional basis.
QUENTIN McDERMOTT: By law, casinos have to operate free of criminal influence.
They can have their licences revoked for serious breaches of operating conditions, but it would be a brave
State Government which signed away its casino revenues.
22:28
NEIL GAMBLE, FORMER CEO, STAR CITY: It's been very good to us.
It's been very good to the people of NSW.
If you include the value of the licence and the gaming and payroll taxes, almost $600 million has been sent to the NSW Treasury during its 2.5 years of operation, which is a stunning amount of money.
QUENTIN McDERMOTT: In casinos, it's an upstairs-downstairs game.
Downstairs is the grind, where most punters play, and where casinos earn the bulk of their revenue.
Upstairs, as a high roller, $5,000 will get you onto a table.
The casino keeps track of your bets, and woe betide the high roller who runs out of money.
23:13
ANDREW SCOTT: The dinner invitations dry up and the tickets to the footy don't happen anymore.
You're left back in the gutter to join the grind action again, unless of course you ever come into some money again, in which case the cycle starts over.
23:48
QUENTIN McDERMOTT: Pokies were first brought into NSW clubs in the 1950s.
INTERVIEWER IN OLD TV FOOTAGE: We're discussing poker machines on the street.
Do you think poker machines should be abolished?
INTERVIEWEE: My oath I do!
INTERVIEWER: Oh. Why?
INTERVIEWEE: Well, they're not fair dinkum.
INTERVIEWER: You think they're loaded against the player?
INTERVIEWEE: Yeah. My word they are.
They are, absolutely.
INTERVIEWER: Why do you say that?
INTERVIEWEE: I've been in a couple of clubs and I've played the poker machine.
They're loaded against me.
INTERVIEWER: How much did you lose altogether?
INTERVIEWEE: About £80.
24:26
QUENTIN McDERMOTT: Nowadays, half of all the money spent nationally on gambling goes on pokies.
Last year, this club earned $55 million from pokies alone.
As with high rollers, the industry makes enormous efforts to lure new clients.
And to keep its profits rising, it invents new products, designed to hook the punters and to entice them to spend more time and money at the machines.
Australia leads the world in the design and development of gaming machines.
Len Ainsworth is the father of Australian pokies.
His huge success in building his former company, Aristocrat, Australia's biggest pokies manufacturer, has brought him an enormous personal fortune.
What's the secret of that company's success?
25:24
LEN AINSWORTH, FOUNDER OF ARISTOCRAT: I think building a better mouse trap -- the five-reel machine, a machine that you can buy 50 credits for $1, so there's not a lot of coin-handling there.
And then you can play it almost like a piano -- you can put whatever you want to on whatever you want to.
25:44
QUENTIN McDERMOTT: The "better mouse trap" was the five-reel machine, which offers a wider range of bets and is now the industry standard.
LEN AINSWORTH: That made it possible to introduce a far wider range of odds to bring in small jackpots and medium-sized jackpots and so on, and made machines, generally speaking, more interesting.
26:08
PROFESSOR JAN McMILLEN, AUSTRALIAN INSTITUTE FOR GAMBLING RESEARCH: The machines and games are designed to attract players, first of all.
They've got to be entertaining.
Secondly, they've got to retain the player.
There's a concept of the player "buying time" so that they stay on the machine for a long period of time.
Repetitive play, and quick results, frequent rewards, that encourage the player to move on to different, more ambitious forms of gambling.
26:37
QUENTIN McDERMOTT: One new development which fulfils this aim is Aristocrat's Hyperlink, which offers a jackpot linked to a bank of machines.
Aristocrat declined to give us an interview.
But privately, the company boasts that the revenue Hyperlink generates has been "nothing short of staggering".
Aristocrat, in its own trade publicity, says Hyperlink "rewards the player who bets more per game".
With a bank of 20 machines or so, venues can expect small, progressive jackpots to be hit on average every five minutes.
What then occurs, says Aristocrat, is "a bit like a shark feeding frenzy".
How do you react to that?
27:20
PROFESSOR JAN McMILLEN: I think that's immoral commercial practice.
I think that encapsulates what's happened with the gambling industry over the last decade, where commercial objectives, the profit motive, is driving the expansion of the market with very little regard to the social costs that are occurring.
I think it's time we put a stop to it and it's up to governments to do so.
27:45
QUENTIN McDERMOTT: In NSW, the number of machines has recently been frozen at 100,000.
The Victorian cap is 27,500.
That, though, ignores the maximum rate at which punters can lose money.
28:00
TIM COSTELLO: In Australia, the losses per hour are $720 per machine.
In the UK, the losses are $130 per hour per machine.
In Japan, $56 per hour.
QUENTIN McDERMOTT: Once the machines have been designed and built, the industry's next priority is to place them in venues where they'll be most profitable.
28:22
PROFESSOR JAN McMILLEN: In terms of their marketing strategies, they look for communities where there is a growing population, few other social activities, and obviously they're put into venues that are popular with the working class, with people with liquor licences, so clubs and hotels.
28:42
QUENTIN McDERMOTT: With the number of pokies now limited in several States, the industry is exerting more and more pressure to get as big a return as possible from each machine.
Just how that impacts can be seen in the Victorian township of Thornton.
120km outside Melbourne, the Rubicon Hotel is a stopping-off point for coach parties of elderly folk on mystery tours of the region.
After lunch, they repair to the gaming area to try their luck on the pokies.
29:15
VERONICA SLOANE: We're the only venue in the shire of Murrindindy, so it's not like an oversupply in our shire, because there is only the 20 machines in the total shire.
QUENTIN McDERMOTT: In fact, it's not the number of machines but their turnover that counts.
Under a Government deal, the details of which are secret, two corporations, Tabcorp and Tattersall's, own
ALL Victoria's quota of machines, and lease them to clubs and hotels.
29:44
VERONICA SLOANE: They're the only people you can get machines from.
They pull the strings.
If they want to pull them tight, they pull them tight.
If they want to dangle you, you can dangle.
If you want to noose yourself, you can get noosed.
QUENTIN McDERMOTT: The 'noose' is a clause in hotels' and clubs' contracts designed to maximise the revenue from the pokies.
