Clubs became an established way of life in New South Wales. They also became a settled part of state politics. By the late 1960s, the government was raking in $23 million a year from poker machine taxes.45 In fact, between 1956 and 1972 the state earned the equivalent of $2.8 billion in today’s money from this form of taxation.46

  The pokies’ first mogul

  It wasn’t just clubs and government raking in the money from poker machines – manufacturers were in on the game as well. Until the early 1950s, nearly all poker machines were imported, mainly from the United States, but high customs duties were imposed on the machines. Then, in 1951, for reasons that are not entirely clear, the federal government denied import licences for the machines, saying that they were ‘non-essential’.47 This proved a bonanza for local manufacturers. Several had been tinkering around the manufacture of machines; within three years of the import ban, one manufacturer emerged to dominate the market, not just in Australia but globally.

  Len Ainsworth, whose factory was fire-bombed in 1954, became a legendary businessman, but until recently few knew the extent of his success. He is credited with being the grandfather of Australia’s poker machine industry. And he became a billionaire in the process. Like many ultra-successful businessmen, Ainsworth possesses (at the time of writing, he’s 101 years old) a complex personality. Driven but incurably cheerful, and with a cherubic grin, he was frugal to the point of describing himself as mean. Setting him apart as a businessman was his relentless drive, competitiveness and ability to seize an opportunity.

  The son of a dentist, Ainsworth responded to his father’s frustration at being overcharged for professional equipment. At the time, there was only one dental equipment manufacturer in the country. So the ambitious young Ainsworth built a thriving dental equipment business.48 He could have remained in the staid but lucrative operation, but chance intervened.

  In the process of growing the business, Len hired an English engineer named Joe Heywood. Heywood approached his boss one day and asked a simple question, as Len later recalled:

  ‘Have you ever thought of making a poker machine?’ My response was, ‘What’s that?’ and Joe had to explain that they were in all the clubs [that is, private men’s clubs]. My response was, ‘What clubs?’ and he asked, ‘Where have you been all your life?’ I said, ‘Making bloody dental supplies!’49

  At the time of this conversation, poker machines had not been legalised and the El Dorado of profits just a few years down the track could scarcely be imagined. Ainsworth took his chance.50 He had a fascination for the mechanics of poker machines and an instinctive understanding of the psychology of players: the right combination ‘of chrome, lights, bells, pulsating dollar signs and cartoon images (scantily clad women, racing cars, piles of gold coins) to lure the customer’.51 Aristocrat Leisure was born.

  Ainsworth built his business empire with innovative machines designed to attract the maximum number of players. Within six years of legalisation, there were nearly 11 000 poker machines operating in New South Wales, a number that rose to over 16 000 by 1966.52 By the end of the 1970s, more than 40 000 poker machines were spread across the state’s 1500 registered clubs, which boasted a total membership of 2 million patrons.53

  Ainsworth cornered the European and American markets as well. With an eye for technical innovation and quality, his machines were reliable and more sophisticated than the competition’s. And Aristocrat pioneered the shift from mechanical to electronic machines, greatly enhancing both their appeal and the dangers associated with them.54 Electronic machines were faster and provided more attractive options for players, keeping them engaged for longer.

  Throughout, Ainsworth dismissed claims about the potential harm pokies caused. He rejected the accusation that Aristocrat’s products ‘were built for addiction’. He maintained that little could be done to save people from themselves – only individuals could do that. ‘The person who goes and plays … a poker machine and he has no money left to buy food or whatever is a fool,’ he said. ‘What do you do about fools? The answer is there’s not much you can do about them.’55

  His indifference to the harm that poker machines regularly inflicted on players was illustrated graphically years later when he told the press that his advice to players was to stand near a machine where someone had been consistently losing: when they’d finished, ‘you play that machine’, he advised. Ainsworth was also accused of encouraging people to chase their losses.56

  Unsurprisingly, Ainsworth has never extended his philanthropy to any cause associated with gambling addiction.57

  Untroubled by the ethics of poker machines, Ainsworth became extremely popular with club owners. He gave their clubs extended credit, and wined and dined them on his company boats.58 In 1979 he came up with another innovation: he switched all his machines over to five spinning reels. This was a costly move but paid off handsomely. The updated machines gave players the impression that they were going to win more money.59

  The entertainment scene in Sydney suburbs and in regional New South Wales had been transformed by pokies. But the clubs industry hadn’t yet spread across the state borders. Victoria’s shrewd, parochial and plain-speaking premier, Sir Henry Bolte, decried New South Wales’ mass-entertainment clubs as ‘degrading institutions’.60 The stocky, round-faced Bolte, who loved to brag about his state, maintained that Victorians were already ‘living in Utopia’.61

  The problems with clubs

  The people of New South Wales had spoken with their feet: membership numbers and attendance figures confirmed the popularity of the opulent clubs. By the early 1970s, the scale of the poker machine industry was immense. Turnover from the machines surpassed all other forms of legal gambling, representing one-fifth of the nation’s total retail expenditure.62

  And the appeal of clubs lay in their pitch to the Australian tradition of the ‘fair go’. One club supporter summed up the case in this way:

  Clubs have provided for people in NSW, facilities and amenities at a level they would not otherwise have been able to afford. They have been central to the Labor philosophy that privilege is an unhealthy thing and all people should have an equal right to share in the good things of life.63

  But the vast size of the new industry and its emerging political power meant turning a blind eye to the problems clubs posed. Poker machine addiction revealed that all was not what it seemed in clubland.

