Fixed-Odds Betting Terminal Inventor Denies Bribing Austria’s Former Vice Chancellor

Posted on: July 8, 2021, 11:31h. 

Last updated on: July 8, 2021, 02:52h.

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.

Austria’s far-right former vice-chancellor (left) and FOBT kingpin Walter Grubmüller (background) pictured in court Tuesday. (Image: Lisa Leutner/Associated Press)

Prosecutors say Walter Grubmüller made a €10,000 donation to Strache’s Freedom Party. He also took the then-vice chancellor on vacation on his yacht to his home on the island of Corfu, all 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.

The ‘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. They offer 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 operation on the island of Ibiza. He was filmed in conversation with a woman posing as a Russian Oligarch’s niece.

On the tape, Strache is heard offering state contracts for cash to the woman. He also discussed 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 discussed how to use non-profit organizations to make illegal political donations and conceal transactions from auditors. He mentioned 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 were 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. They also wanted to rescind 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.