By 2012 Waterhouse had taken on the biggest bookies in the country and entered the big league himself. In the process, he demonstrated the new model of gambling: lure recruits through clever advertising and offer diverse online opportunities. ‘You can bet on any sport at any time,’ his business slogan dared.85 Waterhouse would take odds on almost anything – who would win Dancing with the Stars or the Miles Franklin Award, or the likely sale price of a famous painting. Under Waterhouse, gambling was intended to be fun. ‘If it’s not weird,’ he once explained, ‘I will bet on anything.’86

  But the advertising blitz rang alarm bells. Sports journalist Peter FitzSimons called for urgent action. He’d spotted young children discussing the odds; when kids were ‘lining up to get an autograph from Tom Waterhouse because he’s so glamorous, doesn’t somebody in Canberra think, “yeah, don’t know if this is, don’t know if this is working”?’87 Of course, a small group of Canberra politicians like Wilkie and Xenophon were worried about these trends, but the major parties weren’t listening.

  While Waterhouse was building his online profile, Wilkie’s 2011 committee hearings on gambling reform and online sports betting were underway, and experts and problem gamblers alike were presenting worrying evidence. This was confronting for committee members, but there was a bipartisan and collegiate approach. ‘They all got it,’ Wilkie reflects. ‘When people hear the testimony, they come around to back reform.’88

  Medical practitioners from the University of Sydney’s Gambling Treatment Clinic, for example, reported a new and disturbing trend. In the past five years, they explained, as regulation around sports betting had been loosened, there had been a corresponding increase in the number of clients presenting to the clinic with problematic sports betting behaviour. Indeed, those with sports betting problems had increased in number from under 5 per cent of new clients in the 2006–07 financial year to 15–20 per cent of new clients in 2010–11. The researchers were concerned about the rapidly rising phenomenon.89 (We’ll explore this issue more in Chapter 9.)

  As the evidence to the committee unfolded, the challenges for governments mounted. The greater accessibility of online gambling would likely increase the frequency of gambling, possibly leading to higher rates of addiction. But gambling experts didn’t really know because there was a lack of empirical data. The ability to gamble with credit cards online posed additional risks. So too did the sudden emergence of international sites – the dark web of gambling – which were beyond any Australian regulatory environment. Would Australians shift in large numbers to these sites if there were a crackdown on Australian sites? What kind of regulation would work? There were more questions than answers.

  At the beginning of 2013, as Wilkie’s committee concluded its work with a raft of recommendations about the need for better regulation of online gambling, Tom Waterhouse came up with an idea to take sports gambling to a new level: inserting live odds gambling into the broadcast of National Rugby League (NRL) matches. He struck a five-year, $50-million deal with Channel Nine to become the face of rugby league’s sports broadcasting. The super salesman had become the expert match commentator – it was advertising dressed up as commentary. In a win-win arrangement, Waterhouse would gain countless new clients, while Nine would rake in the revenue, enhancing the company’s profits.

  It wasn’t long before a backlash began. Many football fans thought Waterhouse a rank self-promoter and disliked the idea of live ingame odds. One such person was the federal opposition’s Treasury spokesperson, the affable Joe Hockey. Late one Friday night in the early part of the NRL’s 2013 season, Hockey tapped out a message on Twitter: ‘It’s just wrong to have a bookie so involved in the coverage of footy. It has gone too far.’ Hockey didn’t mention the bookie by name but he didn’t have to. On that particular night on Channel Nine’s Friday Night Football it was the Brisbane Broncos up against the St George Illawarra Dragons, and sitting next to league legend Phil Gould at the commentary desk was the young and dapper Tom Waterhouse.

  Hockey’s Twitter feed lit up: ‘Agree!’ said many. ‘YES, YES, YES,’ said one. ‘So easy to gamble with these smartphones.’ ‘For bookies to have a spot on live telecasts is just outrageous.’ ‘What will you do about it, Joe?’90 The broader public went further than Hockey. A May 2013 poll showed that two-thirds of Australians wanted gambling advertisements banned on television.91 But there wasn’t much Hockey could do about the problem from opposition.

  Prime Minister Gillard now found herself at the centre of another gambling controversy, even as the dust was settling over her ditching of the deal with Wilkie. How would she respond this time?

  By May, Gillard was feeling the backlash from the public. ‘Families have become increasingly frustrated about the penetration of live odds into sporting coverage,’ she said, adding that they were worried ‘that their son or daughter is now talking about the game … through the prism of the associated betting’.92 Surprisingly, the prime minister also felt heat from the gambling industry. The CEOs of Sportingbet and Tabcorp publicly called for a ban on live, in-game odds. Michael Sullivan, CEO of Sportingbet, told the press that Waterhouse was damaging the entire online gambling industry: ‘The frequency of his appearances was driving people mad and Channel Nine has a lot to answer for.’ All this sounded very self-serving from an industry spokesperson who was also engaged in endless promotion of online gambling.