Tabcorp can remove machines if their average daily revenue isn't in the top 50 per cent of similar hotels.
The duopoly's agents visit hotels and clubs to check up on them.
Arriving unannounced and incognito, they note, for example, whether staff are pushing the current gambling promotions.
This makes the Rubicon's manager, Veronica Sloane, intensely uncomfortable.
30:40
VERONICA SLOANE: We're pressurised to increase our turnovers and volumes that goes through the machines, increase our NMR, which is our Net Machine Revenue.
So the patron probably doesn't feel that pressure but WE feel that pressure, so how do we pass it on to do these things?
We unfortunately have to pass it on the customer to be able to maintain these levels.
31:03
QUENTIN McDERMOTT: What would happen if you didn't?
VERONICA SLOANE: If we didn't, we'd probably be downsized and then we'd probably lose our machines.
QUENTIN McDERMOTT: Venues are ranked according to their Net Machine Revenue.
Tabcorp's list for January 2000, for example, shows the Rubicon ranked 83rd out of 129 hotels -- well out of the top 50 per cent.
The Tabcorp contract requires the Rubicon to keep its revenue up, or risk losing machines.
31:35
VERONICA SLOANE: If you fail to meet the target, they will actually assist you to help you increase that target. To do that is via promotions, giveaways, etc.
Otherwise, how can you do it?
So then this becomes against the code of practice -- the responsible serving of gaming, which is what we've signed, and which we agree to totally, because it is just atrocious, I believe, to actually force gaming upon people.
32:08
QUENTIN McDERMOTT: In the gambling industry world of whales and minnows, Tabcorp is a whale.
Its revenue is $1 billion a year and rising since the acquisition of Sydney's casino, Star City.
Both Tabcorp and Tattersall's declined to appear on this program.
Veronica Sloane is the minnow speaking out against them.
She's standing up for those hotels and clubs which don't want to pressurise their customers to gamble.
32:41
VERONICA SLOANE: The corporations say that we should have everybody lined up like chooks at little feeding pens, all doing the same thing at the same time of day, all pecking at machines, thinking that this is life.
There's more to life than that, and there's more to entertainment life, and social activities should be more promoted in gaming rooms, not the dollar.
33:04
QUENTIN McDERMOTT: However, hotel owners aren't always so concerned about their customers' wellbeing.
Four years ago, following a recession, the NSW Government agreed to open up the State's hotels to pokies, to the delight of the owners.
33:19
JOHN THORPE, PRESIDENT, AUSTRALIAN HOTELS ASSOCIATION, NSW: We were then, I believe, on the verge of collapse.
There was a known 700 hotels and possibly 1,200 hotels that were in receivership.
And there were many, to put it bluntly, were hanging on by their fingernails to the windowsill.
We couldn't compete -- simple as that.
33:45
QUENTIN McDERMOTT: Hotels in NSW are now extremely profitable.
Unlike in Victoria, hotel owners buy machines outright and profit directly from turnover.
And there are nearly four times as many pokies as in Victoria.
KAREN RICHARDSON: In our small community, I think we have seven or eight hotels and clubs that all have poker machines in them.
They're on just about every street corner.
The advertising is everywhere, and they just con you in.
34:20
QUENTIN McDERMOTT: Karen Richardson lives with her teenage children in Nowra, NSW.
In 1997, without his family knowing, her husband Gavin started gambling large amounts on poker machines.
KAREN RICHARDSON: We weren't well off by any means.
We were comfortable. We should have been comfortable.
But as the gambling progressed, we certainly weren't comfortable, we were struggling.
34:47
QUENTIN McDERMOTT: Gavin was losing $1,000 a week.
He eventually accumulated debts of at least $125,000.
Again, there's evidence that those who profit from gambling help sustain addiction.
In Gavin's case, it's claimed, the North Nowra Tavern repeatedly advanced him money.
35:08
KAREN RICHARDSON: We had a loan, for instance, with the car.
And he would go to another company and take out a larger loan to pay off that loan.
He would also go to a local hotel and cash cheques, which bounced, which they continually cashed.
35:29
QUENTIN McDERMOTT: The hotel is now being investigated by inspectors from the Department of Gaming and Racing.
But the question Karen Richardson wants answered is why they cashed so many of his cheques, and for
such large amounts.
35:43
KAREN RICHARDSON: They ranged from $500, $2,000, $1,000, $20.
And I don't exactly know what you can buy at a local hotel for $2,000.
But they continued to cash those cheques.
And at the end, it was, to my knowledge, $13,000 worth of cheques.
QUENTIN McDERMOTT: Gavin Richardson's family had no idea at all how desperate he'd become.
36:12
KAREN RICHARDSON: I had a phone call to say that there was a problem and I needed to come out to my church.
That was when I was told that Gavin had taken his life.
He had gone to a quiet place at North Nowra and sat in the car and gassed himself.
QUENTIN McDERMOTT: Gavin had left a note.
36:41
KAREN RICHARDSON: He told me he was very sorry, but the reason he had taken his life was due to gambling and the fact that it had taken over his life, that he was unable to stop it and he could see no other way out for all of us.
He felt that it was the best way out for all of us.
37:05
QUENTIN McDERMOTT: Karen's friends rallied round.
Her husband's desperate act left his family in desperate straits.
At his funeral, their friends gave money, not flowers.
The children went out to work and eventually Karen paid off most of the debts.
She's left with a clear vision of how the industry works.
KAREN RICHARDSON: The industry is just set up to get people in, to suck people in, and to get them coming back.
You can put a $100 bill into a poker machine.
If it's for enjoyment, how can losing $100 be enjoyable to a family who can't afford it?
37:45
JOHN THORPE: We've all got families and relations.
We're part of this community.
We're not aliens.
We've been through rough periods in this country.
We've survived.
We've been here longer than most in terms of our industry.
So you mean to tell me that I want to take advantage of people?
I think that's unfair in the sense that I want you to enjoy yourself.
I don't want you to go and put more than you can afford.
38:18
QUENTIN McDERMOTT: Is gambling out of control here now?
PROFESSOR JAN McMILLEN: I think it may have been, certainly the last five years.
I think for the first time in Australia's history, we've had a public outcry about the expansion of gambling.
Communities are hurting, and hurting very badly.
