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Five bombshells that could blow away Crown’s Melbourne casino

As the future of Crown’s sprawling Southbank casino hangs in the balance, these are the five problems he will be weighing up.

Responsible gambling

Crown Melbourne made around $1.2 billion from its poker machines and table games every year before COVID-19 – excluding high rollers – and doing that “responsibly” is a key requirement of its casino licence.

But it was caught by surprise when Finkelstein declared he would make this one of his key tests of its suitability to hold a licence.

Punters on 34-hour gambling binges, a responsible gambling team with an annual budget of just $1.9 million (versus $500 million spent on marketing), and research showing gamblers were three times more likely to be harmed at Crown than other venues raised his immediate concerns.

On the eve of public hearings on the topic, Crown conceded it was no longer a “world leader” in responsible gambling, pledging to employ another five responsible gaming advisers (for a total of 17) and to limit patrons to a maximum of 12 hours’ gambling per day – still twice as long as academic research recommends.

Crown currently lets people gamble for 18 hours straight before making them stop, cut from 24 hours last year. But that policy is not always followed because Crown’s 12 responsible gaming advisers are too few to monitor what’s happening on the casino’s 2628 poker machines and 540 table games.

Crown has warned the government that adverse findings from the commission would threaten jobs at its Southbank casino, which employs around 12,000 people.

Crown has warned the government that adverse findings from the commission would threaten jobs at its Southbank casino, which employs around 12,000 people. Credit:Chris Hopkins

Asked whether Crown only reviewed its polices because of the commission’s scrutiny, Coonan said: “It certainly pointed up the fact that there were things that needed to be done.”

Crown’s pokies have a $10 per spin bet limit, which means addicts can lose money twice as fast as they can at any other gaming venue in Victoria. Crown can also run 1000 pokies on “unrestricted mode” – spinning without any bet limit at all – which Finkelstein said was “not beneficial to anybody other than Crown”.

Tax rorts

Crown’s contribution to the state’s coffers – about 1 per cent of all tax revenue – has often been used to justify its existence and explain the sway it held over successive governments.

That made the bombshell revelation on June 7 that since 2012 it had rorted the government by making illegal deductions to its tax bill particularly explosive.

By counting the cost of freebies doled out to punters such as food, drinks and hotel rooms as “winnings” from its poker machines, Crown short-changed Victoria anywhere between $8 million and $272 million.

A 2012 internal Crown memo explaining the ploy said it probably “will not be noticed” by the Victorian gambling regulator. And indeed, it only came to the regulator’s and the commission’s attention because Crown sent a spreadsheet estimating the underpayment to the inquiry by accident.

The cover-up became as damaging as the tax dodge itself. Two Crown directors (of the three that survived the Bergin Inquiry) said they doubted Crown Melbourne CEO Xavier Walsh was fit for the job after he failed to bring it to their attention. And there was conflicting evidence between Coonan and Walsh about what she did and how much she knew when he told her about the issue in February, a day after the royal commission was announced.

Helen Coonan - a Crown director for 10 years - said she could not reform the company until directors aligned with major shareholder James Packer (pictured) had departed.

Helen Coonan – a Crown director for 10 years – said she could not reform the company until directors aligned with major shareholder James Packer (pictured) had departed.Credit:AAP

Credit card ‘scam’

Crown came clean in June that it had sold $160 million of casino chips through its hotel desk and charged them to customers’ credit cards between 2012 and 2016 in brazen breach of Victorian law.

Hotel staff created fake invoices and charged them to hotel rooms that didn’t exist. Crown knew it was probably breaking the law in 2012 and formulated arguments to defend itself if it got caught.

Finkelstein said “the whole thing was a fraudulent scam … and everybody involved would have known that”, showing that Crown “simply didn’t care” about breaking the law as long as money was coming through the door.

The practice only came to light because a junior gaming staff member raised it at a training session in March this year as an example of how “higher-ups” at Crown told staff to find or implement ways to circumvent the law.

The “scam” not only broke Victorian law, but helped Chinese guests illegally take money out of China while also leaving the casino even more vulnerable to money laundering.

Crown’s new head of financial crimes, Steven Blackburn, said he expected an audit under way into the practice would find instances of money laundering, and that the sum of illegally generated funds could top $160 million.

Attitude to regulation

The Andrews government did not include an examination of the Victorian Commission for Gaming and Liquor Regulation (VCGLR) in the parameters of Finkelstein’s inquiry. But criticism of the state’s gambling watchdog has grown as each new scandal around Crown unfolded.

The royal commission has exposed the regulator’s failure to hold Crown to account as well as the casino’s belligerence towards the body supposed to keep it in check.

Crown tried to intimidate a VCGLR officer into dropping his push for strengthened anti-money- laundering controls in 2019, when its director of corporate affairs Chris Reilly – a former senior adviser to Daniel Andrews – instructed a colleague to tell the officer Crown would call the gaming minister to complain.

Crown never properly implemented new money-laundering controls required following its 2018 licence review and a VCGLR officer said the watchdog gave up trying to get them implemented because it had “no confidence” the casino would ever comply.

One VCGLR officer said Crown “lied” to him when investigating how 19 Crown staff were arrested in China in 2016. The regulator only finished its report into the incident in February, which blasted Crown for being “unnecessarily belligerent”.

In January this year a recalcitrant Crown sent a letter to the watchdog still denying basic facts about the arrests. Coonan signed that letter but told the inquiry it was the work of the “old Crown” which she could only start reforming after eight directors resigned following the Bergin inquiry’s final report.

And on the second-last day of public hearings in Melbourne, Finkelstein accused Crown of trying to interfere with his inquiry by writing to Victoria’s gaming minister a week earlier warning that adverse findings against it would be a “huge problem for the government too”.

Coonan denied trying to undermine the commission. Crown – the state’s biggest single-site employer – told the minister it was “not in the public interest for Crown to fail” because it would have “severe consequences” for jobs and the tourism industry.

Should Crown be broken up?

Finkelstein raised an unexpected problem that has cast a cloud over the ASX-listed Crown’s future, even if it keeps its licence.

A set of clauses in Crown’s agreements with Victoria make it clear that the Melbourne casino should be “Victorian-run, Victoria-operated with Victoria’s economic and social interests as its principal concern”, he said.

But this has been ignored. Some of the people running Crown Melbourne have been executives or directors in the national group based in Perth or Sydney, or they reported to them, which Finkelstein said “might have worked but it might not have been legal”.

Crown could also be breaching its agreements with Victoria if its new casino in Sydney or its existing one in Perth took business away from Melbourne.

“This is as parochial as you get,” Finkelstein said. In the future, Crown needed to be run by “Victorians for Victoria”.

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