As the events surrounding the Lyons affair were slowly forgotten, Tasmania’s casino building rose into the skyline. It opened for business in February 1973 with a gala event – a celebration of Australia’s first legal casino. Planned to coincide with the annual Hobart Royal Regatta, the city’s sparkling harbour was crowded with yachts, sharing the water with several Australian naval vessels. As the sun set, popular American comedian and actor Jerry Lewis performed in the venue’s theatre.19 Las Vegas had truly arrived in Tasmania.

  Even if Tasmania had botched the politics of developing a casino, they had learned from the example of Las Vegas that careful administration of the business was required. The good administration of the casino was largely down to the diligence of Wrest Point’s CEO, John Haddad, who had scoured the world’s casinos to obtain an understanding of best practice in order to prevent skimming and criminal infiltration.

  Haddad understood the need for strong casino regulations. At the forefront of his mind was the first visit he’d made to Las Vegas, where he’d been introduced to a casino manager named Jack Entratter, a hefty man with scarred knuckles. Entratter explained to Haddad that when he’d first gone to work in Vegas, he’d fallen foul of the mob, who had broken his fingers with the thwack of an iron bar as a warning. Haddad never forgot the lesson. After he took the helm at Wrest Point, Federal Hotels asked him to examine casino regulation in Europe. ‘The industry [in Europe] was full of graft and corruption,’ he later explained. ‘The head of the London casino had just been locked up after they found two million pounds under his floorboards.’20

  Haddad devised a system of tight controls. A government inspectorate was present at all times, and the total takings were counted at the end of each night, a process that was videotaped. The purchase of chips and the awarding of winnings were controlled, so that cash brought into the casino could not then be taken away as ‘winnings’. And at the end of each day’s play, casino staff counted and tore up 100 packs of cards, each specially imported from Spain with Wrest Point’s own distinctive pattern. The reason for such caution? So no one could slip in a few renegade aces.21

  For well over a decade, Wrest Point was a model of casino management. The message was clear: it was possible to have the glitz and the glamour of a casino without poker machines or the mafia, as long as the business was tightly regulated. The economic benefits of the casino were transformative. In the five years after its opening, the casino delivered $9 million to the state’s coffers, paid out $20 million in wages and stimulated the growth of local restaurants and shops.22

  But there was a cost, although it was largely hidden from the public. Within a few years of Wrest Point opening, phone support agency Lifeline in Hobart was already coping with people who had ‘lost all: savings, cars, houses in the Hobart casino’.23

  An empire of corruption

  What happens when illegal casinos are allowed to flourish? In this, the experience of New South Wales offers a sharp contrast to Tasmania.

  In mid-September 1981, one of the most explosive allegations ever made about an Australian politician was directed at the former New South Wales premier Sir Robert Askin. It was, potentially, the Australian equivalent of Watergate. Young journalist David Hickie accused Askin, not long after his death, of leading a corrupt state. The revelations in an article in The National Times were shocking: Askin received huge bribes for protecting New South Wales’ illegal casino operators and SP bookmakers during his reign as premier between 1956 and 1975.24 Hickie fleshed these claims out in an equally explosive 1985 book, The Prince and the Premier.

  Askin was, and remains, an elusive politician. The son of a tram driver, he grew up in working-class Glebe where, by his own admission, he started betting on horses while he was still a kid in short pants.25 Following war service, he joined the Rural Bank, rising to be a manager, before he was lured into the Liberal Party. Some in the Labor Party thought him a class traitor.26 And there was another paradox: for a straight-laced banker, he’d always been attracted to the shadowy world of illegal gambling, operating as an SP bookie both during the war and while working for the bank, which earned him a reputation as a slippery operator.27 However, his knockabout image, coupled with being an easy mixer who enjoyed a drink, won over many working-class voters.