And instead of gambling being for community benefit, for some sort of public purpose, it was the public, the community, who started to feel the pain.
38:45
TONY McAUSLAN, NEXT GENERATION GAMBLING: Anzac Day is the only day Australians can legally play two-up outside of a casino and we're going to be the first company in the world to put up a two-up site where everybody in Australia can log on, play two-up interactively.
QUENTIN McDERMOTT: It's not the only thing you can do at home.
The endlessly inventive minds of the gambling industry are giving us online pokies, they're giving us online
sports betting and they're giving us virtual casinos where you can play your favourite table game.
40:13
TIM COSTELLO: In the home.
So accessible.
Won't even have to leave your home to go to a casino, so no restraints.
And that virtual casino may see some people losing their homes without even leaving their homes.
40:28
QUENTIN McDERMOTT: Lasseters is still so far the only online casino to be licensed and regulated here.
It's doing well and pulling in dollars from abroad by picking up members daily from overseas.
Lasseters is licensed by the Northern Territory.
It's held up by the gambling industry as a well regulated model.
And the managing director is proud of the measures they've introduced to help prevent problem gambling on the site.
41:13
DAVID OHLSEN, LASSETERS ONLINE: If you have a husband and wife playing, or a partnership in a house, and one of them feels the other person has a problem, they can ring the site and have them excluded.
That's very important.
QUENTIN McDERMOTT: But as with high rollers and pokies, a new kind of player development is at work.
Games for a younger market are being invented by Sydney's Next Generation Gaming.
The company is talking to several operators which are hoping to go online in Australia by the end of the year, if the Federal Government permits it.
41:47
TONY McAUSLAN: There's the 25 to 35-year-old market that have got money.
They understand the Internet, they like gaming, they like the excitement that gaming gives them.
Certainly within the next two or three years there'll be things like a casino channel, perhaps delivered on cable television.
We're certainly interested in doing interactive television games for people.
We're in the process of doing that.
42:06
TIM COSTELLO: With digital TV, you'll be able to sit in your home and on Channel 9, or even other channels, bet on whether Shane Warne bowls a flipper or an offbreak next ball, bet who gets the next try or kicks the next goal.
Children, who aren't allowed into casinos or pokies venues until they're 18, will be there in the family home, watching parents participating in gambling.
42:29
DAVID OHLSEN: Convergence on the television set is probably inevitable, but it must be done and can be done safely, such as having a set-top box with a card in it.
The card identifies the user, checks the age of that person.
That way, we can prevent access by children and problem gamblers.
42:50
QUENTIN McDERMOTT: The US has banned Internet gambling for the time being.
Our Federal Government has just announced it wants to do the same, a move already opposed by several States.
They'd like to profit from overseas companies like this one, based in a Caribbean tax haven.
Online gambling operator Starnet is looking to Australia to give it a licence and added credibility.
43:17
ED STARRS, STARNET: We see Australia as the first First World country that is a fully regulated Internet gambling environment.
So we're here to try to work with the regulators and hopefully implement some of the major US-based gaming corporations to establish presence within this jurisdiction.
Currently, the global gaming market is over US$1 trillion.
So I think you can see that the potential for tax revenue generated within Australia can be huge.
43:56
QUENTIN McDERMOTT: Starnet's representatives were in Australia recently, touring the States and talking to the regulators.
Governments haven't been able to agree on a uniform tax rate for online casinos -- and that means
companies like Starnet believe they can dictate terms.
44:17
ED STARR: Currently, we operate out of Antigua, where there's a zero tax rate.
In Australia, there's a large disparity between the various jurisdictions.
Tax rates range between 4 per cent and 50 per cent, depending on which jurisdiction you choose to operate in.
We see that as a major issue.
Obviously, Australia needs to be more competitive and a little more consistent if they expect to attract major US corporations into this market.
QUENTIN McDERMOTT: Starnet's ambitions may be thwarted by the Prime Minister's insistence on a one-year moratorium on Internet gambling.
The States will probably fight the ban, and the gambling industry will continue to cast its net wide.
Whales and minnows alike will continue to be hooked.
Players will still be developed.
It makes you wonder how we let things get so far.
45:21
KAREN RICHARDSON: It should never have been allowed to become the industry that it has.
So I guess basically you have to blame the Government.
There's no-one else to blame.
And their greed -- to me, they are just greedy.
Again, I pay taxes, Gavin paid taxes, and that wasn't enough.
And so they are allowing an industry to thrive so they can reap the benefits of that industry.
QUENTIN McDERMOTT: Do you ever gamble yourself?
LEN AINSWORTH: I'm far too busy creating things for other people to gamble on.
END
46’54
Four Corners looks behind the glitz of the gambling industry, revealing the extraordinary tactics used to separate punters from their dollars.
44’25
---------
Reporter: Quentin McDermott
02:51
QUENTIN McDERMOTT: Gambling is one of the biggest industries in town. It's growing at an explosive rate. It's out there in casinos, pubs and clubs. And now it's in your living room.
03:09
REV. TIM COSTELLO, BAPTIST UNION OF AUSTRALIA: That virtual casino may see some people losing their homes without even leaving their homes.
QUENTIN McDERMOTT: The industry's drive for profit hides a few loose ends.
High rollers, like this major drug dealer, gamble in casinos with the proceeds of crime.
03:26
MARK WELLS, FORMER DIRECTOR, PLAYER DEVELOPMENT, STAR CITY: He was the type of player that every casino would want in there, and ardently sought after.
QUENTIN McDERMOTT: And the gambling industry targets the low roller by trying to squeeze as much as it can out of every poker machine.
VERONICA SLOANE, RUBICON HOTEL MANAGER: The corporations say that we should have everybody lined up, like chooks at little feeding pens, all doing the same thing at the same time of day, all pecking at machines, thinking that this is life.
03:56
QUENTIN McDERMOTT: Tonight on Four Corners, how the gambling corporations stack the odds against the punter.
And how, for the industry, it's a case of winner takes all.
04:23
Gambling is an industry and it's doing extraordinarily well.
Its turnover this year will be $95 billion, but it couldn't survive without its customer base.
Its customer base is gamblers.