  By the end of May 2013, Gillard had banned the spruiking of live odds during games. But she missed an important broader opportunity. Free TV Australia, the peak body for free-to-air television, had told the prime minister that there was no need for legislation on the matter; it would ensure that the industry’s code of conduct would be changed to uphold the ban. Thus, at a stroke, Waterhouse was gone. On his way out, he penned an apology in The Daily Telegraph, expressing contrition that he’d failed to understand how irritated the public had become over his endless self-promotion and with gambling advertisements more generally.

  In reacting quickly to assuage the public about live odds, Gillard had failed to address the larger issues around online gambling. The tsunami of gambling advertisements was left untouched; betting odds could still be spruiked before games; football clubs could still do lucrative sponsorship deals with gambling companies; and the deep enmeshment of gambling and sport was given the green light.

  Gillard had failed a second test on gambling reform, and the consequences would reverberate for years to come.

  8 CAPTURING THE STATE

  A few years ago, when making political donations, the AHA and ClubsNSW delivered the money with a subtle but menacing personal touch. When filing forms to give over the funds, the organisations made sure that an individual politician’s name was identified, even though the money was collected and distributed by the parties’ head offices. According to former New South Wales Liberal Party treasurer Michael Yabsley, it’s a form of ‘wink and nod’ influence, associating a political candidate more directly with those funding their campaign.

  Inside the back rooms of political parties, the biggest donors were known as ‘outstanding citizens’ and, says Yabsley, the AHA and the clubs ‘would be rated as triple A, five star outstanding citizens’.1 And it’s not hard to see why. Between 2007 and 2022, the clubs handed over $3.1 million in political donations, while the AHA gave $8.7 million.2 According to Michael Yabsley, if you ‘join the dots, you will find policy decisions were made when very substantial donations were made by the AHA’.3

  Since the failure of Andrew Wilkie’s deal over mandatory precommitment in 2012, there was no legislation to rein in the destructive effects of gambling anywhere in the country until Victorian government legislation was enacted in that state’s parliament in 2024. In fact, the reverse was the case. Between 2012 and 2022, the gambling industry boomed and governments continually turned a blind eye to the damaging consequences.

  The lack of interest in reform in the face of obvious need is the clearest indicator that Big Gambling had captured government. The likelihood of this occurring was always high, given the industry depends entirely on government regulation for its existence. With a licence to print money, the business model had to be protected.

  State capture by powerful industries and individual corporations had become a normalised feature of the Australian economy. I’ve labelled this normalisation ‘crony capitalism’ – the development of close relationships between business and government for the pursuit of mutual benefits – and I’ve explored this dynamic in several of my recent books, most extensively in Rogue Corporations: Inside Australia’s Biggest Business Scandals. We’ve seen decades of scandals erupting around the capture of government by the fossil-fuel industry, mining, media companies, banking and finance organisations, consulting firms and transport companies. Were it not for these scandals erupting, the public would be none the wiser about these cosy relationships.

  Politicians are well practised in the art of deflecting concerns about the drift towards crony capitalism. So it was noteworthy when, in 2012, then federal treasurer Wayne Swan declared that ‘the rising power of vested interests is undermining our equality and threatening our democracy’. He argued that ‘a handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have a right to shape Australia’s future to satisfy their own self-interest’.4 Swan declined to state why governments weren’t taking action to prevent such capture. And the problem was not limited to a handful of players, as it was occurring across the economy.

  Of all the examples of state capture by vested interests, few were as comprehensive, ruthless and successful as that by the gambling industry. Moves towards capture had been evident since the legalisation of poker machines back in 1955, when ClubsNSW was formed. The power dynamics were solidified around the approval process of Melbourne’s Crown Casino, and went on steroids to knock off Wilkie’s mandatory pre-commitment reform.

  In 2017 Tim Costello declared that Australia’s gambling industry was as powerful as the US gun lobby. Just as the National Rifle Association (NRA) had enabled and encouraged the proliferation of guns in America, leading to an ever-rising number of gun-related deaths, so, Costello argued, the proliferation of problem gambling in Australia was a consequence of the power wielded by Big Gambling.

  It was a provocative comparison. Most Australians were well aware of the tragedy of gun violence in America and the role of the NRA. Costello was asking the Australian public to see how a powerful vested interest in their own country – the gambling industry – was promoting instruments of social harm, with politicians turning a blind eye. The comparison took hold in the media.5

  Others believed a more apt analogy was with the tactics of Big Tobacco. It fought a decades-long battle with governments over the ever-tightening noose of government restrictions, with a playbook that stressed the individual rights and responsibilities of smokers, while adopting clever marketing strategies, lobbying to stifle government action, co-opting research and denying the harm of their products.6 Gambling interests were spooked by how, despite playing dirty, ultimately the tobacco industry was despatched by government action because anti-smoking campaigners succeeded in cementing smoking as a serious health issue. As Michael Photios, the Liberal Party’s vice president in 2011 and a registered lobbyist for the AHA, admitted at the time, the AHA was in ‘war mode because they have seen what’s happened to the tobacco industry’.7

  So how did the gambling industry come to wield so much power after the defeat of Wilkie’s mandatory pre-commitment reform proposal, especially in the face of strong, on-going public opposition to much of its business model?