  Gravel-voiced, shrewd and pugnacious, Askin ran a pragmatic government. But even following his election as premier in 1965, he maintained an account with one of Sydney’s biggest SP betting firms, and he continued to be a fixture at Randwick Racecourse, where, in a blue suit and felt hat and puffing on a fat cigar, he loved to discuss the form with ‘the leading bookies, senior police and shady characters of the gambling and casino world’.28

  Corruption rears its head

  The accusations of bribery directed against Askin have created a simmering, ongoing debate about his conduct. How corrupt was he? And how did corruption flourish in New South Wales under his rule? It’s important to note that Askin inherited control of a state that was already corrupt. As we saw in Chapter 2, the war on gambling had given police a licence to extract payments, and a coterie of corrupt police had infested the force – none more so than the tough, knockabout policeman Ray Kelly.

  A veteran of the Criminal Investigation Branch (CIB), Kelly has been described as among Sydney’s top 20 organised crime figures during the period of the 1940s to the 1970s. He earned this status by running a protection racket for Sydney’s ‘vice’ operators and for reputedly killing a number of criminals who got in his way or that of his crooked friends. He was said to be a longstanding friend of Askin.29 Kelly also mentored Roger Rogerson, the most notorious bent New South Wales cop of all.30

  Two decades before the US mafia cast its eyes on the Australian poker machine market, baccarat was a popular card game but was deemed illegal for its gambling potential. Described as a ‘comparing card game’, baccarat involves players vying to win against a ‘banker’. One of the oldest games played in casinos, it took off in Australian cities during and after World War II, but especially in Sydney, where casino-style baccarat ‘schools’ spread throughout the city and suburbs.31

  With thousands of pounds changing hands each night, the criminals inevitably moved in and organised a racket, with the protection of corrupt police. ‘Most of the big operators,’ The Sunday Mail observed in 1949, ‘have police records or have been well-known to the police for many years.’ By the late 1940s, Sidney Patrick Kelly, a one-time razor gangster, emerged as Sydney’s ‘Baccarat King’. Feared even by the underworld, he went on to control schools around Kings Cross and the Eastern Suburbs, earning a fortune in the process, which allowed him to indulge in ‘a riot of lavish living’.32

  Baccarat schools were occasionally raided by police; there was ‘wild screaming’ by ‘expensively dressed society women’ when the police smashed their way into one upmarket venue.33 But police protection, and corruption, appear to have been common.

  SP bookies flourished even after the creation in 1964 of the TAB, which legalised off-course betting on horse racing. But TAB agencies were described as ‘slums’ because of the poor state of their premises: some provided no refreshments, toilets or even chairs.34

  The dingy TAB premises were no match for the plush, efficient and client-based focus of the bigger SP operations. Thus, prominent Sydney personality and journalist David McNicoll could comment in the mid-1970s that a dozen Sydney SP joints ‘flourish in a grand and extremely well-conducted style’.35 In doing so, they continued to provide an incentive for the corruption of both police and politicians. For years, some MPs had been skimming some graft off the local criminals to get their share of the ‘protection money’ extracted by police.36 And so Askin, when he came to power, was inheriting a state that was already corrupt – but there’s also no doubt that he expanded the opportunities for graft for himself and his cronies while in power.

  A changing of the guard

  In September 1948, Sidney Kelly died of a heart attack in his Centennial Park mansion. Over the following decade, Richard Reilly took his place as key organiser of Sydney’s booming baccarat scene.37 But Reilly was little more than a thug; between 1935 and 1952, he came before the courts 15 times for assault, robbery, demanding money with menace, stealing and carrying an unlicensed pistol. He was friendly with Lennie McPherson and Abe Saffron.38

  Reilly amassed a fortune from his baccarat dealings but, as befitted a major underworld figure, he came to a sudden, brutal end. At around 7.30 pm on Sunday, 25 June 1967, Reilly had parked his sportscar outside his mistress’s Double Bay flat when he was blasted in the neck by a shotgun cartridge, the pellets from which scattered to strike other parts of his body. It was later confirmed to be a gangland shooting carried out by John Warren, a paid underworld executioner. It’s never been established who hired him to murder Reilly. Months later, Warren killed himself after gunning down three people in a Sydney apartment.39

  The subsequent police investigation into Reilly’s murder caused a political furore. Among the cash and personal effects found on Reilly’s body was a notebook containing the names and addresses of numerous prominent people: senior police, abortionists, massage parlour operators, lawyers, criminals and politicians.