  Once banks of machines were installed in hundreds of clubs, serious questions began to be asked about the mass appeal of the machines. The first scholarly attempt came in 1969 with the publication of sociologist Irving Goffman’s Where the Action Is. Prior to his academic career, Goffman had worked as a croupier in Las Vegas casinos, where he formed the view that people feel a need to participate in ‘consequential’ activity – to be where the action is. And gambling, he argued, was the epitome of action. This was especially the case for people whose domestic and/or working lives didn’t provide much excitement.64

  The thrill of gambling was a common theme in the first studies on the mass appeal of poker machines: the endless thump of poker machine handles being pulled; the crash of coins into metal trays, signifying wins; the buzz of bells that announced larger wins; and the public announcements of jackpots. The rapidity of responses from poker machines added to their appeal. ‘The poker machine player can get up to 13 or 14 results every minute, whereas in a day’s racing, one gets only six or seven results,’ Caldwell noted.65 Clubs were utilising poker machines to manipulate human behaviour.

  Public awareness of poker machine addiction burst into the open in a 1966 article in the widely circulated Australian Women’s Weekly. In a four-page article headlined ‘A poker machine addict’, an anonymous female reader of the magazine told fellow readers how her husband had taken the family down a ‘sordid track that led to debt, financial ruin, and the threat of a prison sentence’. This was the first highly personalised, extensively documented and widely publicised acknowledgement of the dark side of poker machines.

  In confronting detail, the woman traced her husband’s psychological changes after he joined a club and discovered poker machines. He became, she said, increasingly secretive, querulous and morose. ‘His behaviour grew worse and worse, our financial difficulties more serious. He started demanding that I write him cheques to pay for his gambling … Usually I gave him the cheques. Life would have been unbearable if I hadn’t.’ She understood the powerful lure that poker machines had over people like her husband:

  There’s something hypnotic about the machines, something to do with the whirring symbols, the lights, the constant din like a factory in full production. Something to do with a feeling of mass desperation as more than 100 people pull away with a common purpose of winning that elusive jackpot.

  As the family sank into a financial mire, the woman felt that the club should take some responsibility for their plight and that of other families like hers. After all, ‘they were pandering to the weakness in others’. But she was left disappointed when she contacted the club: ‘My frantic letters didn’t receive the courtesy of a reply.’66

  Several years later, gambling researchers confirmed what would in future be known as the pokies player’s ‘zone’. In a study conducted in 1971 in one of Sydney’s large clubs, researchers found that at the end of an evening’s gambling on the pokies, 25 per cent of players couldn’t recall whether they had won or lost, or how much money was involved.67

  By the mid-1970s, gambling addiction was causing increasing public concern. ‘Gambling is turning life into a nightmare for scores of western [Sydney] suburbs families,’ reported one local newspaper. People pouring their weekly wages into poker machines was becoming ‘increasingly more widespread’. Local welfare organisations had voiced alarm at the increase in compulsive gambling in the area, with some of the worst cases reported to the Parramatta Lifeline centre. ‘The gambling mania was wrecking businesses and careers.’68

  In fact, Reverend Walker confirmed that, during the early 1970s, the telephones in Lifeline’s offices issued ‘a pitiless series of stories of misery, personal unhappiness, broken homes, squandered savings and suicide’.69

  As late as 1977, Reverend RW Wrightson, a minister of the Uniting Church in Tamworth, lamented: ‘How much does the State spend to set up counselling services to help the poker machine addicts. Nothing. They leave it to the churches.’70

  The government’s laissez-faire approach to poker machines was creating a full-blown social problem. Yet Big Gambling – comprising the clubs industry, the state government and Aristocrat Leisure – was indifferent to the plight of their victims. And so it would be for decades to come.

  A vastly different approach was taken in Western Australia. In 1974, the Labor government led by John Tonkin appointed a royal commission into gambling. In its report, the three commissioners opposed poker machines, along with other forms of gambling. They had been shocked when visiting Sydney clubs, where they saw members of both sexes – including housewives in the afternoon – playing the machines for hour after hour. They worried that children were being neglected.71

  In fact, no data had been compiled by the New South Wales Department of Child and Social Welfare on the hardship caused by poker machine losses. No other government agency kept such data either.72 Victims suffered in silence.

  2 THE MAFIA COMES TO AUSTRALIA

  The bombing of Len Ainsworth’s poker machine factory in 1954 was an early warning sign that organised crime would target the industry. In fact, the involvement of underworld figures was inevitable, even if entrepreneurs like Ainsworth didn’t see it coming.

