Crown to keep Melbourne license despite failings, Govt. to name special manager

Crown Resorts is keeping its flagship Melbourne casino license despite a royal commission finding the business “unsuitable” to run the complex due to having engaged in “illegal, dishonest, unethical and exploitative” conduct.

Despite these findings, Commissioner Ray Finkelstein, who led the eight-month investigation, did not recommend for the gaming giant to be stripped of its license. Instead, Finkelstein recommended Crown to be given two years to reform itself under the supervision of a government-appointed “special manager,” reports The Sydney Morning Herald.

The special manager will be tasked with overseeing all aspects of the business. Stephen O’Bryan, the first commissioner of the Independent Broad-based Anti-corruption Commission (IBAC), is set to take the role. O’Bryan will have the ability to veto board decisions and, if after two years, he considers Crown is unfit to hold its license, it will be canceled.

Meanwhile, major shareholder James Packer is mandated to sell down his 37% stake in Crown to 5% or less by September 2024. This is part of a new ownership cap which aims to prevent outside influence on the gaming company.

The decision not to remove Crown’s license was taken on the basis that it would pose “considerable harm” to the Victorian economy and “innocent third parties.” The operator contributed around 1% of Victoria’s state tax revenue in pre-pandemic years, and it employs more than 11,000 people in Melbourne. The commissioner also recognized the ongoing reform process Crown has undertaken for some time now.

"The Commission discovered that for many years Crown Melbourne had engaged in conduct that is, in a word, disgraceful," one part of the report reads. "It is difficult to grade the seriousness of the misconduct. Some were so callous that it is hard to imagine it could be engaged in by such a well-known corporation whose Melbourne Casino Complex is visited by millions annually."

The findings include systemic breaches of the law, tax breaches, misleading and delaying the regulator, and systemic breaches of responsible gaming obligations, reports 9 News. These conducts put vulnerable Victorians at risk, the inquiry found.

Premier Daniel Andrews said on the inquiry and the subsequent measures that Crown “was more than on notice,” remarking the license will terminate in two years’ time “unless and until they can demonstrate that they are fit and proper” to hold the gaming license.

He further described the misconduct as “shameful,” and that there had been “appalling behavior for a lengthy period.” “Today's findings are very serious and it speaks to conduct that is shameful in many, many ways," he said.

The royal commission was first established in February, following a New South Wales inquiry that revealed Crown facilitated money laundering and was unfit to operate Sydney's Barangaroo casino.

Legislation has been introduced into parliament to address nine of the recommendations from the royal commission’s report, which total 33. The remaining 24 will be “considered,” said Gaming Minister Mellissa Horne.

Further measures being introduced following the inquiry include a ban on junkets, and boosted penalties for breaches of the Casino Control Act: these will be raised from $1 million to $100 million.

In a new statement, Crown said the company “welcomes” the report and that the findings provided “a way forward” for the business. “We are embracing the challenges ahead of us as we work to restore our reputation, and we are determined to get this right,” said new CEO Steve McCann. “We will be a better Crown.”

The company has further promised it would work cooperatively and transparently with the new special manager.