  When the existence of this ‘black book’ became public knowledge, Askin had been premier for two years and rumours of corruption were already swirling around his government. The Labor opposition leader, Jack Renshaw, demanded a royal commission into the allegations of ‘association between people in high places and operators of illegal baccarat schools’. Specifically, he wanted Reilly’s ‘black book’ examined by an independent tribunal. Askin summarily dismissed the call. The premier said that he was going to take the advice of his police commissioner, Norman Allan, and ‘keep the contents of the notebook private while detectives investigated the murder’.40 Allan, hand-picked by Askin for the commissioner’s role, was the premier’s personal ‘fixer’, good at making difficult problems go away.41 Predictably, the investigation into the names in Reilly’s explosive notebook was filed away and forgotten.42

  Askin effectively brought the police force under his personal control. As journalist David Marr wrote in 1976, the 8000-strong force ditched their mostly working-class origins and voted Liberal; they became Askin’s force.43

  Richard Reilly’s murder hastened the transition from baccarat schools to fully fledged illegal casinos in Sydney. The driving force behind this transition was Perce Galea. The son of Maltese immigrants, Galea grew up on the tough streets of Woolloomooloo in the 1920s. He had an early introduction to gambling, betting in threepences while working as a newsboy outside Central Railway Station.44 Employed as a driver and wharf labourer, Galea saw an opportunity to develop his interests in the shadowy world of gambling during and after World War II, when Sydney was teeming with American and British soldiers. Operating as both a registered bookmaker and the organiser of a baccarat school, he became a professional gambler.

  Husky-voiced, olive-skinned and always immaculately dressed, Galea cut a dashing figure at Sydney’s race meetings, where he had the happy knack of backing winners and would share his tips and his winnings with the crowd. Often he’d arrive at the racecourse straight from his gambling den, without having gone to bed.45 Galea was the ‘prince’ of racing, and it was through his connections there that he earned the respect he craved. But by the early 1970s his leading role in transforming baccarat schools into lavishly appointed casinos had earned him another accolade: he was ‘the uncrowned king of illegal casinos in Sydney’.46

  To keep his lucrative casinos operating, Galea simply paid off the police. The full extent of his bribery racket wasn’t confirmed until the 1995–97 Royal Commission into the New South Wales Police Service, conducted by Justice James Roland Wood. Corrupt police told the royal commission that for years Galea had been paying them $400 a week to turn a blind eye to his illegal casinos operating at Dixon Street, Haymarket, and Darlinghurst Road, Kings Cross. ‘One police officer was allowed to give evidence using a codename after telling commission investigators that Galea would kill him if he gave adverse evidence about him,’ wrote journalist Kate McClymont. ‘He said he was paid to leak information to Galea about police interest in Galea’s illegal casinos.’47 Galea himself refused to give evidence and was jailed for contempt in July 1995.

  The sudden opening of lavish, Las Vegas–style illegal casinos in Sydney from the late 1960s transformed the city’s entertainment scene. Attending an illegal casino became all the rage among Sydney’s socialites, who discovered the ‘heady pleasure’ of a flutter – they were ‘part of an increasing number of trendy hostesses with the urge to carry on when the dinner party’s over’, The Bulletin noted in 1973.48

  Fourteen casinos sprung up in Sydney’s inner city.49 While they generally had shabby exteriors, often tucked away up an old flight of stairs or behind a plain brick veneer, the casinos were plush premises inside: thick red carpets, gold-embossed wallpaper, panelled ceilings and glittering chandeliers. They were staffed by uniform-wearing croupiers and scantily clad hostesses, some of whom also doubled as escorts. Unlike baccarat schools which required little more than packs of cards, casinos require large, fixed equipment that can’t be shifted the instant a police raid occurred. Therefore operators like Galea needed police protection.50

  The turnover in the casinos was eye-watering. Galea owned two of the most popular: Forbes and the Double-Bay Bridge Club. Each handled millions of dollars a week. If they’d been opened in Europe, they would have been legal. In New South Wales, their illegality was a leftover from the six-decade-old war on gambling. For the Galea family, among other operators, the 1970s were glory days, when they virtually had a licence to print tax-free money.

