Crown Melbourne deemed suitable to run casino

Following a review of 4,000 pages of reports from a special manager, as well as the outcomes of inquiries and commissions across three states, the Victorian gambling regulator has determined that Blackstone-owned Crown Melbourne is suitable to hold a casino licence.

The announcement comes two-and-a-half years after the Victorian Royal Commission reached a conclusion to the contrary in light of misconduct that breached laws in Australia and overseas, but Crown Melbourne was allowed to continue operating so as to not put innocent third parties like its employees and suppliers at risk.

That decision was made with the proviso that a special manager be appointed to oversee the company's operations and remediation. 

The Victorian Gambling and Casino Control Commission (VGCCC) has concluded it is "clearly satisfied" that Crown Melbourne is suitable to operate the Melbourne Casino, and that it is in the public interest that the licence remain in force.

This is after the company was slogged some $250 million in fines for its conduct, while also developing a longer-term roadmap to show its sustained commitment to integrity and safety.

"There is evidence of change occurring in parts of the organisation, including critical areas such as the responsible service of gambling and the prevention of financial crime," the special manager states in the final report.

"Although these foundational elements have been successfully established, it will take time for Crown to demonstrate reform outcomes and embedded culture change throughout the organisation."

With new owners following the $8.9 billion sale to Blackstone, the significant changes that have taken place contrast with the VGCCC's depiction of Crown in the lead-up to the appointment of the special manager.

"As millions of people entered the doors of Crown Casino in the years following the opening in the mid-1990s they had every right to expect that it would provide an environment in which gambling was safe, criminal influence was not allowed to flourish and that patrons were not exploited rapaciously," the commission's summary states.

"The community had every right to expect the conditions of the casino’s licence would be met and the conditions of its social licence to operate would be honoured appropriately.

"The community had every right to expect Crown Melbourne would behave in a way that met the suitability test of its licence. It did not."

Commission Chair Fran Thorn says the Royal Commission detailed how Crown Melbourne had breached its legal, social and moral obligations, resulting in illegal activities, tax avoidance, money laundering, criminal associations, and significant harm to vulnerable community members, ultimately finding Crown Melbourne unsuitable to hold the Melbourne casino licence.

She notes the special manager's report concluded that Crown Melbourne has remediated the failings exposed in the Royal Commission and established the critical foundations needed to achieve sustainable overall transformation in coming years.

"There was no evidence of maladministration or illegal or improper conduct indicative of the serious and systemic failures previously identified by the Royal Commission, and these failings had been addressed," she says.

"During our investigations, we observed a different Crown Melbourne emerging with a clear understanding of the privilege and obligations of holding the Melbourne casino licence.

"That transformation plan will be at the heart of our oversight, along with Crown’s legal and social obligations, and provides the next level standard for Crown Melbourne. The commission will require Crown Melbourne to deliver further transformation through a statutory direction that will be issued shortly."

The commission also had a "Plan B Project" up its sleeve before receiving the special manager's final report, contemplating the potential for a total loss of Crown Melbourne's licence to operate and subsequent appointment of a manager to operate the casino.

Early in 2022 the new commission hit a stumbling block as part of the process to ensure that if this decision were to be made, thousands of jobs and businesses would not be at risk. However, it realised that Crown Melbourne had never been required to put in place a workable transition out plan, unlike other major gambling licence holders.

In the absence of such arrangements, "the legislative provisions covering the removal of an operator and institution of a manager to oversee orderly transition would have been difficult to achieve", leaving the commission and government potentially exposed to bad actions from a sacked licence holder.

"The commission invested heavily in preparing transition out arrangements to ensure it never faced a casino operator that was 'too big to fail'," the VGCCC writes in a summary of this consideration.

"The commission holds that no licenceholder should be allowed to be too big to fail, and that changing the lack of implementable and enforceable transition out arrangements in the event of an unsuitable Crown Melbourne was a critical base for the suitability decision."

As part of this, a commercial advisor was engaged to assist with determining what needed to be in place organisationally to effect transition out, and to de-couple the casino from the rest of Crown Melbourne and Crown Resorts.

It now emphasises that putting the right structures in place so that Crown "was NOT and NEVER would be 'too big to fail'" will be an be an enduring legacy of the commission's work over the past two years.

In other words, today's determination cannot be taken for granted in perpetuity, and Crown Melbourne will need to continue to demonstrate its cultural change and legal compliance.

Along with the VGCCC’s strengthened oversight regime and enforcement powers, a new, specialist Casino Division has been established, providing confidence that Crown Melbourne will be held stringently accountable in the future, including for its ongoing transformation.

“In return for the privilege of an exclusive licence, Victorians have a right to expect that Crown Melbourne will never again prioritise profit ahead of the safety and wellbeing of its patrons and staff or over compliance with its legal and social obligations," Commissioner Thorn says.

“Crown Melbourne must continue to seek to rebuild and earn public trust by demonstrating the good character, honesty and integrity that are necessary to remain a suitable casino operator.

“We put Crown on notice that this commission will not hesitate to act if the privilege of holding the casino licence is again abused.”