Federal Group CEO Greg Farrell in Tasmania in March, 2017. Credit:Phillip Biggs Tasmania is going to the polls on March 3 and after years of reliable bipartisan support, Labor is suddenly off script, vowing to rip pokies out every pub and club in the state. Public support for the Farrell family enterprise appears to be fracturing. Both conservative and progressive groups have voiced support for Labor's policy and newspaper headlines have begun to focus on one of the the family's poorly kept secrets. "Mainland gambling interests may fight to undermine 'brave' Labor pledge on pokies," screamed Burnie's Advocate newspaper last month. It turns out that the Farrells are mostly based in Sydney. The family company, Mulawa Holdings, which owns the Federal Group, which owns the casinos and the pokies, is registered in Chatswood. The Farrells own sprawling residences in Wahroonga, property in Dural and an Arabian horse stud at Berowra.

Greg, Julie and Jane Farrell with horses Chance to Dance and A Vision Mi. Credit:www.mulawaarabians.com.au "These people have been taking between $10 and $15 million a year out of the state and taking it to Sydney to fund their bloody horse-breeding," said one Tasmanian political operative this week. As with others Fairfax Media spoke with for this story, he was reluctant to be named. Worse, the methods the family used to acquire such wealth and power in Tasmania are coming under renewed scrutiny. Greg Farrell at Country Club Tasmania. Credit:Phillip Biggs Putting Tasmania on the map

The Federal Group arrived in Tasmania back in 1968 when the debt-riddled state was toying with the idea of licensing the first legal casino in Australia. The company's chairman, Greg Farrell Sr, ran a public campaign reassuring nervous locals that their development would be more hotel than gaming den, that it would attract high-rollers from around the country and the world. It would put Tasmania on the map. Intrigue arrived with gaming. Labor backed the scheme, but the Liberal Party won office the following year with a majority of one – independent Kevin Lyons. The Liberals had notions of splitting the Federal Group's monopoly by opening a second casino, despite fierce lobbying against the proposal. Luckily, before the competitor got off the ground, Lyons suddenly quit. He had been offered a stupendous sum by British Tobacco – equivalent to around $250,000 – for his autobiography. He never wrote the book, but he did take a job with the Federal Group. With the Libs out the second casino was knocked on its head, and when one was eventually built years later, the Federal Group was allowed a controlling stake. Allegations that Lyons had been paid off were dismissed after a police inquiry, though last week a former bookie told the ABC he had been instructed to carry a mysterious briefcase to home in Lyons' suburb around the time of his resignation. The federal independent MP and anti-pokies campaigner Andrew Wilkie has called for a Royal Commission into the incident. The Federal Group said it had nothing to hide, telling the ABC it would not respond to vague allegations.

Over the years the Federal Group's luck held. It successfully lobbied to have the gaming tax rate reduced. The boon in tourism was more limited than had been predicted, and as a result most of the losses were local, observes the historian James Boyce, author of the recent book Losing Streak, How Tasmania was Gamed by the Gambling Industry. But business was good and over the years the Farrell family managed to buy all the shares in the Federal Group, making the public company a private one. After Greg Sr died his five children took equal cuts and Greg Jr began to run the show. Under his leadership the company staged a second coup in 1993, when again Tasmania was struck by a debt crisis, one that was not helped by the fact that its citizens had one of the highest per capita gambling expenditures in the nation coupled with the lowest level of gambling tax returns. The obvious solution to the Liberal government of the day was to unleash pokies from the casinos into the pubs and clubs. At first the Farrell family was outraged, arguing in a submission to a parliamentary enquiry that spreading pokie machines into pubs would grant access to those who could least afford to gamble. Debate over the legislation was furious and deadlocked until suddenly, in August 1993, Federal Hotels was handed, for free, the monopoly licence to every machine in the state. As Boyce notes in his book, the state had just given away its most valuable public licence for free. Citibank estimated the gift was worth around $130 million. When you ask other political operators in the state how this might have happened, you might be confronted with silence or at least a long awkward pause. "I don't know how it happened," one political operator told Fairfax Media.

"It's just one of those terrible Tasmanian stories," the economist and popular Tasmanian blogger John Lawrence says. With Tasmania's entire gaming industry in the bag and a favourable tax regime in place the Farrell family began to get seriously rich. It built a formidable political network, funding not only sports clubs and politicians, but the arts and social welfare groups. Indeed, Greg Jr might not recall it (he did not respond to a request for an interview) but he first met the author Boyce when Boyce was researching the social impact of gambling for Anglicare Tasmania in 1998. Farrell was funding the research and took a hands-on approach, going so far as to turn up to meetings of the researchers and insisting on the right of veto over their recommendations. Boyce remembers Farrell to be softly spoken and friendly, until Boyce insisted on the organisation's independence. "He had me in the corner, he was red in the face and shouting." The family influence was fostered through its sponsorship and membership of organisations like The Tourism Industry Council of Tasmania, the Chamber of Commerce and Industry, the Tasmanian Hospitality Association and the Property Council of Tasmania. Greg Jr is known to have close ties to the Anglican Church.

