Crown Resorts has been deemed "unsuitable" by the state's Royal Commission to operate a casino in Victoria, but will not immediately lose its licence over concerns it could affect the local economy.
The report published today (26 October) is the result of an enquiry by the Royal Commission into the licence of casino operator Crown in Victoria, which concluded that the operator's deficiencies meant it was not viable to have such a permit in the state.
The commission said Crown had engaged in "unlawful, dishonest, unethical and exploitative behaviour", adding that the scale of wrongdoing was so widespread and egregious that "no other conclusion has been revealed".
The report also builds on findings uncovered during the Bergin report in New South Wales, which found widespread failings at Crown and, as a result, were also deemed "unfit" to run casinos in the Sydney Barangaroo area.
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The Crown Victoria Commission found more failures in corporate governance, risk management and responsible gambling services, including "serious, ongoing legal breaches" and misconduct contrary to Australian and other laws, often with the knowledge of Crown executives.
The Commission also found patterns of non-cooperation with the regulator, including intimidation, providing it with false or misleading information, delaying the investigation process and frustrating the regulator's investigations.
Evidence was also found relating to tax irregularities which had been instigated or undertaken with the knowledge of several senior staff members, who had then deliberately concealed themselves from the regulator for fear of being caught.
In addition, the Commission cited cases of "serious, systematic breaches" of responsible gambling obligations, including the way Crown treated vulnerable people who had been harmed by gambling.
"The Royal Commission finds that Crown's board has failed in its duty to ensure that the organisation complies with its legal and regulatory obligations," the report said. "It also found that many senior executives involved in the breaches were indifferent to their ethical, moral and sometimes legal obligations.
"The influence of Packer / CPH, which the Bergin Inquiry found," prompted Crown to put profit before other motives for action, "has been confirmed by this Royal Commission."
However, the report said that given the importance of maintaining the integrity of the licensing system, it would not be in the interests of the Victorian community to revoke the licence immediately.
The Commission stated that this was because of the risk of significant harm to the Victorian economy and the innocent third, and because of the Commission's belief that Crown Melbourne has the will and ability to reform and become fit to hold a casino licence again.
The Commission therefore recommended that Crown be allowed to continue operating under the supervision of a dedicated manager for a period of two years, while implementing comprehensive reforms to make it fit to hold an independent licence.
This should address a total of 33 recommendations made by the Commission, including the powers of the regulator and its inspectors, the obligations and structure of the casino operator, prevention of casino money laundering, unpaid casino tax, fines and responsible gaming service.
The Victorian government agreed with the findings, but said that while it would implement the Commission's priority recommendations, it would go further in a number of areas, including the introduction of "new stringent measures and strict oversight" on Crown to avoid similar failures in the future.
As part of this, the government today introduced the Casino and Gambling Amendment Bill 2021, which will implement the Commission's nine priority recommendations, with further legislative measures planned for next year.
The bill also establishes a special manager who would have "unprecedented powers" to oversee Crown, veto board decisions and have unlimited access to all areas of the casino, its books and records. Crown would cover all costs associated with the special manager.
Subject to passage of the new bill, it is proposed that QC Stephen O'Brien be appointed as special manager. O'Brien was the first independent anti-corruption commissioner in Victoria to bring integrity and accountability to casino operations.
Other restrictions outlined in the bill include that Crown would be prohibited from dealing with junket operators, and any restrictive provisions that prevent the state from making regulatory changes for casinos without compensation must be removed.
If Crown fails to make sufficient progress within the two-year period, its licence will be automatically revoked.
"The onus will be on Crown to demonstrate clearly through its activities and progress in its reforms why its licence should not be revoked," the government said. "Contrary to the recommendation of the Royal Commission, Crown's licence will be deemed revoked unless otherwise decided."
The bill would also have a wider impact on land-based casinos in Victoria, including that the maximum fine under the Casino Control Act 1991 would be increased from A$1 million (£545,857/€647,292/$751,045) to $100 million to ensure meaningful consequences for breaking the law. This reflects the Commission's recommendation that the fines under the Act were inadequate as the fine was increased to at least $10 million.
In addition, the Bill would establish the Victorian Gambling and Casino Control Commission to focus on casinos and strengthen and expand the regulatory authority's power to prosecute a casino operator.
"We welcome the remaining recommendations and recognise their breadth and complexity in relation to gambling harm minimisation, casino operator structural reforms and addressing anti-money laundering risks," the government said.
"The government supports these recommendations in principle, subject to further detailed analysis and consultation. A second tranche of legislation next year would justify claims arising from these recommendations.
"Our government is taking action right now to hold Crown to account and intends to continue reforms next year to take account of the Royal Commission's findings."
Crown has yet to publish a detailed response to the report, saying only that it is currently reviewing the Victorian Government's funding and response.
"Crown will work collaboratively and constructively with the Victorian Government on the report's findings and recommendations and their response," the statement said.
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