Adorned by one of the world’s most iconic buildings in the Sydney Opera House; Darling Harbour in the last gasps of a New South Welsh summer is about as pristine a scene as you will see anywhere in the world for a regulatory briefing.
Regulating the Game 2025’s Tuesday opening keynote speaker, Michael Phelan – Former CEO of the Australian Criminal Intelligence Commission (ACIC) – remains understandably unconcerned with scenery, however, as he opens up his presentation on increasing regulation vs commercial viability and curbing the opportunities of organised crime.
Indeed, as the nation with the highest gambling losses in the world by a fair margin – balancing the need for regulatory implementation with the issue of over-enforcement is a tough line to walk. This issue is exemplified by a changing landscape, one in which, as Phelan explains, the barriers to entry have been completely changed by the development of the internet – and are now relatively low.
Phelan further underlines that Australians lost around AU$32bn (US$20.1bn) on gambling a year – around 50% of which is accounted for by online betting. In Australia, there has been an increase in sports wagering; however, there has been a decrease in horseracing wagering. There has also been a sharp decline in revenue from casinos across the country.
The facts are then further backed up by Institute of Criminology statistics on organised crime in Australia, which highlight; The cost of organised crime = up to AU$68bn per year – alongside drug sales at retail level = over AU$15bn per year.
Further unpicking the state of affairs within Australia’s organised crime market – Phelan explains that 25% of that is then laundered through professional facilitators and the rest is not – with real estate and gambling being the two industries which there are the highest number of Suspicious Matter Reports submitted in relation to money laundering.
If you take away criminals and problem gamblers, you’ve got to ask yourself; what’s left of the casino industry?
Undeniably, this is an important question, because these problem areas will need to be taken care of – and there will have to be an industry left afterwards in order to protect the players that are left as people will continue to gamble, nonetheless.
Phelan utilises these statistics as a bridge to the next section of his presentation which highlights the changing landscape of an industry which, in Australia, used to be dominated by independent companies. However, now the rise of corporates mostly owned offshore and registered in North Territories for the lower turnover tax are pushing out the independent bookmakers.
This, he explains, combined with the fact that the cost of doing business in gaming is also rising, means bookmakers now also have to pay their IP and punters have to pay point of consumption tax as it pays higher tax revenue.
The criminal intersection, Phelan underlines, is a potential problem area that can arise from gaps created within the industry by over-regulation and taxation disproportionate to the amount of gambling product demand. As he details further, bookmaking in Australia has changed from a retail-dominated industry to online, a fact which is evidently reflected in the decline presence of racecourse bookmakers.
This change has made it much harder for governments and regulators to ensure regulation is adhered to.
You can’t regulate what you can’t see
This is why there must be visibility in the industry to ensure regulation, though there is no visibility when you’re betting with an offshore bookmaker.
As such, Phelan underlines that this kind of danger is reflected equally by the risks players also have to take when betting with illegal operators. That is why governments don’t want to over-regulate and push people towards this space. Therefore, Phelan highlights the importance of keeping the money onshore in the bookmaking industry is a key way of ensuring that regulators retain this kind of visibility.
Of course, you couldn’t talk regulation in Australia without discussing the country’s ongoing issues with casinos – with Phelan suggesting that governments in the nation now are at a point where they need to re-think how much revenue they expect to gain from casinos to make them viable. All of these so-called gaps in the market are, he concludes, likely to be eventually filled by organised crime.
Phelan’s closing remarks draw comparisons to the Australian tobacco market – which is an industry in which organised crime has become a bigger issue.
He underscores that this is an illegal market that has developed over time – despite the use of tobacco being relatively stable across the country for the past 20 years – because taxation and price has increased to such a point that the gap between usage and taxation / price has become large enough for "someone else to step in."
This is an area in which more violence against tobacco shops and in general in the area across Australia – because the space is becoming increasingly unregulated. Now, organised crime has infiltrated the market to the measure of billions of dollars – and it's going to be hard to get it out.
This, then, Phelan concludes, is why the casino industry needs to remain ‘viable’ to make sure that criminals don’t step in to take a noticeable chunk which has been left by a void between over-regulation and price compared to demand