And in Australia, in increasing numbers, they are bussed into casinos to play the gaming tables, they are given incentives to visit pubs and clubs to play the pokies, or they simply stay at home to bet on the Internet.
This is a film about how the industry plays hard ball in a never-ending bid to trap us, whether we play $5,000-a-hand blackjack, or five cent poker machines
05:09
REV. TIM COSTELLO: I have met the families who have lost their savings, lost their marriages, in some instances, lost partners who are addicted to gambling.
Suicides have occurred. I've gone to some of the funerals.
I've started to realise that gambling has captured the whole culture by the throat.
05:33
ANDREW SCOTT, HIGH ROLLER: If somebody is a whale, a whale being a very large gambler, if somebody is a whale, then they are used to and they expect from casinos -- and from all around the world it's the same -- they get what they want.
Be that alcohol, rooms, food, service, whatever.
And they expect to get it.
If they don't get it in your casino, they're gonna go to another casino and get it.
So, you'd better give it to them.
05:59
QUENTIN McDERMOTT: Andrew Scott is a former whale who beat the system until the system bit back.
Recognised as one of the most skilled blackjack players in the country, he's been banned from some casinos
because he counts cards and wins.
Now he runs a blackjack school for budding professionals.
Your argument is that the casinos are banning you because you're winning.
09:24
ANDREW SCOTT: Oh, it's not an argument. It's a fact.
Casinos wouldn't deny it.
It's been told to my face, "You're a card counter, so we're gonna ban you."
QUENTIN McDERMOTT: Gambling is a cynical industry.
It doesn't like professional players because they affect its profits.
But it'll go to enormous lengths to attract high rollers who it thinks will lose.
In the industry that's called "player development".
06:48
ANDREW SCOTT: Player development really should be termed "player exploitation".
Player development is all about the casino cultivating its good customers.
Now, its good customers are little walking pots of gold that they can siphon money out of.
GARY BENSON, HIGH ROLLER: The player can, you know, live like a king while he's away gambling.
But the casino knows at the end of the day, or hopes at the end of the day, that they're gonna finish on top.
And they generally do. They generally get the punter's money.
So, he ends up paying for all those things indirectly.
And pays a lot more.
07:22
QUENTIN McDERMOTT: Morality plays little part in this process.
The casino has a database of high rollers and goes after them with a rare determination.
MARK WELLS: You would use that list to track who was coming into the casino and who you'd like to come into the casino.
If there was somebody you particularly knew about, that was a big roulette player or a blackjack player, you would call them, see if they were interested in coming in -- maybe take them for a game of golf, take them for lunch, take them for dinner, and maybe pay their air fares or do something like that to bring them in for a weekend.
And all that would be based on what value the casino perceived that high roller had in the long term.
08:03
QUENTIN McDERMOTT: Casinos are not at all fussy about the kind of people they attract or where their money comes from.
This is demonstrated by the story of the gambler, Duong Van Ia, known to the casinos as Van Duong.
Van Duong lived in the Sydney suburb of Cabramatta.
When Sydney Harbour Casino -- later Star City -- opened, staff members were detailed to keep him happy.
Mark Wells was the casino's director of player development, and recognised early on the value of targeting
ethnic communities as customers.
08:38
MARK WELLS: We identified Cabramatta as a good area a few years before Star City opened up.
The reason that we chose it was because it had a very high Asian population base, mostly Vietnamese, that were known to be strong gamblers.
The usual process we used with all player development was to use a few key players to introduce us to more players.
QUENTIN McDERMOTT: Duong Van Ia was one of the biggest fish the Sydney Casino caught.
He was one of your very top gamblers?
09:09
MARK WELLS: He was one of the best baccarat players, not just for Star City but in the country.
09:16
QUENTIN McDERMOTT: Van Duong's family ran a barbecue duck restaurant in Cabramatta.
But that's not where he made his money.
A police task force started investigating his role in organised drug smuggling.
DETECTIVE SENIOR CONSTABLE NICK BINGHAM, JOINT ASIAN CRIME GROUP: We believe he was responsible for a large proportion of heroin being sold in the Cabramatta area.
09:36
QUENTIN McDERMOTT: What quantities of heroin are you talking about?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: Well, the streets of Cabramatta were awash with heroin.
Just how much he was responsible for, we don't exactly know.
But we believe that he was responsible for supplying multi-kilo lots of heroin on a regular basis to various dealers throughout that area.
10:00
QUENTIN McDERMOTT: The amounts of drug money passing through Van Duong's hands were huge.
A great deal of it was gambled in the high rollers' Endeavour Room.
These print-outs from Sydney Harbour Casino -- never before released -- show the staggering amounts he was gambling.
Over six months in 1996, his total turnover was $94 million, making him the casino's number two high roller.
In one month alone, his turnover was $24 million.
10:31
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: He was gambling an awful lot through the Sydney Harbour Casino and other casinos around the country.
He could go there every day and spend hours and hours there, all night, in fact.
He'd gamble hundreds of thousands of dollars in one sitting.
I don't think there was a limit.
10:52
QUENTIN McDERMOTT: The casino then had a different owner to the current operator, Tabcorp.
It had heard the suspicions about Van Duong, but treated him like a king.
As Duong was pampered, the police were tracking him.
And he was also being filmed by the casino's own security.
11:11
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: If we felt it was necessary, we would approach them and request them to utilise the surveillance equipment to monitor him for us.
QUENTIN McDERMOTT: In September 1997, New South Wales Police Commissioner, Peter Ryan, decided to ban Van Duong from the casino.
But the casino didn't like the decision one bit.
Mark Wells knew what the rumours were.
But the rumours didn't alter the casino's view of Van Duong.
11:39
MARK WELLS: It was suspected that he was involved with drugs.
But at that stage he hadn't been charged with anything and he'd certainly not done anything, shall we say, to suggest that he was acting illegally within the casino and so, therefore, he was a welcome guest.
11:57
QUENTIN McDERMOTT: Even after he was banned, the casino went to great lengths to maintain contact.
Mark Wells and a colleague from VIP Services took Van Duong and his girlfriend to this restaurant in
Chinatown.
There, they stressed to him that it wasn't the casino's decision to ban him.
