Electronic Gaming Machines (EGMs), commonly known as pokies or slot machines, are computer-based gambling systems found in casinos, clubs, and pubs. They accept cash or digital credits and generate randomised outcomes that determine winnings or losses. While designed for entertainment, EGMs have also been identified as a channel exploited for money laundering due to their high cash flow and limited player traceability.
According to research from the Australian Institute of Criminology, EGMs have been repeatedly used by organised criminal groups to convert illicit funds into legitimate winnings. The rapid expansion of gaming venues across Australia, combined with minimal customer identification requirements, makes EGM-related oversight an essential component of Anti-Money Laundering (AML) frameworks.
Electronic Gaming Machines (EGMs) Definition
Electronic Gaming Machines (EGMs) are computerized gambling terminals, also known as pokies or slot machines, that accept cash or digital credits and determine outcomes using random number generation. From a compliance perspective, EGMs are considered high-risk where cash use is prevalent and player identity is not verified, which is why operators and financial institutions apply controls like payment screening and transaction monitoring to manage exposure.
How Money Laundering Occurs Through EGMs
Money laundering through EGMs generally follows the placement and layering stages of the classic AML model. Illicit funds are introduced into the system, cycled through limited play, and then cashed out as “clean” winnings.
Common tactics include:
Cash placement without significant play. Large amounts of cash are loaded into a machine, with only a few spins before the player cashes out.
Ticket trading or docket purchasing. Criminals buy winning tickets from other players to falsely legitimise their funds.
Structuring across multiple venues. Smaller transactions across different clubs or pubs help evade reporting thresholds.
These typologies are frequently noted in national AML guidance from AUSTRAC, which outlines vulnerabilities in cash-based gaming operations and the need for robust customer verification and transaction monitoring.
The Role Of Transparency And Cashless Systems
One of the most effective ways to mitigate EGM-related AML risk is through greater transparency. Moving from anonymous, cash-based play to account-linked, cashless systems enables regulators and operators to monitor player activity in real time. This improves data collection, auditability, and suspicious matter reporting accuracy.
For example, the NSW Crime Commission’s inquiry found that implementing account-based EGMs could significantly reduce laundering by making transactions traceable and identifiable. Transparent systems also align with FATF’s Recommendations, which encourage traceability and digital oversight in high-risk sectors.
Strengthening AML Controls In EGM Operations
To combat money laundering effectively, operators and financial institutions should adopt a multi-layered control framework that integrates technology, governance, and compliance oversight.
This typically involves:
Enhanced customer due diligence. Identify and verify players who conduct high-value or frequent transactions using risk-based thresholds.
Comprehensive transaction monitoring. Implement transaction monitoring to flag unusual redemption or spending patterns.
Automated payment screening. Use payment screening solutions to detect links to sanctioned individuals or suspicious activity.
Data integration and governance. Establish consistent policies for data sharing between gaming venues and financial institutions.
Regular compliance audits. Assess system controls, reporting quality, and internal escalation procedures to ensure continuous alignment with AML regulations.
Evolving Regulatory Landscape For EGMs
Regulatory scrutiny around EGMs continues to intensify across Australia and globally. AUSTRAC and other financial intelligence units are advocating for reforms to mandate digital play tracking and remove cash dependence. These changes mirror the broader shift in gaming and gambling compliance towards traceable, technology-driven models.
As the gambling industry converges with fintech innovation, EGM operators must treat AML compliance as an operational priority. Real-time data, predictive analytics, and transparent reporting structures are now vital to ensuring sustainable compliance and public trust.
