Proceeds of crime: gambling firms keep millions when Australians steal to fund addiction

When gambling addicts steal hundreds of thousands of dollars for losing bets, the victims of theft have little recourse. Advocates say that must change

In 2018 a 27-year-old Tasmanian assistant financial accountant was convicted of multiple counts of fraud after stealing $292,955, most of it from his employer. The court heard the man had committed the fraud to fund a gambling addiction, pouring the stolen money into a Sportsbet account, whereupon he lost it all. He was sentenced to jail and was issued with compensation orders, despite being deeply in debt.

Sportsbet kept the money.

In 2021 a 48-year-old Tasmanian woman faced court after stealing $940,221 from the veterinary practice where she worked, and accruing a debt of $24,218 on a fraudulently obtained credit card. She had been diagnosed with a gambling disorder “at the most extreme end” and spent most of the money playing a social casino game, Heart of Vegas, owned by Aristocrat Leisure, Australia’s largest poker machine manufacturer. She played the game through Facebook, which took a 30% cut of every transaction. She was convicted of 26 counts of fraud and ordered to compensate the companies she stole from, despite the court noting she was already in debt and unlikely to be able to repay them.

Aristocrat and Facebook kept the money.

In September Gavin Fineff, a former Sydney financial adviser pleaded guilty to multiple fraud-related offences in the NSW district court. Fineff lost more than $8m to sports gambling, much of it belonging to his clients and friends, some of them elderly and vulnerable.

The victims of his crimes never got their money back. Fineff will be sentenced in January.

In a submission to the Senate inquiry into online gambling, Fineff wrote:

Millions of innocent Australians have been hurt from the destruction of someone with gambling addiction … I accept my punishment but I can’t accept the destruction continuing. New people will be hurt today and tomorrow; families, community services, the courts and the public are all picking up the cost.

Gambling reform and victims’ rights advocates say such cases are common. Gambling companies keep the proceeds of crimes committed by people experiencing gambling harm, leaving victims of those crimes with few avenues for redress or compensation. The system that is supposed to regulate them is failing, they argue.

Michael O’Connell, a former commissioner for victims’ rights in South Australia, says restitution orders made on people convicted of gambling-related fraud and other dishonesty offences are, for the vast majority of people, “empty promises”.

“Even if there are attempts to satisfy them, the sums returned don’t match the sum of the actual loss and harm that the victim has suffered – such as the pain, the anguish, the emotional and psychological effects,” he says.

Director of policy and campaigns at Financial Counselling Australia, Lauren Levin, says the regulatory and legislative system is failing people with gambling addictions too.

“No one chooses to get an addiction. Some of those sons, fathers and mothers will do terrible things that they never in their wildest dreams imagined they would do.

“Then the police step in and the director of public prosecutions. There is a tabloid news report … The taxpayer pays $130,000 a year per inmate. And no one asks the gambling companies to return the proceeds of crime to those innocent victims of crime. No one asks the simple question, ‘How do we return the stolen funds to the victims?’”

How is regulation supposed to work?

States and territories are primarily responsible for regulating gambling companies, but they are also captured by federal anti-money laundering and counter-terrorism financing laws. Those laws require companies to report suspicious transactions, including money going in and out of the country and payments over $10,000, to the Australian Transaction Reports and Analysis Centre.

They also require companies to investigate customers’ sources of wealth. Austrac can investigate companies for noncompliance with the laws.

When the Tasmanian accountant started stealing money from his employer to fund his gambling, he transferred funds from workplace credit cards to a PayPal account, which he then used to deposit money into his Sportsbet account. The court heard that between January and June 2017 he conducted 248 transactions, with a steep escalation of activity in April and May, which paralleled his intensifying gambling.

As the transactions increased, PayPal queried why he was receiving so many payments from his employer’s credit cards. He responded with fraudulent information and set up a new PayPal account to hide his behaviour.

PayPal said it could not comment on individual customers.