12:18
MARK WELLS: Myself and another individual from our department, had lunch with him and explained the situation and told him what section under the act he'd been barred, and that it was beyond our control to do anything about it, and that if he wanted the bar lifted he'd have to make representation back to the Police Commissioner to have that bar lifted.
QUENTIN McDERMOTT: The bar wasn't lifted in Sydney.
But Van Duong travelled instead to Jupiter's Casino on the Gold Coast and Crown Casino in Melbourne to play.
Sydney Harbour's loss was Crown's and Jupiter's gain.
Would it be fair to say that you were very sorry to see him go?
12:56
MARK WELLS: Oh, very sorry to see him go. Very sorry indeed.
He was an excellent player. He was good for the game. He was well-behaved.
He was the type of player that every casino would want in there, and ardently sought after.
13:15
QUENTIN McDERMOTT: You might think that government authorities, at least, would welcome the Police
Commissioner's decision to ban Van Duong.
Far from it.
casino's regrets are echoed by the head of the New South Wales Casino Control Authority.
When he was banned he went off immediately to play at other casinos interstate.
KAYE LODER, CHAIR, NSW CASINO CONTROL AUTHORITY: I understand that's the case.
QUENTIN McDERMOTT: What's your view of that?
KAYE LODER: I'm sorry to see the money go out of New South Wales.
But I'm speaking personally, for myself.
13:47
QUENTIN McDERMOTT: If either the casino or the authorities had any doubts about him, they were
settled in 1998 when the police finally nailed Van Duong.
They secretly filmed him accepting payment for a large consignment of heroin near a school in Cabramatta.
The police used an undercover agent, seen here on the driver's side.
The film shows Van Duong getting into the car and sitting down by a satchel containing the payment of $75,000.
Minutes later, his accomplice arrives and delivers the heroin.
14:38
Van Duong was arrested the same day.
He pleaded guilty to supplying heroin and was sentenced to eight years in jail.
But even this case hasn't led to checks being carried out by the casino on other high rollers who gamble huge amounts of money.
The casino says it isn't usual practice for any business to ask their customers about the origin of their funds.
Under Federal law, casinos automatically report large transactions to AUSTRAC, the Australian Transaction, Reports and Analysis Centre.
They're also required to report any suspect transactions separately.
The casino was unwilling to tell us how many suspect transactions have been reported from the Endeavour Room.
Have you seen people coming in literally with bags or suitcases full of money?
15:36
MARK WELLS: Yeah, sure. Yes.
One guy walked in with I think close to $400,000 in a brown paper bag.
14:53
ANDREW SCOTT: I have never in my life witnessed a casino question where money has come from.
And I suppose they would say, "Why do we have to question?"
But I have seen unshaven, bedraggled guys in dirty tracksuits come in with brown paper bags full of money.
I've seen it with my own two eyes, and they're never asked a question.
16:04
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: If chips were bought in excess of $10,000, that must be reported.
If there was a payout in excess of $10,000, that also must be reported through the AUSTRAC reporting conditions.
16:14
QUENTIN McDERMOTT: If the casino staff were suspicious, they could make a report of a suspicious
transaction, couldn't they?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: I believe so.
QUENTIN McDERMOTT: And it never happened in Duong's case?
DETECTIVE SENIOR CONSTABLE NICK BINGHAM: Not that I was made aware of.
16:30
QUENTIN McDERMOTT: If the casino doesn't carry out background checks on high rollers, the Casino
Control Authority doesn't seem to care.
It may sometimes suit the police to stand back and keep an eye on criminals in casinos.
But the question for the public is, should casino profits and State taxes be boosted by the proceeds of crime?
Would you favour some system of checks being brought in, particularly on high rollers who come in with absolutely huge sums in cash?
17:04
KAYE LODER: Not necessarily.
One of the reasons that there is a casino in Sydney and that it is legal is because if there is no legal casino in Sydney, people will gamble at ILLEGAL casinos.
If you have a legal casino, at least you regulate the gaming that is available, and the State obtains some benefit from the revenue.
17:34
QUENTIN McDERMOTT: Even if that revenue is coming from heroin deals?
KAYE LODER: I think it's a matter of debate, and a matter of policy for others to decide, but if that money is coming from heroin deals and is going into casino gaming and is coming back to the State in the way of revenue, it's a matter of debate about whether or not that's a good thing, or an acceptable thing.
18:09
QUENTIN McDERMOTT: So, how did it go?
MARK WELLS: As expected. 3.5 hours of discussions with them.
QUENTIN McDERMOTT: Mark Wells no longer works for Sydney's casino, and the casino has a recent new owner, Tabcorp.
But Wells joins a growing list of former staff and players who've given recent evidence in relation to gambling matters to the Casino Control Authority.
The Authority is carrying out a statutory investigation into how Sydney's casino is run.
You got the impression they were taking the allegations seriously?
18:39
MARK WELLS: Yes, I think they would like to take them seriously.
Whether anything comes of it, I'm a bit cynical.
There's too much money at stake here for it to be in their best interest to find that the casino operator isn't a fit and proper person to do it.
18:53
QUENTIN McDERMOTT: So there's no question, you think, of them losing their licence or anything like that?
MARK WELLS: I'd be very surprised if they lost their licence, yeah.
QUENTIN McDERMOTT: Legalised casinos were sold to Australians as fresh, glamorous and safe, a better option than underworld gambling joints.
Yet, in addition to tolerating dirty money, legal casinos still seem to tolerate vices habitually found in illegal gaming.
Soliciting and loan sharking are supposed to be frowned upon.
Allowing drunken customers to gamble is illegal.
But all seem to thrive.
19:36
GARY BENSON: I have seen hosts basically ordering drink after drink for some of the large punters, who are getting quite inebriated and losing large sums of money.
I'm sure these people wake up the next day, thinking to themselves, "What have I done?"
19:54
MARK WELLS: People do get drunk and people -- depending on who they are -- are tolerated, because they are a big player and their action is important to the casino.
There's a "let's not upset him" syndrome that will permeate through the place if he's a big player.
20:08
MICHAEL MAIMANN, GAMBLER: I've been approached three times in the last 12 months by hookers working, once in the Endeavour Room and twice downstairs.
20:20
QUENTIN MCDERMOTT: In the Endeavour Room, there are stories of moneylenders and of prostitutes and pimps.
