Australian gambling operators making millions from stolen money
Despite problem gamblers facing the wrath of the law for stealing to indulge their addictions, Australian gambling operators face no retribution and, more often than not, keep the stolen funds.
A Tasmanian assistant financial accountant was charged and convicted of several counts of fraud in 2018. The 27-year-old at the time had reportedly stolen around $292,955 from his employer to fund his gambling addiction.
The stolen funds were put in a Sportsbet account; however, he lost the entire sum and was sentenced to jail. The court also issued the accountant compensation orders. Meanwhile, Sportsbet kept the stolen funds he lost.
A similar incident occurred in 2021, but the money stolen was $940,221 by a Tasmanian woman. She obtained the funds from her place of work, a veterinary practice, and accrued a $24,218 debt on a credit card she had obtained fraudulently.
She was diagnosed with an extreme gambling disorder and lost most of the money while playing the Aristocrat Leisure-owned Heart of Vegas. Some 30% of every transaction was cut by Facebook, the platform she used to play the social casino game. The 48-year-old was convicted of 26 counts of fraud by the court and ordered to pay off her debt. Aristocrat and Facebook, however, held on to the money.
The most recent and substantial case occurred in September this year and involved more than $8 million. The guilty party this time was Gavin Fineff, a former Sydney financial adviser. He lost over $8 million to sports gambling; most of it was owned by his friends and clients, some of whom were elderly and vulnerable.
Fineff pled guilty to several fraud-related offences in the NSA district court and will be sentenced in January 2023. His victims never received their money back.
The former Sydney financial adviser turned in a report to the Senate for an inquiry into online gambling. There, Fineff emphasised the harm of gambling and its continued destruction of people’s lives. He revealed that he duly accepted his punishment; however, he couldn’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,” Fineff wrote.
According to advocates of gambling reform and victims’ rights, cases where gambling companies retained funds from crimes committed by addicted customers were common. They argued that the installed system to regulate these gaming and wagering agencies were lacking.
South Australia’s former commissioner for victims’ rights, Michael O’Connell, claimed that any restitution orders made concerning people convicted of gambling-related fraud or other dishonesty offences were, for the most part, “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,” O’Connell said.
Lauren Levin, the Financial Counselling Australia director of policy and campaigns, also gave her input. She stated that the regulatory and legislative system was not properly attending to people who suffered from gambling addictions.
“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,” Levin explained.
“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?’”
Besides states and territories, federal anti money laundering (AML) and counter terrorism financing (CTF) laws are a means of regulating gambling companies. According to the laws, companies were mandated to report suspicious transactions to the Australian Transaction Reports and Analysis Centre (AUSTRAC). This includes payments over $10,000 and money moving in and out of the country.
READ: AUSTRAC investigates Bet365 and Sportsbet over AML concerns
The companies were also required to investigate the source of wealth of their customers. AUSTRAC would arrest those who fail to comply with the laws.
In the 2018 case of the Tasmanian accountant, the stolen funds were transferred from his workplace credit card to a PayPal account. From there, he deposited money into his online betting account and, according to court documents, made a total of 248 transactions between July and June 2017.
The figure was higher than his transaction activity in April and May, and PayPal queried him. The accountant supplied a fraudulent answer and opened a new PayPal account to continue his transactions.
Sportsbet, like most Australian online bookmakers, is licensed in the Northern Territory. According to a spokesperson who commented on the case, the company had “acted appropriately at all times and is comfortable that all legal and reporting obligations were complied with”.
The firm refused to comment on whether if it conducted any investigations into the accountant’s betting at the time. Sportsbet was also not told to release the stolen funds, nor has the bookmaker announced its desire to return the money voluntarily.
Levin believes that the existing laws were not being effectively used. She also said that in cases where a young finance professional on a salary deposits huge amounts in just a few months on gambling platforms, there should be obvious red flags.
According to the NT Criminal Code Act, it is an offense to deal with funds that “ought reasonably to have suspected to be proceeds of crime” by the recipient.
Earlier, AUSTRAC also confirmed that AML and CTF laws were applicable to casino operators in fraud cases. In 2020, Peter Soros, the deputy chief executive of AUSTRAC, revealed that gambling firms that neglected to carry out additional due diligence on their high-risk customers risked violating federal and state laws.
For years, Andrew Wilkie, an independent federal MP, has advocated for stricter gambling legislation. Earlier this year, he proposed a bill, in collaboration with Fineff, that would give AUSTRAC the authority to place compensation orders on gambling companies. This was primarily for cases where they allowed a patron to gamble “in circumstances where there were reasonable grounds to suspect the person would pay for the service using stolen property”.
Wilkie’s bill will also place a “positive obligation” on the gaming and wagering operators to report any suspected person gambling with stolen money to AUSTRAC.
“It is grossly unfair that the gambling companies keep the stolen money while addicted people are jailed, and their victims are left with nothing,” the independent federal MP said.
“The current patchwork of state and federal laws fail to protect us because these laws are weak and rarely enforced.”
Due to state-based crime compensation schemes being excluded from the remit of property-related crimes, gambling-related fraud and theft victims have been denied any avenue to seek redress.
According to Levin, the commonwealth director of public prosecutions could get the victims’ money from the gambling companies on their behalf. However, someone would have to investigate and refer the case first.
Levin noted other countries, like Sweden and the UK, where cases like this were taken more seriously. In the former, bets confirmed to be made off criminal proceeds are voided, and the firms are mandated to turn in the money. For similar cases in the UK, victims are given pathways to get their money back.
“If the legislation we have doesn’t work in practice, then we need to fix it. There is no good reason for gambling operators to profit from crime-funded gambling. That is just wrong,” Levin said.
