In 2012, the operators of Melbourne’s Crown casino put an unsolicited proposal to the New South Wales government for a licence to operate a new casino at Sydney’s harbour-front Barangaroo site.
It would, the company said, be targeted at high rollers and other overseas visitors, and wouldn’t offer poker machines.
The bid succeeded, and in principle approval was granted in 2013. The Labor opposition supported the proposal.
Crown’s capacity to influence political decision-making is in the legendary category, certainly as far as Australia is concerned. Crown is a major political donor (as is James Packer’s mother, Roslyn) along with other gambling operators, and employs politically connected influencers. The board’s chair is former Liberal federal minister Helen Coonan.
The current inquiry into Crown, set up by NSW’s Independent Liquor and Gambling Commission, was called after a series of revelations reported by the Nine network and the Age and Sydney Morning Herald in 2019. The reporting alleged links with overseas criminal syndicates operating junket tours, a preparedness to allow (or perhaps facilitate) money laundering, and Crown’s connection with Macau based casino operator Lawrence Ho.
Ho’s now deceased father, Stanley, was associated with criminal syndicates. Ho junior was a business partner of James Packer through their shared Macau casino business, and proposed to acquire a shareholding of just under 20% of Crown Resorts Ltd, the operator of Crown.
Ho eventually abandoned his ambitions for Crown. But the inquiry has terms of reference that allow it to investigate the suitability of Crown regardless of Ho’s involvement.
Senior counsel assisting the inquiry, Adam Bell SC, submitted last week that Crown was not fit to operate the casino, having regard in particular to the influence of Packer, who retains a 36% share of Crown Resorts Ltd via his CPH Holdings company. Packer maintained an apparent capacity to direct activities of the company’s management, despite stepping down from the board in 2016. His behaviour in apparently threatening a Melbourne financier, including mention of a former Mossad operative, was described by counsel as disgraceful. Packer asserted that mental illness had led to his disgraceful conduct. Counsel assisting submitted, however, that no medical evidence had been proffered to submit these claims.
Just as importantly the Crown board, composed as it is of a cross-section of Australia’s well-connected corporate heavyweights, was, it seems, unable or unwilling to exercise proper governance of the company. The inquiry has heard of lack of oversight and impeded flows of information, including in relation to the arrest of 19 Crown staff in China, arising from breaches of China’s strict anti-gambling laws.
Evidence presented to the inquiry has been damning not just for Crown however. Regulators who have overseen Crown’s operations in Perth and Melbourne must now be in the spotlight.
The Victorian Commission for Gambling and Liquor Regulation (VCGLR) has known for some time of issues with Crown. In 2018, Crown was fined $300,000 (a record) for slot machine tampering, an allegation first brought to light by whistleblowers via Tasmanian federal MP Andrew Wilkie’s “Pokieleaks”. The company denied wrongdoing, but copped the fine. As well they might, given that it represents the average yearly revenue of one of its 2,800 slot machines. That same year, Crown was fined another $25,000 for not advising the VCGLR of new non-resident junket partners.
In 2018, the VCGLR’s sixth review of the casino licence identified a raft of issues that Crown had to improve to meet international standards for regulation of casino gambling. These included a lack of independence on the part of directors, concerns around compliance with anti-money laundering procedures, and lack of interest in “responsible gambling” and self-exclusion activities. Nonetheless, the review concluded that it was in the public interest for Crown to maintain its licence to operate the casino.
The VCGLR itself has had its problems in recent years. A 2017 review of the agency by the Victorian auditor general concluded that the agency had poor morale, was understaffed, and overwhelmed by the new system of individual venue operation introduced in 2012. The auditor was particularly critical of VCGLR’s capacity to effectively regulate Crown, again identifying the issue of money laundering and other areas of risk.
Crown may be forced to restructure its board, and Packer to dilute his shareholding and influence with the company. It is conceivable that the company may lose its licence, although this is less likely, given a compensation deal that the company secured with then NSW premier Mike Baird. The ILGA is meeting on 19 November to decide whether it can or should act to delay Crown’s opening, scheduled for December this year, given that the inquiry report will not be available until February 2021.
Without international travel, the prospect of a no-pokies casino making money, always challenging, is highly doubtful. Conditions likely to be imposed on the licence will make its operations expensive and its returns modest.
In the meantime, regulators in Victoria and Western Australia must quickly decide how to proceed from here. The influence of gambling operators needs to be addressed via reform of donation laws and transparency in decision-making. The NSW inquiry has demonstrated the importance of having public hearings, and the power to compel evidence under oath where necessary. The softly-softly approach, favoured by VCGLR in particular, needs urgent reconsideration.
Gambling regulators need adequate resourcing to do their job properly, including the assurance of genuine independence from government. The Packer connection to the Crown business seems likely to be severed, but the big money at stake in gambling operations makes it imperative that we have confidence in effective, independent regulation. That confidence has been severely shaken.