  Intervening in elections

  The anti-MPC publicity campaign waged against the Gillard government in 2011 created a blueprint for the gambling industry. In 2014 it marshalled its forces against the Victorian Liberal government led by Denis Napthine. His ‘crime’ was to have passed legislation the previous year imposing a 4.2 per cent tax increase on poker machines, but only on machines that took more than $32 000 per machine per year.

  That attempt at a modest claw-back for the community earned the premier a powerful enemy. Community Clubs Victoria – representing the state’s pokies industry – unleashed a $300-million campaign against the government with the slogan ‘Our Pain Is Napthine’s Gain’.8 Napthine’s Coalition government was voted out in the 2014 state election. His was widely seen as an inept government, on a range of fronts, but the message rang out nevertheless: take on Big Gambling and expect its wrath.

  The industry pulled out another heavily funded election campaign in an effort to defeat prominent gambling reform campaigner Senator Nick Xenophon. In the lead-up to the 2016 federal election, Xenophon was tipped to win two additional Senate seats with his Nick Xenophon Team. On this occasion the AHA led the campaign against a politician seen as hostile to the industry’s pokies interests. Xenophon wasn’t surprised: ‘[The AHA have] been gunning for me since 1997. But this election they are getting out the cannons and missiles.’ But the public would see through its campaign, Xenophon claimed, and he was right. The senator was returned, along with two additional Xenophon Team candidates.

  Xenophon remained in the sights of the gambling industry. In 2017 he resigned from the Senate and sought to win a seat in the South Australian lower house, but this time he was defeated. In the early hours of the morning after the election he received a text message from Anthony Ball, the CEO of ClubsNSW: ‘Sorry Nick. We’ll kill you all off.’9 No senior official in the ClubsNSW organisation thought it necessary to remonstrate with Ball’s inappropriate language.

  By this time, the boards of the biggest clubs were paying their CEOs up to $1.5 million in annual salaries.10 Such salaries were an obvious incentive for them to protect the club’s lucrative pokies business model, which required continuing deep ties to the political process.

  The gambling industry went in with all guns blazing again at the 2018 Tasmanian state election.11 The stakes could not have been higher. In the lead-up to the election, Labor’s opposition leader, Rebecca White, announced that poker machines would be phased out in the state. It was a daring break from the common practice of state governments around the country (except in Western Australia) to give virtual free rein to pokies in towns and suburbs. If one state phased them out, others might follow. Gambling interests in Tasmania set out to buy the election for the incumbent Liberal Party, led by Premier Will Hodgman.

  The youthful and untested White could not have taken on a more powerful enemy. As we have seen, Greg Farrell’s Federal Hotels had since 1993 held an exclusive licence to operate pokies in the state – a deal that made the Farrell family among the richest people in the country. Along with the state’s AHA, Farrell bankrolled the Liberals’ campaign, outspending Labor on advertising by a factor of ten to one. TV and radio ads, billboards and banners blared the message that Labor was a threat to local pubs and would destroy jobs. The claims were grossly exaggerated but wedged Labor from its traditional base. The Liberals got over the line and retained government, which sent yet another warning to politicians around the country about the treatment they could expect if they dared to challenge the industry.

  Just how servile politicians had become in servicing the gambling industry’s agenda was shown during the 2018 debate in New South Wales on gambling reform. Paul Toole, the Minister for Racing and Gaming in the Liberal government of Gladys Berejiklian, announced a policy that would see a cap placed on the installation of new pokies machines in gambling hotspots. Greens MP Justine Field quickly worked out that under the so-called reform, which was backed by ClubsNSW, there would be more machines in the state by 2020 than under the existing regulations. Tim Costello claimed that the new policy looked like it had been written by the pokies lobby.

  Through the Alliance for Gambling Reform, Costello called upon the Labor opposition to challenge the new arrangements. Not only were these calls ignored, but when the parliamentary vote came, many Labor MPs rose to make speeches about the contribution clubs were making to their communities. Watching on was journalist Nick O’Malley, who commented that ‘both parties voted in lock step, not with one another, but with the most powerful group in the state [ClubsNSW]. It all happened so fast barely anyone outside the chamber noticed.’12

  Political donations

  The gambling industry perfected the ‘carrot and stick’ method of quietening opponents in the political system. Intervening in elections was the stick, a demonstration of power that had a chilling effect on pushback. But the use of ongoing political donations acted as a useful carrot, swaying politicians to back the industry’s continual expansion and overlook its increasing social damage.

  Of course, the AHA and the clubs were only part of the gambling industry’s undermining of democracy. Total donations from the industry in the two decades to 2022 and to both state and federal parties is estimated to have been more than $22 million, with sharp increases from online gambling companies over that time. Donations increased during election years and were evenly split between the major parties.13

  This largesse represented only officially lodged donations, and did not include amounts under the reporting limit, or that flowed into special forums or subscriptions set up by the major parties that were, conveniently, not classified as donations. The Federal Labor Business Forum collected $600 000 from gambling companies alone in 2023, out of a total of $5 million that flowed into the forum. Labor’s was a classic example of dark money in politics.14 The Liberal Party had a similar organisation in the Menzies 200 Club, which also took donations from the gambling industry.15