“PayPal adheres to all relevant laws, regulations and compliance requirements in markets in which we operate. The company remains committed to fulfilling its regulatory obligations and we report applicable transactions to Austrac.”

Sportsbet, like many other online gambling companies, is licensed in the Northern Territory, where regulation has historically been more relaxed than in other jurisdictions. But in 2019 the Territory government legislated codes of practice for online gambling companies, obliging them to train staff to identify and act upon “problem gambling red flag behaviours”, which include “gambling for an extended period”, “changing gambling patterns”, “increase in deposit frequency” and “escalating sums of money deposited”.

A spokesperson for Sportsbet said the company “acted appropriately at all times and is comfortable that all legal and reporting obligations were complied with” in relation to the case. The company would not comment on whether it carried out any investigations into the man’s betting.

Sportsbet was not ordered to release the funds it received from him, nor has it voluntarily done so.

The game on which the Tasmanian woman lost her money, Heart of Vegas, is based on simulated poker machines, marketed as exact replicas of the actual machines in Las Vegas. But since players can never cash out their “winnings”, such games are not regulated as gambling in Australia, even though they are often owned by gambling companies and function in almost every other way as gambling.

The court heard that the woman had been diagnosed with a severe gambling disorder for much of her life, which began with poker machines and shifted to online gambling with the advent of mobile phones and gambling apps.

A spokesperson for Product Madness, the UK-based subsidiary of Aristocrat, which publishes Heart of Vegas, declined to comment on the woman’s case.

“Payment information is collected and processed by the third-party digital platforms where our apps are hosted, not by Product Madness,” the spokesperson said. “We respect and uphold all relevant data and consumer privacy requirements. In the event that Product Madness was made aware by law enforcement that funds were not obtained legally, we have processes in place to ensure account safety and would follow applicable laws.”

Meta, the parent company that owns Facebook, which processed and collected fees from many of the payments made to Heart of Vegas, declined to comment.

What could be done?

Levin says existing laws are not being used effectively.

The NT Criminal Code Act makes it an offence to deal with money which the recipient “ought reasonably to have suspected to be proceeds of crime”.

Austrac has also previously confirmed that anti-money laundering and counter-terrorism financing laws apply to gambling companies, including in cases of fraud. The deputy chief executive of regulatory strategy at Austrac, Peter Soros, told the ABC in 2020 gambling companies that did not perform additional due diligence on high-risk customers “run the risk of not complying with our laws”.

Levin says that when a salaried young finance professional deposits hundreds of thousands of dollars in the space of a few months with major gambling companies, it should raise obvious red flags.

“Shouldn’t they have suspected something?”

Andrew Wilkie, an independent federal MP has campaigned for years to tighten legislation. This year he put forward a private member’s bill that would give Austrac the power to make compensation orders against gambling companies if they allowed a customer to gamble “in circumstances where there were reasonable grounds to suspect the person would pay for the service using stolen property”.

Wilkie’s bill, written with Fineff’s assistance, would also put a “positive obligation” on the companies to report to Austrac any suspicion that a person was gambling using stolen money.

“It is grossly unfair that the gambling companies keep the stolen moneys, while addicted people are jailed and their victims are left with nothing,” Wilkie says.

“The current patchwork of state and federal laws fail to protect us because these laws are weak and rarely enforced.”

State-based victims of crime compensation schemes exclude property-related crimes from their remit, leaving victims of gambling-related fraud and theft with no avenue for redress.

Levin suggests that there may be a role for the commonwealth director of public prosecutions to act on behalf of victims to get money back from gambling companies, but that would require someone to investigate and refer the case to them.

“Basically, no one has bothered looking for the money to give back to the victims,” she says.

She notes that in Sweden bets shown to be funded by the proceeds of crime are void and companies must forfeit the money. In the UK there are provisions to strip operators of profits, along with pathways for victims to get their money back.

“If the legislation we have doesn’t work in practice, then we need to fix it,” Levin says. “There is no good reason for gambling operators to profit from crime-funded gambling.

“That is just wrong.”


Stephanie Convery

The GuardianTramp

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