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Illegal Casinos on the Rise in Australia amid Increased Regulatory Restrictions

Authorities in Australia have intensified their efforts against illegal gambling operations, conducting five raids on underground casinos in Sydney over the past year. The increase in these illicit establishments comes at a time when licensed casino operators, including Crown Resorts and Star Entertainment Group, have faced strict regulatory scrutiny that has limited their operations. Law enforcement agencies have attributed the rise in illegal gambling to both criminal actors seeking new avenues for illicit activities and players moving away from regulated casinos due to stringent new restrictions.

Australia police officers gather during an investigation. (Source: Wikipedia)
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A report by Australian media group News Ltd indicates that in addition to the growth of illegal casinos, private poker games have become increasingly prevalent across Sydney. The shift in gambling activity is believed to be a direct consequence of a crackdown on money laundering and other financial crimes at licensed casinos. With tighter regulations making it more difficult for certain transactions to take place within legal venues, organized crime groups have seized the opportunity to establish illegal alternatives that operate outside the oversight of regulatory authorities.

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Crime journalist Mark Morri, who played a key role in exposing the rise of illegal casinos, explained that significant amounts of money continue to circulate in the gambling sector, and if individuals are unable to gamble freely at licensed venues, organized crime groups will find alternative ways to meet the demand. He compared the situation to the illicit tobacco trade in Australia, where high taxes on legal tobacco products have led to criminal networks smuggling large quantities into the country and distributing them at lower prices through unregulated retail channels.

Authorities have pointed to specific instances that highlight the risks associated with illegal gambling establishments. In one recent case cited by News Ltd, police raided an underground casino after receiving a report from a player who claimed he was being held hostage due to unpaid gambling debts.

The operation was found to include multiple gaming tables and employed hostesses who provided food and drinks to patrons. Such incidents underscore the dangers of unregulated gambling, which lacks the security and consumer protections found in licensed casinos.

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Increased Regulations Hampering Growth

Australia's gambling industry has been subjected to heightened regulatory oversight in recent years following revelations of compliance failures involving international junket operators. In response, authorities have implemented or proposed stricter measures such as mandatory carded play and cashless gaming to enhance transparency and reduce the risk of financial crimes. However, these measures do not apply to gambling operations in pubs and clubs, which house over 90,000 electronic gaming machines in New South Wales alone.

The regulatory crackdown has placed financial pressure on major casino operators. Crown Resorts, which was acquired by US private equity firm Blackstone in 2022, has begun selling non-core assets to address financial challenges.

Star Entertainment Group, facing ongoing financial difficulties, is currently evaluating a potential acquisition offer from US-based Bally's Corporation. The company has also announced plans to sell off its newly opened Brisbane resort as part of its efforts to stabilize operations.

At the Regulating the Game conference in Sydney, the former head of the Australian Criminal Intelligence Commission (ACIC) warned that excessive regulation and high taxation within the gambling industry were pushing players toward illegal operators. He explained that when regulatory and tax burdens exceed a sustainable level, players and industry stakeholders begin seeking alternatives outside the legal framework.

Drawing parallels with the tobacco industry, he pointed out that once regulatory control diminishes, authorities lose visibility over illicit activities, creating an environment where underground markets thrive.

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