Is that true?
MARK WELLS: Yes, it is. The short answer is, yes, it is.
But we really should categorise it by saying that it is almost impossible for any casino to police such actions within its boundaries.
20:47
QUENTIN McDERMOTT: Star City says it doesn't tolerate loan sharking, prostitution and money laundering.
But there's evidence loan sharking has been going on for years.
A few loan sharks have been barred by the Police Commissioner, though none by the casino itself.
One high roller details how loan sharks operate.
For his protection, we've used an actor's voice and hidden his identity.
21:13
HIGH ROLLER: The standard rate is 10 per cent per week.
QUENTIN McDERMOTT: What would happen if you didn't repay that?
21:18
HIGH ROLLER: If you didn't repay it, you'd get leaned upon and you'd get fairly pressurised to repay it by whatever means you could find.
If you didn't repay it, there were threats of violence against you.
QUENTIN McDERMOTT: Have you ever been threatened?
HIGH ROLLER: I've had the occasional conversation that's been very heavy and very uncomfortable.
In that sense, it's been, "Unless you get this to us tomorrow, that's it."
21:41
QUENTIN McDERMOTT: Four Corners was told that the practice is still going on, despite notices which have gone up while this program was being made.
HIGH ROLLER: They've had signs go up which said that if anyone's been forced to, being asked to either lend money or being offered money, or being asked to borrow money, that to advise Endeavour Room management.
But despite the signs, it's business as usual.
QUENTIN McDERMOTT: Business as usual in what sense? What have you actually observed?
22:07
HIGH ROLLER: I've observed people lending money to other people on a professional basis.
QUENTIN McDERMOTT: By law, casinos have to operate free of criminal influence.
They can have their licences revoked for serious breaches of operating conditions, but it would be a brave
State Government which signed away its casino revenues.
22:28
NEIL GAMBLE, FORMER CEO, STAR CITY: It's been very good to us.
It's been very good to the people of NSW.
If you include the value of the licence and the gaming and payroll taxes, almost $600 million has been sent to the NSW Treasury during its 2.5 years of operation, which is a stunning amount of money.
QUENTIN McDERMOTT: In casinos, it's an upstairs-downstairs game.
Downstairs is the grind, where most punters play, and where casinos earn the bulk of their revenue.
Upstairs, as a high roller, $5,000 will get you onto a table.
The casino keeps track of your bets, and woe betide the high roller who runs out of money.
23:13
ANDREW SCOTT: The dinner invitations dry up and the tickets to the footy don't happen anymore.
You're left back in the gutter to join the grind action again, unless of course you ever come into some money again, in which case the cycle starts over.
23:48
QUENTIN McDERMOTT: Pokies were first brought into NSW clubs in the 1950s.
INTERVIEWER IN OLD TV FOOTAGE: We're discussing poker machines on the street.
Do you think poker machines should be abolished?
INTERVIEWEE: My oath I do!
INTERVIEWER: Oh. Why?
INTERVIEWEE: Well, they're not fair dinkum.
INTERVIEWER: You think they're loaded against the player?
INTERVIEWEE: Yeah. My word they are.
They are, absolutely.
INTERVIEWER: Why do you say that?
INTERVIEWEE: I've been in a couple of clubs and I've played the poker machine.
They're loaded against me.
INTERVIEWER: How much did you lose altogether?
INTERVIEWEE: About £80.
24:26
QUENTIN McDERMOTT: Nowadays, half of all the money spent nationally on gambling goes on pokies.
Last year, this club earned $55 million from pokies alone.
As with high rollers, the industry makes enormous efforts to lure new clients.
And to keep its profits rising, it invents new products, designed to hook the punters and to entice them to spend more time and money at the machines.
Australia leads the world in the design and development of gaming machines.
Len Ainsworth is the father of Australian pokies.
His huge success in building his former company, Aristocrat, Australia's biggest pokies manufacturer, has brought him an enormous personal fortune.
What's the secret of that company's success?
25:24
LEN AINSWORTH, FOUNDER OF ARISTOCRAT: I think building a better mouse trap -- the five-reel machine, a machine that you can buy 50 credits for $1, so there's not a lot of coin-handling there.
And then you can play it almost like a piano -- you can put whatever you want to on whatever you want to.
25:44
QUENTIN McDERMOTT: The "better mouse trap" was the five-reel machine, which offers a wider range of bets and is now the industry standard.
LEN AINSWORTH: That made it possible to introduce a far wider range of odds to bring in small jackpots and medium-sized jackpots and so on, and made machines, generally speaking, more interesting.
26:08
PROFESSOR JAN McMILLEN, AUSTRALIAN INSTITUTE FOR GAMBLING RESEARCH: The machines and games are designed to attract players, first of all.
They've got to be entertaining.
Secondly, they've got to retain the player.
There's a concept of the player "buying time" so that they stay on the machine for a long period of time.
Repetitive play, and quick results, frequent rewards, that encourage the player to move on to different, more ambitious forms of gambling.
26:37
QUENTIN McDERMOTT: One new development which fulfils this aim is Aristocrat's Hyperlink, which offers a jackpot linked to a bank of machines.
Aristocrat declined to give us an interview.
But privately, the company boasts that the revenue Hyperlink generates has been "nothing short of staggering".
Aristocrat, in its own trade publicity, says Hyperlink "rewards the player who bets more per game".
With a bank of 20 machines or so, venues can expect small, progressive jackpots to be hit on average every five minutes.
What then occurs, says Aristocrat, is "a bit like a shark feeding frenzy".
How do you react to that?
27:20
PROFESSOR JAN McMILLEN: I think that's immoral commercial practice.
I think that encapsulates what's happened with the gambling industry over the last decade, where commercial objectives, the profit motive, is driving the expansion of the market with very little regard to the social costs that are occurring.
I think it's time we put a stop to it and it's up to governments to do so.
27:45
QUENTIN McDERMOTT: In NSW, the number of machines has recently been frozen at 100,000.
The Victorian cap is 27,500.
That, though, ignores the maximum rate at which punters can lose money.
28:00
TIM COSTELLO: In Australia, the losses per hour are $720 per machine.
In the UK, the losses are $130 per hour per machine.
