Slot-Machine Scam Allegations Tarnish Crown

By Rob Taylor Features Dow Jones Newswires

CANBERRA, Australia--If gamblers at Crown Casino thought their slot machines were being stingier than usual, it may have been because employees were giving the one-armed bandits a little extra muscle.

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Casino workers in Melbourne cracked into the machines to whittle the odds of winning down below the statutory 85% return, an Australian lawmaker said Wednesday, referring to testimony from three former employees.

"The worst case was where they (casino managers) asked us to remove three out of five play options," one of the three men said in a video statement in which his face was obscured. "You basically remove betting options from the machine."

The documents tabled by Andrew Wilkie, an independent lawmaker and anti-gambling crusader, also accused Crown Casino of deliberately tampering with poker machines, "shaving down" the buttons on new machines with Leatherman multi-tools and files to allow bettors to wedge an object against them so the machines could be played continuously, in contravention of state gambling laws.

The three whistleblowers said they had also been directed to use different player ID cards when processing transactions of more than US$7,845 to avoid attracting the scrutiny of anti-laundering authorities and police.

"If these accusations are true, then Crown would be facilitating money laundering for any number of nefarious reasons, like tax fraud, drug running and antiterrorism," Mr. Wilkie told legislators. He called for a Senate investigation into the allegations. "Many laws have possibly been broken and the truth will not be uncovered without a parliamentary inquiry, as well as investigations by law enforcement and regulatory agencies."

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The casino's parent company, Crown Resorts Ltd., which counts billionaire James Packer as its biggest shareholder, said it rejected the allegations concerning "the improper manipulation of poker machines and other illegal or improper conduct at Crown Casino in Melbourne," and called on Mr. Wilkie to hand over all information he had to the authorities. Crown shares fell 4.3% on Wednesday, wiping hundreds of millions of dollars off the company's value.

Gambling analysis shows Australians have become the world's biggest losers. Data by industry consultancy H2 Gambling Capital shows, on average, each Australian adult lost $1,052 last year, 40% more than second-placed Singaporeans. Americans, despite the lure of the Nevada gambling mecca Las Vegas, lost only $479.

Slot machines--known in Australia as pokies--account for half of the $14 billion lost Down Under each year. According to the University of Sydney, Australia has about 200,000 slot machines, which is roughly one for every 120 people in the country. Glowing and chiming in corners, the machines are near-ubiquitous in pubs and clubs following a wave of deregulation during the 1990s.

The allegations come at a sensitive time for Crown, with gaming authorities reviewing the Melbourne casino's five-year license and after the auditor-general of Victoria state told gambling regulators in February that they had not overseen the casino "to a level of focus...that reflects its status and risk as the largest gaming venue in the state."

In August, industry analyst Morningstar also warned that Crown Resorts faced a long recovery in its lucrative China-based VIP business following the arrests last year and conviction of some Crown employees in China for gambling offenses. Crown reported that VIP program revenue at its Australian resorts had fallen 49% in the fiscal year that ended in June.

Mr. Wilkie, a former intelligence analyst and whistleblower, said he would not detail the allegations.

"Although I cannot make any comment about the accuracy or not of their allegations, I do know that these are three people who we should listen to, and we should take their allegations very seriously," he said.

Australia's Communications Minister Mitch Fifield, who also oversees gambling, said the allegations were a matter for state gaming regulators. The Victorian Commission for Gambling and Liquor Regulation said in a statement the accusations would be "thoroughly investigated."

In the Australian Parliament, a group of influential Greens and independent lawmakers with bargaining power over legislation in the upper house called for a Senate inquiry into regulation of Australia's casino industry, saying Crown should not continue to operate poker machines until a "full and independent audit" was undertaken into its operations across the country.

"Politicians at the state and federal level cannot sit by and allow such serious allegations to go unchecked," Australian Greens leader Richard Di Natale said.

Write to Rob Taylor at rob.taylor@wsj.com

(END) Dow Jones Newswires

October 18, 2017 06:06 ET (10:06 GMT)