KEY POINTS:
A young student is whacked about the face by another woman outside Auckland's Sky City casino.
This is no catfight over the pokies: the student is in debt to the other woman's husband - a loan shark. She could not pay off the $2000 she borrowed at 7 per cent interest a week.
Gambler "Ken" well remembers the fight and the young woman.
He saw her back in the casino the next night with a bruised face. And he has seen her again and again ever since: she is now an agent for one of the many loan-shark syndicates that Ken and others say openly roam the casino floor offering loans to heavy gamblers.
A Weekend Herald investigation documented the presence of loan sharks in Sky City. With it came stories of Korean and Taiwanese girls pimped into prostitution, of young Chinese men forced into drug dealing and of a student faking his own kidnapping so his parents could pay off his debts through the "ransom".
Ken, who does not want to be identified, says the heavy scene has been part of the casino's VIP gaming rooms for years.
He should know: he claims to have borrowed and lost hundred of thousands of dollars from loan sharks. It all but ruined his life for a time, although the harrowing details would clearly identify him so it was agreed not to outline them.
"You can just describe it as pitiful," says Ken. "Pitiful."
The Sky Tower is firmly established as an icon of Auckland.
Yet Sky City's grudging acknowledgement of the presence of loan sharks and this week's sudden departure of chief executive Evan Davies after criticism of the company's financial bottom line has again raised questions.
And the Auckland operation is not alone: Christchurch Casino - in which Sky City has a 40 per cent stake - is subject to a Department of Internal Affairs inquiry into allegations of loan sharks and money laundering made by its former acting chief executive Stephen Lyttelton, who quit three weeks ago and is now in a bitter public row with an industry he calls "a weeping sore full of pus".
There are calls from Green MP Sue Bradford and the Problem Gambling Foundation for a full public inquiry into the 13-year-old casino industry.
The glitter has certainly gone.
The industry's headlines so far this year could not be further from those on Sky City's opening night in 1996, where it promised "glitz aplenty".
Prime Minister Jim Bolger, playing roulette with Governor-General Dame Cath Tizard, described the casino as "awesome". He lauded the effect it would have on the economy through employment and tourism, even saying it might have contributed to an upgrade in New Zealand's credit rating.
But the to-and-fro over the economic benefits of casinos versus their social costs has continued ever since they were legalised.
The casino's positioning of itself as a tourist mecca took a hit on its 10th anniversary two years ago when Auckland Mayor Dick Hubbard went on record as saying that he wouldn't take a guest there.
Sky City says its own research shows "one in every two" international visitors to Auckland visits the complex, although it could not break this figure down to how many of those go to use the casino itself - an important distinction given 700,000 visitors are attracted to the Sky Tower each year.
"The corporate spin on tourism is the great lie of casinos worldwide," says John Stansfield, chief executive of the Problem Gambling Foundation. "The person with the swarthy complexion and pockets of money under swirling robes just does not exist here."
Fiona Luhrs of the Tourism Industry Association is more pragmatic: citing Ministry of Tourism figures that 130,000 tourists visited a casino while in New Zealand, and the "destination" status of the Sky City complex as a whole, she said casinos "are certainly not a bad thing".
Sky City is still a jobs machine. There are 2750 at its Auckland site - 900 working in gaming - and a total of 5000 across its empire that includes casinos in Hamilton, Queenstown and across the Tasman.
But even the job creation image has been tarnished, too, with the announcement last month that Auckland will bear the brunt of 230 job losses announced by Evan Davies as part of a mission to cut $33 million in costs and sell any poorly performing assets in what was his last major act at the company he had been with since the outset. He also pledged to take the knife to charitable sponsorship programmes such as those with the Starship Foundation and the Breast Cancer Foundation.
Mike Treen, national director of the Unite union, says the cutbacks have already bitten into security, which is now down to 12 staff as opposed to the 35 that were on at one time when it first opened.
Treen says this will place his 650 members at risk, as will the abolishment of the free taxi and shuttle service for staff who start or finish between midnight and 6am.
Treen speaks of other "miserly" cost cutting: a doubling of car park charges from $2-$4 and a 40 per cent increase in food prices in the staff canteen.
The cuts - in some cases the first in years - were Davies' response to criticism in March by shareholders for pursuing an aggressive but debt-funded acquisition strategy while the performance of its core Auckland casino "softened".
Under his reign, Sky City opened casinos in Queenstown, Hamilton, took over casinos in Adelaide and Darwin, purchased a cinema chain and major stakes in Christchurch Casino and a internet bookmaker. It also has a financial interest in Dunedin Casino, giving it connections with all but one of New Zealand's six casinos.
Reporting a "disappointing" result in the half-year to December, Davies said a poor VIP gaming performance had been a significant factor. Revenue from VIP gamblers in Auckland was down by 40 per cent to $9.4 million, which after commission was a $2.9 million loss - compared to a net win of $11.3 million in the first half.
Herald files show loan sharks have been in the casino in one form or another since 1996, but their recent public outing has been jumped on by the anti-casino lobby.
Their presence in headlines widened the boundaries of anti-casino argument away from the "degenerate gambler" image associated with problem gambling and tied casinos firmly to the seedy world of organised crime.
The recent "big hits" by the anti-gambling lobby have been with the alleged enticement of heavy gamblers such as Patrick Jackson, who stole more than $766,708 from his employer to play the pokies, or Christine Keenan, who stole $500,000 to fuel her habit at the Dunedin Casino.
