Tighter casino rules fuelling black market, ex-Australian official warns
Australia’s former top crime intelligence official has raised concerns that strict regulations and higher taxes on the gambling industry could be doing more harm than good. Michael Phelan, who previously led the Australian Criminal Intelligence Commission (ACIC), suggested that excessive government intervention is now pushing players towards illegal operators and fuelling organised crime.
Phelan argued that when legal gambling becomes too costly or restricted, people naturally seek alternatives, often outside of regulated markets. He pointed to the Australian tobacco industry as a cautionary example, where heavy taxation and strict rules led to a booming black market, ultimately reducing the government’s ability to monitor sales and enforce the law. A similar trend in gambling, he warned, could create serious challenges for law enforcement.
One of his biggest concerns is that law enforcement agencies are losing visibility over gambling activities as players move towards unregulated markets. Without proper oversight, tracking money laundering, fraud, and organised crime becomes significantly harder. He highlighted that underground gambling operations, whether in temporary venues or through offshore betting platforms, are often impossible to monitor, making them an attractive option for criminals.
Star Ent. & Crown in hot water
The warning comes at a critical time for Australia’s gambling sector. Star Entertainment Group, one of the country’s largest casino operators, is facing major financial difficulties, in part due to the increasing costs of compliance and regulatory changes. The introduction of mandatory carded play and other restrictions has reportedly driven many customers away, while similar measures have not been applied to gambling venues in pubs and clubs, creating an imbalance in the industry.
Whereas, Crown Resorts faces widespread anti-money laundering breaches, leading to record fines, leadership changes, and compliance reforms. New regulations, such as Victoria’s Casino Control Regulations 2023, have raised operational costs while strengthening consumer protections.
Illegal gambling gains ground
Industry experts warn excessive regulation could push gamblers towards offshore markets, which already account for 25 percent of Australia’s gambling sector, potentially risking billions in tax revenue losses.
Illegal gambling is already making its presence felt. Recent police investigations in Victoria have uncovered underground poker games, reinforcing concerns that criminals are stepping in to fill gaps left by struggling legal operators.
Furthermore, Australia’s gambling industry is under increased regulatory scrutiny, with major casino operators facing intense investigations and heavy penalties. Star Entertainment was found unsuitable to hold a casino licence after allowing high-risk patrons linked to criminal activities to gamble.
This is a major reason why Phelan is urging regulators to take a more balanced approach, one that considers both the need for oversight and the economic realities of the gambling industry. If legal operators are pushed out of the market, he warned, it would only strengthen the hold of unregulated and criminal-run gambling operations.
The challenge, he emphasised, is finding a middle ground where regulation is effective but does not drive people away from legal platforms.
