Crown Resorts finds itself in more hot water as it was recently hit with a $1 million penalty by the Victorian gambling regulator for transgression of its rules and the operator’s failure to comply with junket tour partners vetting regulations.

A report from the Australian Financial Review revealed that the $1 million fine imposed by the Victorian Commission for Gambling and Liquor Regulation (VCGLR) was the highest possible penalty and that the commission had issued the fine due to Crown’s refusal to “cease a relationship” with an “individual junket operator and his associates”. The commission added that Crown had also not complied with the relevant internal control statement concerning junket operations.

Ross Kennedy, the commission’s chairman advised that the $1 million fine was decided on as “it reflects the serious nature of Crown’s direct disobedience”.

“The amount of this fine reflects the seriousness of this matter, particularly Crown’s conduct in failing to immediately implement the requirements of the commission’s direction to cease a relationship with an unsuitable junket operator,” Kennedy stated.

This is the second time that Crown faces a seven-figure penalty from the regulator, and with maximum penalty increases being implemented, it should hope that this is its last.

Increased Severity

The fine levied again Crown in April 2021 was due to the company failing to vet its high-roller junket tour partners for criminal links and other matters of rectitude.

Crown’s eight-year relationship with crime-linked junket operators was criticised by the Victorian regulator at the time with the commission finding that the company had failed to correctly vet its partners.

Organisations who flaunt the commission’s rules will be facing stiffer penalties this year as amendments to Victorian legislation that increase the maximum potential fine from $1 million to $100 million went into effect from 1 January 2022.

An Uncertain Future

While Crown has weathered the findings of the Bergin inquiry in New South Wales, where the operator was deemed was unfit to open its new Sydney casino and the Victorian Finkelstein royal commission, which came within a hair’s breadth of outright cancelling Crown’s Melbourne licence, it still faces further challenges. The West Australian royal commission into Crown’s Perth Casino licence is expected to report its findings report in March.

The company is additionally currently the subject of an enforcement investigation by financial crimes watchdog AUSTRAC regarding money laundering laws activities. Analysts have estimated that this could cost the company up to $100 million in fines.​

The new Crown Resorts Sydney casino’s launch may be more muted than the venue initially planned, but this is understandable, considering the current global situation.

The property will launch with around 160 table games, as per statements made by Don Carducci, a JP Morgan Australia analyst. This matches revelations made by Crown Resorts’ executives during an investor call, where it was communicated that Crown Sydney’s gaming space has been permitted to expand up to 20,000 square metres. An additional comment was made that the current floor space utilisation is “materially less than 50 per cent of what we’re capable of,” referring to an empty floor that has been prepared for gaming.

Carducci added that considering the current table per square metres ratio, utilising the remaining available space will add around $100 million to annual table revenue, assuming that demand remains consistent.

Entertainment Expanse

Crown Resorts Sydney is the first six-star luxury hotel in the area, boasting 349 hotel rooms and 76 luxury residences with 13 restaurants and bars.

The upcoming casino spaces will include VIP areas with 160 table games and close to 70 electronic table games. Due to Star Entertainment’s monopoly on pokies in NSW, Crown Sydney will only be able to include them as part of its offering from 2041.

The property’s casino floor will differ from its Melbourne and Perth counterparts in that, instead of being a wide-open space, players will be able to access three intimate high-roller gaming spaces, namely, the Crystal Room, Mahogany Room, and Sky Gaming.

Redemption

The operator has stated that it intends to launch gaming operations at its Sydney casino in early 2022, following a revamp of its corporate governance. The recent NSW enquiry resulted in only six Crown Resorts executives that served prior to the inquest remaining in their positions and the company has added 11 new senior management and executive team members. The most notable of the new appointments is CEO Steve McCann who recently ended a 12-year stint as the Group CEO & Managing Director of Lendlease.

The company stated that the changes are the precursor to a “comprehensive culture transformation with new purpose and values.”​

The Global easing of pandemic-related restrictions means that major Australian casinos like Casino Canberra are once again open for business after over two months of government-mandated closure.