Now the loan shark allegations centre on the VIP rooms of the Auckland and Christchurch casinos - the supposed high-end of the industry.
Both are reportedly underperforming. Their customers are almost exclusively Asian, with all of Sky City's VIP hosts of Asian origin having English listed as their second language. Access is by invitation-only, with big gamblers proving themselves on the main floor.
A former Sky City VIP dealer said loan sharking happened openly in the room during his decade there, with people running out of money and getting straight back on the table without a question being asked. The former gambler said a $10,000 loan could be done as quickly as a handshake, requiring only the passing of a single $10,000 chip.
All sources dismissed any notion of a "high-rollers" scene, saying Asian students were a common fixture in the room.
The former dealer, who did not want to be named for fear of damaging future employment prospects, claimed management had been aware of loan sharks and organised crime. He recalled one meeting where a senior manager acknowledged that 50 per cent of the customers in the VIP room were involved in money laundering of some kind.
The most explosive allegations have come out of Christchurch Casino, where chief executive Stephen Lyttelton and his gaming manager Peter Arbuckle quit three weeks ago and have since made scathing public attacks.
This week they told the Weekend Herald that the Christchurch Casino - under their reign - was awash with loan sharks; that criminals laundered money there; and that the Department of Internal Affairs was a "weak regulator".
The pair said their claims were true of the entire New Zealand casino industry, with their executive colleagues all aware of the problems - Lyttelton claiming to have raised all his concerns about Christchurch Casino with Davies and others at his final board meeting on May 31.
Lyttelton's explanation of the current state of the New Zealand casino industry are simple: the casino owners are "problem shareholders" addicted to cash like a problem gambler.
Lyttelton says casinos can do what they like because the Department of Internal Affairs is a "weak regulator".
Allegations of organised crime have also seeped into the Australian arm of the Sky City empire, with the South Australian State Government saying the Adelaide Casino was being used by motorcycle gangs to "wash criminal cash", and granting police extra powers to bar them from the premises.
Police here are less concerned. Inspector Rob Abbott, area commander for Auckland central business district and liaison officer for the casino, says the casino itself is a relatively crime-free area, except for "run-of-the-mill" disorder.
He says police were aware of loan sharks, but as the act of lending money was not a criminal act, it was not an "active interest" for police but more of a "social ill".
Although loan sharks of all kinds could face up to two years in jail or fines of up to $300,000 for breaches of a scheme unveiled in a Government crackdown this week, the shadowy nature of those at the casino means they will be difficult to catch.
Mike Hill, director of gambling compliance at the Department of Internal Affairs, said a casino operator that allowed loan sharking would be "of concern" because it would essentially be enabling problem gambling.
He dismissed criticism that the department was weak as "absolute nonsense".
He said the department - which has nine inspectors dedicated to Sky City in Auckland - had done a lot of background work on crime in casinos, and wanted certain operators to be "more aware" of criminality on their premises, although he refused to disclose which ones.
Sky City itself has a firm line on the allegations of loan sharking. The company has no operational control over Christchurch Casino and Sky City's regulatory and general manager, Peter Treacy, said it had a "zero tolerance" policy to loan sharks and had banned two from the Auckland casino recently.
He says the casino had high standards and "we can't move without being regulated".
All the allegations were anonymous and unsubstantiated, and he invited those making them to "tell us who they are and we'll deal with them".
The allegations make newspaper column inches, says Treacy, but do not represent the experience of ordinary punters.
So was all this inevitable? Dr Bruce Curtis, a sociologist at Auckland University who studies gambling, says it was.
He says casinos worldwide start off with a hiss and a roar and much talk about the benefits to tourism and the economy before becoming a "grind operation" focused on mums and dads.
"The exception is Las Vegas, and Auckland and Hamilton ain't Las Vegas."
But he also warned not to put too much stock in talk of corruption and rampant loan sharks in the industry. There were a lot of urban myths associated with casinos.
But gambler Ken grew up in a country where loan sharks - "Ah Long" in Cantonese - were commonplace and can remember the houses of problem gamblers splashed in red paint or covered in red writing when their loans were due.
"I just never thought I would see it here."
Empire of Evan Davies
A town-planner by trade, Evan Davies helped create the ultimate landmark when he oversaw the construction of Sky City and the Sky Tower above.
He also took the reins of the casino and until his sudden departure on Tuesday, Sky City was Evan Davies' empire.
He extended its reach into a string of theatres and casinos throughout New Zealand and Australia.
An Auckland Grammar old boy, his working life started with his father Rodney, also a town planner, before he moved into construction and property management with companies like Brierleys and big projects like Rainbow's End.
Just as the glitter has gone from the casino, the gloss went off his reign recently. There has been criticism he was too comfortable and had been in the job too long. Weekend Herald columnist Fran O'Sullivan wrote recently that the chief executive's usual ebullience had been missing for some time.
Last year he came under attack from the Service and Food Workers Union over his pay packet, reported to be $4.6 million in salary and shares, while local casino workers scored just $12 a hour.
Davies' wife, Heather Shotter, was also a long-serving member of the executive team (the Sky City board had agreed to both Davies and Shotter continuing to hold top management roles after they married).
He doesn't walk away any poorer: Davies stands to make up to $7 million on top of his $1.7 million severance pay by cashing share options accumulated during his 11 years in the job.
At the peak of his powers, Davies once told a journalist he had just one regret: that he didn't build the Sky Tower higher.