  The police often denied the existence of these underground casinos, but every cab driver knew their location.51 They attracted the celebrities of the day: television, radio and sports stars. But their patrons also came from Sydney society’s elites: politicians, judges, lawyers and businessmen. Some, like Forbes, catered for all-comers, with ‘working class clientele downstairs and more well-heeled clients on the second floor’.52

  Corruption inevitably flowed from this lucrative but illegal source of entertainment. Hickie’s 1981 allegation was that both Askin and his police commissioner Fred Hanson – who had replaced Norman Allan and was in the job from 1972 to 1976 – were paid $100 000 to protect the businesses of Galea and the other casino operators. Journalist Kevin Perkins spoke to rogue cop Ray Kelly, who explained how the system worked:

  No one can open [a casino] without the permission of the premier and the police commissioner [Fred Hanson]. If anyone opens them against our wishes, we close them down … they pay for protection and the right to operate … I still collect the money and distribute it. I make sure he [Hanson] gets his share and so on down the line.53

  Commissioner Hanson had also come from humble beginnings. Following war service, he’d risen quickly up the ranks of the police service, earning the nickname ‘Slippery’ along the way.54 He told The Daily Telegraph in 1973 that it was ‘very difficult to gain entry and obtain evidence’ against the casinos. The paper responded by showing that almost anybody could enter a casino at any time, and it reported the allegations of police taking bribes to ignore them.55

  In 1975 Hanson sued the ABC for defamation for suggesting that he had an interest in an illegal casino. The case was settled out of court, but Hanson was forced to resign from the force as a consequence. He died in 1980 from inhalation of carbon monoxide. The case of Hanson and the ABC highlighted the challenge of reporting on corruption in New South Wales. As the left-wing newspaper Tribune commented in 1972, ‘Few people are prepared to give evidence about police and few newspapers are prepared to publish it when they do.’56

  Askin’s shadowy world

  After the Moffitt inquiry reported in 1974, Askin managed to beat away further calls for investigation into corruption, ignoring the continual rumours that swirled around his government and the police. The premier made no move to legalise casinos, despite the ongoing speculation of the involvement of organised criminals. Nor did his government clamp down on illegal gambling. Casino operators and SP bookmakers could earn fortunes without paying tax and without any regulation of their industry, or any impediments to its growth. But was he a friend to organised crime?

  Defenders of Askin, including historian Paul Loughnan, depict the premier simply as a quintessentially ‘colourful politician’. According to Loughnan, Askin ‘enjoyed a beer, a bet, a joke and a laugh in a public bar at the races, engaged the services of SP bookmakers when it suited him … but [that] is not tantamount to corruption’.57

  A very different picture of Askin emerges from journalist Tony Reeves’ 2007 account of the life and career of Abe Saffron. Reeves had tracked organised crime in Sydney for decades, linking key criminal entrepreneurs like Saffron, Perce Galea and Jack Rooklyn – known as ‘the Invincibles’ – with crooked police, shady business directors and standover merchants such as Lennie McPherson. Over time, Reeves writes, this loose coalition became a tight group who exercised real power over ‘who got the nod for advancement, who got the chop, who would be ministers in important state portfolios, and who would not’.58 Under Askin’s ‘corrupt leadership’, Reeves says, corruption became institutionalised. Hanging like a dark cloud over Askin’s reputation is the size of his estate when he died: it was worth more than $10 million in today’s value.