In Austria, the co-inventor of the controversial gambling machines known as fixed-odds betting terminals (FOBTs) is on trial for corruption, along with the country’s far-right former vice chancellor, Heinz-Christian Strache.
Prosecutors say Walter Grubmüller made a €10,000 donation to Strache’s Freedom Party and took the then vice chancellor on vacation on his yacht to his home on the island of Corfu in return for political favors.
They claim Grubmüller wanted Strache to change the law to make a small private hospital he owned eligible for public funding. As vice-chancellor, Strache was the second most powerful man in Austria at the time.
Both Grubmüller and Strache deny the allegations.
Crack Cocaine of the High Street
In 1998, Grubmüller founded Global Draw with British former bookmaker Steve Frater. Together they created FOBTs, machines that would become prevalent in UK betting shops, offering customers an array of fast-paced electronic gambling games from roulette to simulated horse racing.
The machines have been criticized for their addictive qualities, which prompted the British government to slash the maximum stakes per spin from £100 to £2 in 2018.
In 2004, Frater and Grubmüller sold Global Draw to US gambling giant Scientific Games for £104 million ($143 million).
German prosecutors uncovered the relationship between Strache and Grubmüller when they were investigating the so-called “casinos affaire” and an episode known in the Austrian media as “Ibiza-gate.”
Ibiza-Gate and the Casinos Affaire
In May 2019, Strache was caught in an elaborate sting operational on the island of Ibiza when he was filmed in conversation with a woman posing as a Russian Oligarch’s niece.
Strache is heard offering the woman state contracts for cash. He also discusses the potential sale of one of Austria’s biggest tabloid newspapers to the phony oligarch to ensure positive coverage for the Freedom Party.
He also discusses how it’s possible to make illegal political donations by using non-profit organizations to conceal transactions from auditors.
He mentions several companies that funded the Freedom Party in this way, including gambling giant Novomatic, which denies it did so.
In March 2019, Freedom Party member and Strache crony Peter Sidlo was appointed CFO of Casinos Austria (CA), despite having no previous executive or gaming industry experience.
CA is a third-owned by the Austrian state. Until recently, its other major shareholder was Novomatic, with 17 percent. CA holds the monopoly on casino gaming in Austria.
Quid Pro Quo
Whistleblowers alleged that Novomatic backed Sidlo’s appointment as part of a quid-pro-quo deal with the Freedom Party. They claimed Novomatic wanted Strache to influence the government to liberalize casino gaming, breaking Casinos Austria’s long-held monopoly, as well as rescinding a law banning gaming arcades from the Austrian capital.
This could then have paved the way for Novomatic to operate a casino in Vienna, while flooding arcades with its gaming machines.
Novomatic has categorically denied these allegations and has since sold its stake in Casinos Austria. No one has been charged in relation to the scandal.
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