Boyce says the importance of the alliances cannot be overstated. "People here fear all these networks, they rely on government jobs and powerful interests. People are afraid to speak out in case they are excluded, they miss out on information, on contracts, on jobs." And there was even more good luck. In 2003, their free monopoly licence was extended, without public consultation, on the understanding it would invest in a new resort. By 2006 the Farrells had attracted the attention of the BRW rich list. "The late Greg Farrell senior could not have known it then," observed the BRW in 2006, "but when he and his then business partner, the late Gordon Barton, took over The Federal Group in 1969 ... he was laying the groundwork for his five children to 'own' an island – Tasmania to be precise." That year the family's wealth, divided among the five siblings, was estimated to be $385 million. The BRW noted that between the granting of its licence and 2006 the state government had surrendered revenues of up to $300 million, while the the profit enjoyed by the family due to its monopoly had grown from rom $596,000 in 1993 to $32.7 million in 2004-05. "Farrell cannot be criticised for this; as an astute businessman he has simply exploited compliant governments," it observed. Recent estimates put the Farrell's wealth at around $475 million, a fortune it is consolidating by buying up the pubs where their pokie machines are most profitable.

But the political tide might now be turning, due in no small part to the rise in fame and fortune to the man who may well now be Tasmania's unlikely favourite son, the gambler and art collector David Walsh. Professional gambler Walsh grew up in the hardscrabble district of Glenorchy on the Derwent River, to the banks of which – after making a fortune as a professional gambler – he would one day return to build his infamous museum, Mona. Mona opened in 2011, an extravagant, idiosyncratic, avant garde private museum of sex and death that soon became famous around the world and a point of fierce pride for Tasmanians, who attend for free, ducking around the queues of mainlanders and foreigners drawn to Hobart to visit it. "Because of Walshie," says the blogger John Lawrence, "you don't have to worry about those jokes about two-headed Tasmanians anymore." Mona prompted a surge in high-end tourism and investment. It is not only creating jobs, it is making Tasmania cool. And it has not escaped the public's notice that while the Farrell family was taking money out of Tasmania, Walsh was spending his own money in Tasmania, and operating his museum at a personal loss, says Lawrence.

In 2015 Walsh proposed that he be allowed to open a small high-end casino – one without pokies – in order to offset the cost of running Mona. This would require the government negotiating a deal with the Federal Group, which responded that it would allow Walsh to have his casino if its own pokie monopoly was extended. Walsh, who recently called pokies "granny-raping machines" refused, pulling the pin on his proposed $200 million investment and writing a blog post in which he declared, "I find poker machines antisocial, unsightly, and insidious. But, unfortunately, they are now a significant source of revenue to the government and our legislators are, therefore, conflicted. That means it's up to those of us who think pokies are a problem (apparently 80 per cent of us) to give a clear indication of the direction we want. Since I'm the idiot that inadvertently started this process, I should lead it now, even if I'm the loss leader." According to Lawrence, public sentiment swayed "Walshie's" way. "By now everyone knows someone who has lost their shirt on the pokies," he says. He believes it was becoming clear that the Federal Group's long relationship with the state had served the family's interests far more it had Tasmania's. As the 2018 election approached, both parties needed to develop a policy on gaming monopoly, which is set to expire in 2023 and which is up for renegotiation.

Most observers expected that the two parties would arrive at a similar policy, one that might challenge the pokie monopoly, while ensuring that the Federal Group's interests were largely protected But in December, Labor's new leader, Rebecca White, shocked the state by announcing a Labor government would remove pokies entirely from pubs and clubs, citing the damage done to Tasmanian families by the $110 million they lose each year to the machines. Even more surprisingly, the new policy had been driven in part by Scott Bacon, shadow treasurer and son of the former premier Jim Bacon, who had once backed the Federal Group's empire. The polls are neck-and-neck, but there are signs that Labor's gamble against the Federal Group is resonating. Unsurprisingly White's policy has the backing of Wilkie and the Greens, but it has also won the support of Jacqui Lambie, who after leaving federal parliament is moving into state politics. The left-leaning GetUp! Movement has endorsed the policy, as has the Australian Conservative Movement. The Reverend Tim Costello, the high-profile spokesman for the Alliance for Gambling Reform, has thrown his weight behind the policy, telling a local paper, "The public knows that state politics has often been captured by very powerful interests and big saviours.

"Now the next test is Federal Hotels – Tasmanians are told they're so important. In fact, they're a job destroyer. When the pokies licences go, it will create jobs. For every $1 million going through pokies it creates less than three jobs. So the money [diverted from gambling] will create jobs." He warned that mainland groups such as Clubs NSW would join the fight to defeat Labor. "You have the chance to lead Australia. Tasmania is now leading the mainland on this. "Other nations ask how could any state that licenses pokies be so predatory and blind." One of Tasmania's most highly regarded political analysts, Wayne Crawford, wrote in Hobart's Mercury that the Labor decision, a once unthinkable challenge to vested interests, might upend the election, noting that according to some polls it has 80 per cent support.

Ms White told Fairfax Media this week that her party had come to the decision after hearing testimony during a parliamentary inquiry about the damage done by pokies. "It's a risk, but we had a once in a lifetime opportunity here." Since her announcement Ms White says that she has spoken on the phone once with Greg Farrell. "It was a polite conversation." Boyce says that it Labor wins and the pokies go the Farrell family can only blame themselves. For too long, he says, the Farrells took far too much. In other states, pokies generate vast revenue for government, for pubs and clubs and for casino operators. Sure, there are millions of losers, but there are at least a handful of winners. If you take the pokies out of Tassie, he says, only one family stands to lose.