In Japan, $56 per hour.
QUENTIN McDERMOTT: Once the machines have been designed and built, the industry's next priority is to place them in venues where they'll be most profitable.
28:22
PROFESSOR JAN McMILLEN: In terms of their marketing strategies, they look for communities where there is a growing population, few other social activities, and obviously they're put into venues that are popular with the working class, with people with liquor licences, so clubs and hotels.
28:42
QUENTIN McDERMOTT: With the number of pokies now limited in several States, the industry is exerting more and more pressure to get as big a return as possible from each machine.
Just how that impacts can be seen in the Victorian township of Thornton.
120km outside Melbourne, the Rubicon Hotel is a stopping-off point for coach parties of elderly folk on mystery tours of the region.
After lunch, they repair to the gaming area to try their luck on the pokies.
29:15
VERONICA SLOANE: We're the only venue in the shire of Murrindindy, so it's not like an oversupply in our shire, because there is only the 20 machines in the total shire.
QUENTIN McDERMOTT: In fact, it's not the number of machines but their turnover that counts.
Under a Government deal, the details of which are secret, two corporations, Tabcorp and Tattersall's, own
ALL Victoria's quota of machines, and lease them to clubs and hotels.
29:44
VERONICA SLOANE: They're the only people you can get machines from.
They pull the strings.
If they want to pull them tight, they pull them tight.
If they want to dangle you, you can dangle.
If you want to noose yourself, you can get noosed.
QUENTIN McDERMOTT: The 'noose' is a clause in hotels' and clubs' contracts designed to maximise the revenue from the pokies.
Tabcorp can remove machines if their average daily revenue isn't in the top 50 per cent of similar hotels.
The duopoly's agents visit hotels and clubs to check up on them.
Arriving unannounced and incognito, they note, for example, whether staff are pushing the current gambling promotions.
This makes the Rubicon's manager, Veronica Sloane, intensely uncomfortable.
30:40
VERONICA SLOANE: We're pressurised to increase our turnovers and volumes that goes through the machines, increase our NMR, which is our Net Machine Revenue.
So the patron probably doesn't feel that pressure but WE feel that pressure, so how do we pass it on to do these things?
We unfortunately have to pass it on the customer to be able to maintain these levels.
31:03
QUENTIN McDERMOTT: What would happen if you didn't?
VERONICA SLOANE: If we didn't, we'd probably be downsized and then we'd probably lose our machines.
QUENTIN McDERMOTT: Venues are ranked according to their Net Machine Revenue.
Tabcorp's list for January 2000, for example, shows the Rubicon ranked 83rd out of 129 hotels -- well out of the top 50 per cent.
The Tabcorp contract requires the Rubicon to keep its revenue up, or risk losing machines.
31:35
VERONICA SLOANE: If you fail to meet the target, they will actually assist you to help you increase that target. To do that is via promotions, giveaways, etc.
Otherwise, how can you do it?
So then this becomes against the code of practice -- the responsible serving of gaming, which is what we've signed, and which we agree to totally, because it is just atrocious, I believe, to actually force gaming upon people.
32:08
QUENTIN McDERMOTT: In the gambling industry world of whales and minnows, Tabcorp is a whale.
Its revenue is $1 billion a year and rising since the acquisition of Sydney's casino, Star City.
Both Tabcorp and Tattersall's declined to appear on this program.
Veronica Sloane is the minnow speaking out against them.
She's standing up for those hotels and clubs which don't want to pressurise their customers to gamble.
32:41
VERONICA SLOANE: The corporations say that we should have everybody lined up like chooks at little feeding pens, all doing the same thing at the same time of day, all pecking at machines, thinking that this is life.
There's more to life than that, and there's more to entertainment life, and social activities should be more promoted in gaming rooms, not the dollar.
33:04
QUENTIN McDERMOTT: However, hotel owners aren't always so concerned about their customers' wellbeing.
Four years ago, following a recession, the NSW Government agreed to open up the State's hotels to pokies, to the delight of the owners.
33:19
JOHN THORPE, PRESIDENT, AUSTRALIAN HOTELS ASSOCIATION, NSW: We were then, I believe, on the verge of collapse.
There was a known 700 hotels and possibly 1,200 hotels that were in receivership.
And there were many, to put it bluntly, were hanging on by their fingernails to the windowsill.
We couldn't compete -- simple as that.
33:45
QUENTIN McDERMOTT: Hotels in NSW are now extremely profitable.
Unlike in Victoria, hotel owners buy machines outright and profit directly from turnover.
And there are nearly four times as many pokies as in Victoria.
KAREN RICHARDSON: In our small community, I think we have seven or eight hotels and clubs that all have poker machines in them.
They're on just about every street corner.
The advertising is everywhere, and they just con you in.
34:20
QUENTIN McDERMOTT: Karen Richardson lives with her teenage children in Nowra, NSW.
In 1997, without his family knowing, her husband Gavin started gambling large amounts on poker machines.
KAREN RICHARDSON: We weren't well off by any means.
We were comfortable. We should have been comfortable.
But as the gambling progressed, we certainly weren't comfortable, we were struggling.
34:47
QUENTIN McDERMOTT: Gavin was losing $1,000 a week.
He eventually accumulated debts of at least $125,000.
Again, there's evidence that those who profit from gambling help sustain addiction.
In Gavin's case, it's claimed, the North Nowra Tavern repeatedly advanced him money.
35:08
KAREN RICHARDSON: We had a loan, for instance, with the car.
And he would go to another company and take out a larger loan to pay off that loan.
He would also go to a local hotel and cash cheques, which bounced, which they continually cashed.
35:29
QUENTIN McDERMOTT: The hotel is now being investigated by inspectors from the Department of Gaming and Racing.
But the question Karen Richardson wants answered is why they cashed so many of his cheques, and for
such large amounts.
35:43
KAREN RICHARDSON: They ranged from $500, $2,000, $1,000, $20.
And I don't exactly know what you can buy at a local hotel for $2,000.
But they continued to cash those cheques.
And at the end, it was, to my knowledge, $13,000 worth of cheques.
QUENTIN McDERMOTT: Gavin Richardson's family had no idea at all how desperate he'd become.
