Later this month, Crown Resorts will learn if it will retain its gaming license in Victoria, Australia. An investigation there—and similar probes in New South Wales (NSW) and Western Australia (WA)—are likely to change the way casinos are regulated throughout the country.
The Victorian royal commission, which convened last February, will determine if Crown can continue to operate Crown Melbourne. A separate royal commission in WA will do the same for Crown Perth. It all began with a previous investigation into Crown in NSW; that inquiry found that Crown was an “unsuitable person” to run gaming operations at Crown Sydney, a new casino in a multibillion-dollar tower in the city’s Barangaroo district. The gaming hall has yet to open, though other features of the resort are allowed to do business.
NSW’s Bergin Report—named for former Judge Patricia Bergin—was released in February following. It found that Crown Resorts permitted or facilitated money laundering at the Melbourne and Perth casinos and had relationships with junket operators linked to organized crime. As a result of the Bergin Report, which also called into question the effectiveness of current regulatory bodies, the NSW government has announced that it will set up a new independent casino regulator, reported Asia Gaming Brief.
Billionaire James Packer, Crown’s majority shareholder, has been summoned to face a Western Australian royal commission examining whether Crown should retain its Perth casino license. Other witnesses include Crown Chairman Ziggy Switkowski and CEO Steve McCann.
Depending on the outcome of Victoria’s royal commission, Crown may be fined up to $1 million or even lose its license in the state. In the words of the counsel assisting the commission, “The seriousness of Crown’s conduct to date must be a central, important and weighty factor in any finding or recommendation the commission might reach.” If Crown is “given a chance to redeem itself,” counsel said, it should be subject to strict ongoing scrutiny.
The economic realities of the situation may be a deciding factor. If Crown Melbourne loses its license, it could jeopardize the livelihoods of more than 10,000 people and “impose great financial losses” on shareholders large and small. Crown has argued that it’s not in the public interest for Crown Melbourne to be “stripped of its license and broken up.”
“The path to suitability is clear,” the company said in a statement, and pledged “no deviation from that path by virtue of the safeguards of an independent monitor or supervisor, which Crown accepts ought to be appointed in any event.”
No matter what happens to Crown—and regardless of similar investigations into its main rival, Star Entertainment—it’s not just the operators that must change, but the regulators charged with holding them accountable.
Jamie Nettleton, a partner at the law firm Addisons and Brodie Campbell, wrote in Asia Gaming Brief, “The manner in which casino businesses can be conducted will be significantly altered. … We expect that regulators and the media will continue to monitor the activities of Crown closely, to determine whether the lessons of the various inquiries have been learnt.”
Though the NSW report found Crown unsuitable to hold a gaming license, it left the door open to remediation.
Now, rival Star Entertainment has been thrust into the same spotlight and is facing the same kinds of allegations. The government in Queensland, where Star has two properties, has said it will launch a probe into the company’s practices.
Meanwhile, two Australian law firms are preparing class-action lawsuits on behalf of Star investors who stand to lose based on the outcome. Like Crown before it, Star is accused to failing to manage anti-money laundering (AML) and counter-terrorism financing (CTF) risks.
“The proposed class action will allege that Star engaged in misleading and deceptive conduct; breached its continuous disclosure obligations; and conducted its affairs contrary to the interests of members as a whole in the period,” said the law firm Maurice Blackburn.
Star has described the allegations as “misleading.”
