In July last year, Dominic Perrottet, then the New South Wales treasurer, was asked a pointed question about how the government squared its commitment to addressing problem gambling with its forecasts for increased revenue from poker machines.

Given that increases in pokie tax revenue mean increased losses for gamblers, Alliance for Gambling Reform representative Kate da Costa asked at an industry breakfast, must it not reflect “increased harms from gambling from financial stress, family relationship damage, mental and physical ill health and worse?”.

Perrottet’s response was typical of a politician who relishes the chance to go off script and enter the cut-and-thrust of public debates. Problem gambling, he said, was “one of the worst blights on our country”. So too was the fact “we provide and facilitate an environment where people pour their savings down a pokie machine”.

“To the question, it is an annual reminder of the travesty in this area, and it is something that needs to be, to be brave, it’s something that needs to be addressed and I completely understand and agree with the premise of the question,” he said.

“It’s something that needs to be addressed and I know that Victor is working closely in that space.”

Victor is Victor Dominello, then the state’s liquor and gaming minister.

Dominello featured prominently in a report this week in the Nine newspapers, which revealed that senior police had warned the government in December they felt like they were armed with “pool noodles” when it came to fighting sophisticated organised crime rings.

The member for Ryde was quoted as telling the meeting the public would be horrified if they knew the extent of organised crime and money laundering across Australia.

As the minister responsible for the gaming portfolio, Dominello did more than most to try to address the problem. But six months after he publicly backed him, Perrottet, now the premier, stripped Dominello of the job.

At the time of Perrottet’s answer at the breakfast, Dominello had for months been working on plans to address problem gambling while becoming increasingly concerned about the threat of illegal money laundering.

After allegations of organised crime inside Crown Resorts’ Melbourne casino were reported by the Sydney Morning Herald and the Age in 2019, Dominello had tasked former supreme court judge Patricia Bergin to investigate the company.

Bergin’s report confirmed much of the newspaper’s reporting, including evidence of money laundering and links to alleged criminal involvement at Crown, and Dominello began pushing for the introduction of a compulsory gambling debit card.

Designed to address problem gambling as well as money laundering, the plan had support from some within the cabinet including, a senior government source told the Guardian, Perrottet himself. Dominello reportedly shored up crossbench support for the proposal, including from the Greens and One Nation in the upper house.

But Dominello’s policy idea was fiercely opposed by the key lobby group for clubs and hotels in the state, ClubsNSW, because of revenue hits to the industry during the pandemic. Both a source of political donations and multi-million dollar grant funds, the clubs and hotel sector have substantial sway in the state.

Sign up for the Guardian Australia Weekend app

In February last year the now-former deputy premier, John Barilaro, wrote an opinion piece in Sydney’s Daily Telegraph saying the proposal was a “massive overreaction” and said the card would “strangle pubs and clubs with red tape”.

Barilaro insisted his National party would never support the proposal. The Guardian later reported he had met with ClubsNSW 13 times in eight months during the pandemic.

When Dominello declined to attend a ClubsNSW dinner in the NSW Hunter Valley last year, Barilaro went instead. He sent a text message to Dominello in which he called the minister a “deadset dick” for not attending.

He wrote: “What about just looking after your stakeholders. Like Clubs NSW.”

Of most concern to MPs around the cabinet table was the possibility of the clubs and hotel organisations mounting a marginal seat campaign in the lead-up to next year’s state election. The Perrottet government is already in minority, and the political cost of former premier Mike Baird’s attempt to ban greyhound racing is still fresh in the minds of many MPs.

When Barilaro quit parliament at the same time as the former premier, Gladys Berejiklian, Perrottet announced a major reshuffle of his ministry.

Among the changes he stripped Dominello – who is also the minister for customer service – of the liquor and gaming portfolio. The office of the state’s gaming regulator was also moved from his ministry cluster. Instead the portfolio was handed to a junior Nationals minister, Kevin Andrews, who has indicated no desire to go ahead with the gambling debit card.

Instead the government is trialling a so-called opt-in “digital wallet” favoured by the gambling lobby.

The new deputy premier and police minister, Paul Toole, said on Friday that he was “a bit concerned” after reading the story about the organised crime briefing in the Sydney Morning Herald.

“We speak with the police commissioner almost weekly. We also talk about what additional resources and what things need to happen there to ensure they have enough support, and the premier is very active to that,” he said.

A cashless gambling card may not have been a panacea for money laundering or organised crime, but one has to think it would help. Just as it would in tackling the scourge of addiction, so top of mind for Perrottet last year.

The premier’s ideals failed to save Dominello, though, who is not the first person to take on the gambling lobby in NSW and lose.