36:12
KAREN RICHARDSON: I had a phone call to say that there was a problem and I needed to come out to my church.
That was when I was told that Gavin had taken his life.
He had gone to a quiet place at North Nowra and sat in the car and gassed himself.
QUENTIN McDERMOTT: Gavin had left a note.
36:41
KAREN RICHARDSON: He told me he was very sorry, but the reason he had taken his life was due to gambling and the fact that it had taken over his life, that he was unable to stop it and he could see no other way out for all of us.
He felt that it was the best way out for all of us.
37:05
QUENTIN McDERMOTT: Karen's friends rallied round.
Her husband's desperate act left his family in desperate straits.
At his funeral, their friends gave money, not flowers.
The children went out to work and eventually Karen paid off most of the debts.
She's left with a clear vision of how the industry works.
KAREN RICHARDSON: The industry is just set up to get people in, to suck people in, and to get them coming back.
You can put a $100 bill into a poker machine.
If it's for enjoyment, how can losing $100 be enjoyable to a family who can't afford it?
37:45
JOHN THORPE: We've all got families and relations.
We're part of this community.
We're not aliens.
We've been through rough periods in this country.
We've survived.
We've been here longer than most in terms of our industry.
So you mean to tell me that I want to take advantage of people?
I think that's unfair in the sense that I want you to enjoy yourself.
I don't want you to go and put more than you can afford.
38:18
QUENTIN McDERMOTT: Is gambling out of control here now?
PROFESSOR JAN McMILLEN: I think it may have been, certainly the last five years.
I think for the first time in Australia's history, we've had a public outcry about the expansion of gambling.
Communities are hurting, and hurting very badly.
And instead of gambling being for community benefit, for some sort of public purpose, it was the public, the community, who started to feel the pain.
38:45
TONY McAUSLAN, NEXT GENERATION GAMBLING: Anzac Day is the only day Australians can legally play two-up outside of a casino and we're going to be the first company in the world to put up a two-up site where everybody in Australia can log on, play two-up interactively.
QUENTIN McDERMOTT: It's not the only thing you can do at home.
The endlessly inventive minds of the gambling industry are giving us online pokies, they're giving us online
sports betting and they're giving us virtual casinos where you can play your favourite table game.
40:13
TIM COSTELLO: In the home.
So accessible.
Won't even have to leave your home to go to a casino, so no restraints.
And that virtual casino may see some people losing their homes without even leaving their homes.
40:28
QUENTIN McDERMOTT: Lasseters is still so far the only online casino to be licensed and regulated here.
It's doing well and pulling in dollars from abroad by picking up members daily from overseas.
Lasseters is licensed by the Northern Territory.
It's held up by the gambling industry as a well regulated model.
And the managing director is proud of the measures they've introduced to help prevent problem gambling on the site.
41:13
DAVID OHLSEN, LASSETERS ONLINE: If you have a husband and wife playing, or a partnership in a house, and one of them feels the other person has a problem, they can ring the site and have them excluded.
That's very important.
QUENTIN McDERMOTT: But as with high rollers and pokies, a new kind of player development is at work.
Games for a younger market are being invented by Sydney's Next Generation Gaming.
The company is talking to several operators which are hoping to go online in Australia by the end of the year, if the Federal Government permits it.
41:47
TONY McAUSLAN: There's the 25 to 35-year-old market that have got money.
They understand the Internet, they like gaming, they like the excitement that gaming gives them.
Certainly within the next two or three years there'll be things like a casino channel, perhaps delivered on cable television.
We're certainly interested in doing interactive television games for people.
We're in the process of doing that.
42:06
TIM COSTELLO: With digital TV, you'll be able to sit in your home and on Channel 9, or even other channels, bet on whether Shane Warne bowls a flipper or an offbreak next ball, bet who gets the next try or kicks the next goal.
Children, who aren't allowed into casinos or pokies venues until they're 18, will be there in the family home, watching parents participating in gambling.
42:29
DAVID OHLSEN: Convergence on the television set is probably inevitable, but it must be done and can be done safely, such as having a set-top box with a card in it.
The card identifies the user, checks the age of that person.
That way, we can prevent access by children and problem gamblers.
42:50
QUENTIN McDERMOTT: The US has banned Internet gambling for the time being.
Our Federal Government has just announced it wants to do the same, a move already opposed by several States.
They'd like to profit from overseas companies like this one, based in a Caribbean tax haven.
Online gambling operator Starnet is looking to Australia to give it a licence and added credibility.
43:17
ED STARRS, STARNET: We see Australia as the first First World country that is a fully regulated Internet gambling environment.
So we're here to try to work with the regulators and hopefully implement some of the major US-based gaming corporations to establish presence within this jurisdiction.
Currently, the global gaming market is over US$1 trillion.
So I think you can see that the potential for tax revenue generated within Australia can be huge.
43:56
QUENTIN McDERMOTT: Starnet's representatives were in Australia recently, touring the States and talking to the regulators.
Governments haven't been able to agree on a uniform tax rate for online casinos -- and that means
companies like Starnet believe they can dictate terms.
44:17
ED STARR: Currently, we operate out of Antigua, where there's a zero tax rate.
In Australia, there's a large disparity between the various jurisdictions.
Tax rates range between 4 per cent and 50 per cent, depending on which jurisdiction you choose to operate in.
We see that as a major issue.
Obviously, Australia needs to be more competitive and a little more consistent if they expect to attract major US corporations into this market.
QUENTIN McDERMOTT: Starnet's ambitions may be thwarted by the Prime Minister's insistence on a one-year moratorium on Internet gambling.
The States will probably fight the ban, and the gambling industry will continue to cast its net wide.
Whales and minnows alike will continue to be hooked.
Players will still be developed.
It makes you wonder how we let things get so far.
45:21
KAREN RICHARDSON: It should never have been allowed to become the industry that it has.
So I guess basically you have to blame the Government.
There's no-one else to blame.
And their greed -- to me, they are just greedy.
Again, I pay taxes, Gavin paid taxes, and that wasn't enough.
And so they are allowing an industry to thrive so they can reap the benefits of that industry.
QUENTIN McDERMOTT: Do you ever gamble yourself?
LEN AINSWORTH: I'm far too busy creating things for other people to gamble on.
END
46’54