On the other side of the globe, Caesar’s Cromwell in Las Vegas celebrated its first anniversary by reopening after enduring being shut down similarly to its Australian counterpart.

Back in the Saddle

Aquis Entertainment, the company behind the casino, had already received the go-ahead to reopen on October 14th as, at that stage, the Australian Capital Territory (ACT) was free of any lockdown status. As this was under the condition of the venue observing operational limitations like a 25 patron capacity restriction, the casino had opted to remain closed until conditions were more favourable.

The property’s entire staff complement will be able to get back to work and provide patrons with the experiences they have been missing thanks to recent decisions made by the ACT. The jurisdiction has managed to achieve a 90% vaccination rate and has made changes to safety protocols including the lifting of face mask mandates at outdoor venues.

Singapore Beckons

Singapore’s government is also reaping the rewards of a successful counter-pandemic strategy and has announced that Australians will soon again be able to visit the Marina Bay Sands and Resorts World Sentosa. The Singaporean government announced that a “travel bubble” would be established with Australia, enabling fully vaccinated business travellers, students, residents, and citizens to start visiting from November 8. Vaccinated individuals from the UK, USA, Spain, France, Italy, and Sweden are already allowed into the country, provided that they submit to a COVID-19 test on arrival and another after their 10th day in the country.

Aquis, a Hong-Kong located investment firm, is the owner of Casino Canberra and forms part of the Fung family business interests. The company’s Chairman, Tony Fung, has over a decade and a half of experience in Australian investments and the country’s hospitality industry. The family’s Australian interests are4 overseen by Justin Fung, so Casino Canberra falls under his purview.

Aquis is currently planning a $440 million beachfront hotel in Surfers Paradise on the Gold Coast which will be the country’s only gambling-free major resort development.

The Victoria government recently unveiled its ‘Casino and Gambling Legislation Amendment Bill 2021’ and introduced it into the region’s parliament. The government’s objective is to implement urgent recommendations specified by the royal commission regarding Crown Resorts.

The Bill would amend the Casino Control Act 1991, the Victorian Commission for Gambling and Liquor Regulation Act 2011, the Gambling Regulation Act 2003, and the Casino (Management Agreement) Act 1993.

This action follows the findings of the royal commission into Crown Resorts, headed up by Raymond Finkelstein. The commission was initiated under the instruction of the Minister for Consumer Affairs, Gaming and Liquor Regulation.

The investigation’s findings deemed Crown to be “unsuitable” to hold its Melbourne casino license based on its apparent “illegal, dishonest, unethical and exploitative” conduct. Despite this recommendation, the operator has managed to retain the licence.

Bill Breakdown

The bill’s amendments would allow for the enforcement of several recommendations originating from the reports. These include widening the powers of the regulator, introducing new casino operator obligations, and placing a ban on junkets.

The bill would also allow for the cancellation of Crown Melbourne’s casino licence if the Commission again finds the operation unsuitable after a mandated reform period where the property will attempt to rescue its reputation and very existence. The reform period would include the appointment of a ‘special manager’ who would oversee operations for two years.

Additional recommendations include the establishment of a new regulator model to intensify oversight of casino and gambling operators and revocation of the Casino Management Agreement provisions that compel the state to compensate Crown for specified actions taken without the operator’s consent. The recommendations would furthermore expand the list of offenses that can be leveled against a casino operator and introduce harsher penalties for transgressors.

In an official statement, the operator expressed its commitment to reform, saying,

“As with the recently released report and the Victorian government’s response, Crown will review the details of the Bill and engage with the government to understand the proposed legislative amendments relating to Crown Melbourne.”

Considerations

At the moment, the bill currently is at the second reading stage, and still needs to pass a committee stage, a third reading, and a royal ascent, before it can be officially implemented.

While the royal commission’s findings detailed “disgraceful” conduct over several years that took place over back many years, one of its numerous recommendations suggested that the removal of Crown Melbourne’s license may be detrimental to Victoria’s economic interests.

It stated that this action may result in “significant harm” to the economy of Victoria, adding that it found that Crown Melbourne “has the will and the capacity to reform itself so that it again becomes a suitable person to hold a casino licence.”

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