  Sydney had a long history of violent criminals muscling in on lucrative ‘vices’ – gambling, prostitution, alcohol and illicit drugs – as the ‘razor wars’ of the 1920s showed. Regular waves of organised crime erupted throughout the 1940s and ’50s, reaching a peak in 1966–67 in a feud between Sydney and Melbourne criminals over the control of the vice trade. Hired gunman Raymond O’Connor was shot dead in a crowded nightclub.1

  The steep growth in the number of clubs and poker machines, together with the unregulated nature of the industry, proved an irresistible lure for underworld thugs. Leveraging the enormous profits was the equivalent of winning a perpetual jackpot. The figures tell the story. In 1971, $2.5 billion was poured into the slots of New South Wales poker machines, an amount exceeding the total of all other forms of gambling in the state.2 This world-scale gambling habit attracted not only local criminals but American mafia figures as well. Organised crime in Australia was set to go to a new level.

  The American mafia had recently developed a more sophisticated model of organised crime, involving the infiltration of legitimate businesses and employing lawyers, accountants and money laundering to conceal their activities.3 Old-style thuggish forms of intimidation added to the menace of the new model. However, from the early 1960s the administrations of US presidents John F. Kennedy and, later, Lyndon B. Johnson cracked down heavily on the mafia. With US crime bosses feeling the heat, some became keen to explore overseas markets, and Australia was regarded as a prime target as it had less experience in combating organised crime.4 And the profits from gambling shone like a beacon.

  The first connection between the mafia and the Sydney underworld occurred in 1965 with the visit to Sydney of New York mafia boss Joe Testa, described as a ‘psychopathic killer’,5 who was introduced around the city’s illegal casinos and clubs. Testa visited again in 1969, when he was introduced to Lennie McPherson, the ‘Mr Big’ of the Sydney underworld.6 By this time McPherson was Australia’s most notorious criminal, a sadistically violent man who is believed to have committed or commissioned more murders than any other organised crime figure in the country.7

  A thick-set man with a large, fleshy face, sunken eyes, a bulbous nose and powerful forearms, McPherson was a caricature of a hardened criminal. Irascible and outspoken, he had risen to power by systematically murdering his competitors, even ducking out of his own wedding reception to gun down a rival.8 He dreamed of becoming Australia’s Al Capone while operating behind the front of an Asian furniture importing business. He turned his suburban Sydney house into a high-tech fortress, with a hidden room with cash stacked up against each wall and machine guns at hand.9 Adding to McPherson’s mystique was his ability to evade serious prosecution. Jailed twice as a young man, he avoided prison again until the end of his career, when he was sent down for four years in 1994.

  The truth was that McPherson had ingratiated himself with senior police officers by becoming an informer: he would ‘fizz’ on anyone, even close friends, to cement his ties to police.10 An added benefit was the removal of his criminal competition. Senior police made it clear that McPherson himself was untouchable. According to Bob Bottom, a journalist specialising in Sydney’s organised crime networks, McPherson was allegedly behind a 1973 plot to arrange a successor to the then police commissioner, John Avery.11 Fellow criminal Neddy Smith once declared, ‘McPherson is the man who runs this state and has since 1957 to my knowledge.’12 If that was an exaggeration, it was certainly a fact that McPherson received protection from corrupt senior police officers in New South Wales.13

  And so the New South Wales police showed no interest in Joe Testa’s visits – but not so the Commonwealth Police, who were following up his links to Bally Manufacturing, America’s largest poker machine maker, which had links to the mafia.14 Following Testa’s 1969 visit, Lennie McPherson visited America. In the early 1970s, both the New South Wales and Commonwealth police had information that Testa was a link between organised crime in America and New South Wales.15 Stealthily, American-style organised crime operations were infiltrating Australia.

  The connections strengthened throughout the 1970s and early 1980s. Keen to broaden their operations outside America, the directors of Bally visited Australia in 1971 to explore opportunities in the Australian market. They believed that Queensland and Victoria would soon join New South Wales in legalising poker machines.

  By the early 1970s, Bally intended a major push to get its machines into the country. As a result, the company appointed an Australian manager, Jack Rooklyn, who himself had dodgy dealings with a range of criminal figures while maintaining an air of respectability through his affiliation with the elite sport of yacht racing. A thick-set man with a pudgy face and bushy black eyebrows, he has been described as a tough, uncouth, cigar-chomping operator.16

  Rooklyn remains one of the most elusive major crime figures of post-war Sydney. He was the grandson of Russian Jews who, in the late 19th century, fled antisemitism and migrated to the United Kingdom, where they worked in the textile industry. In 1911 the family had migrated to Australia. The black sheep of the family, Jack Rooklyn became an entertainment impresario before building a pinball empire during the Great Depression, importing his machines from Bally, which manufactured them alongside poker machines. Through these connections, Rooklyn slid effortlessly into the world of organised crime, where for decades he was a prime figure, albeit one who mostly stayed out of the clutches of the police.17

  An associate of Lennie McPherson, Rooklyn was part of an American–Australian criminal network that was assembled quietly to exploit vulnerable New South Wales clubs.

  Bally’s business model

  The unsavoury connections between Bally and American mobsters were public knowledge. Prior to its arrival in Australia, the company had been involved in a libel suit in England. It took legal action against The Daily Mail, which had alleged its mafia links. But Bally lost the case, which suggested the Mail’s reporting was factual.18