Crown Resorts found “unsuitable” to operate Perth casino

| By Daniel O'Boyle
The Perth Casino Royal Commission has found that Crown Resorts “unsuitable” to operate its Crown Perth resort in Western Australia, but has opted not to recommend revoking its licence.

However, the Commission’s report did propose a number of other changes instead in order for Crown to be considered suitable, including mandatory limits for electronic gaming machines (EGMs).

The report followed two previous inquiries into Crown’s suitability for a licence in other jurisdictions. The Bergin Report in New South Wales looked into whether Crown was suitable to operate a casino in its new resort in the Barangaroo area of Sydney, while the Victoria Royal Commission’s report examined whether it was fit to operate its flagship Crown Melbourne resort.

Like the Perth report, both inquiries determined that Crown was an “unsuitable” licensee, but stopped short of revoking or refusing to grant a licence.

In looking into Crown’s suitability, the report uncovered a number of failings at Crown Resorts and its subsidiaries. Many of these failings were similar to those uncovered by the previous reports, with most flagged issues relating to relationships with junkets and anti-money laundering measures, as well as governance issues.

The report noted that from 2013, Crown became “increasingly reliant” on junkets at both its Melbourne and Perth locations.

The operator had claimed in 2009 – when the Western Australia Gaming and Wagering Commission first considered permitting junkets – that it would perform AML checks and not do business with junket operators deemed “high-risk”. 

However, the business “approved and maintained relationships with junket operators and junket representatives that it had assessed to be ‘high-risk’ from a money laundering perspective”.

The report also said that chairman James Packer “did not appreciate that junket operators posed a higher risk than other parts of Perth Casino’s gaming business, of either attracting criminal elements or the facilitation of money laundering, at the time of his appointment”.

“He believed those risks could be managed,” it added.

In addition, it said, other key leadership figures had limited or no understanding of how junket businesses worked and the associated risks.

In terms of corporate governance, the report found that many of Crown Perth’s key legal and compliance functions had been centralised. As a result, the central Crown Resorts business oversaw many areas related to day-to-day legal and compliance functions at the Perth casino.

This, it said, made accountability more difficult. The report noted that the Perth-specific subsidiaries of Crown “ did not have any substantive involvement in the assessment or approval of junket operators who came to Perth Casino or oversight of the assessment and approval function”.

It added that there was “no evidence” that senior management had made the subsidiaries’ boards aware of agreements made with junket operators such as SunCity.

These issues were heightened by the fact that chair James Packer did not attend board meetings for Crown subsidiary Burswood Limited, which owned the resort, from August 2013 until his resignation in 2016.

“Crown acknowledges that it was unacceptable for Packer not to attend board meetings, and that the other members of the BL board should have expressed concern and taken steps about the prolonged absence,” the report said.

Regarding money laundering, the report found that cage staff had been adequately trained to recognise potentially suspicious transactions.

David Brown, who was Crown’s general manager of cage and account admitted that he “knew there were transactions occurring in 2013 and 2014 that were suspicious” and should have been reported to money-laundering authority Austrac.

Former Crown chief financial officer Ken Barton, meanwhile, was found to have known that the Crown VIP team requested certain bank accounts used by VIPs not include Crown’s name.

“Upon becoming aware of the purpose of Riverbank, it did not raise any alarms bells with him that accounts of this character may facilitate money laundering,” the report said.

As a result of these findings, the report concluded that Crown and its subsidiaries were not “a suitable person to be concerned in or associated with the organisation and conduct of the gaming operations of a licensed casino”.

However, rather than revoking its licence, the Royal Commission proposed a number of changes which Crown Perth must undergo.

It said that Crown should adopt a “corporate structure that has more clarity than the current arrangement”, with the roles of each subsidiary clarified.

In addition, Crown Perth should “introduce a full, mandatory, binding loss pre-commitment and play period limits scheme for electronic gaming machine (EGM) play at Perth Casino (EGM Scheme) as soon as practicable”.

Under this system, players must set weekly loss limits, and if they do not, a default limit based on research into “safe” limits should be set for them. While customers may be able to raise these lost limits, there should be a “prescribed maximum” set by the Gaming and Wagering Commission.

Maximum bets on these machines should be set at $10.

VIP players, meanwhile, must provide “documentation evidencing their financial capacity”.

Meanwhile, the report also found that Gaming and Wagering Commission should also be restructured, with more funding in order to allow it to better regulate operators.

Crown is set to be acquired by private equity giant Blackstone, having agreed an AUD$8.9bn deal following a protracted bidding saga. Blackstone had made its initial acquisition proposal in March 2021, but later upped this offer in January 2022.

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