Regulatory compliance failures

The Crown Melbourne casino resort has to pay an AU$1m (US$777,200) fine over its failure to properly vet foreign high rollers and junket operators. The Victorian Commission for Gambling and Liquor Regulation (VCGLR) issued the fine on Tuesday to Crown Melbourne Ltd for its regulatory violations.

the million-dollar fine is the largest that the VCGLR can give

Some of the junket operators with which the company was working have links with organized crime. The million-dollar fine is the largest that the VCGLR can give as part of the Casino Control Act. Crown Melbourne also received a letter of censure which means that it cannot restart any junket operations until it gets in line with regulations.

The Crown Resorts-owned casino should have had a “robust process” in place in order to make sure that it was only dealing with reputable operators, according to the VCGLR The casino did not collect relevant information so that it could make an informed decision about the people who control the junkets. It also failed to properly verify or check the information it did receive. Finally, Crown Melbourne did not keep the required records over its dealing with junkets.

The VCGLR did not provide many specific details about its findings. It had concerns that criminals could use information about internal procedures and controls at the casino to try to launder money.

Reaction to the fine

Investigations into Crown Melbourne began after the publication of media reports in 2019 about the alleged links between some of Crown’s junket operators and organized crime. These reports ultimately led to the beginning of the NSW inquiry. VCGLR chairman Ross Kennedy spoke about the serious breaches by Crown Melbourne that led to Tuesday’s fine. Going forward, he said that “robust processes must be implemented to ensure that Crown’s Melbourne casino remains free from criminal influence and exploitation.”

Crown Resorts chairperson Helen Coonan noted that the company will keep engaging with the government of Victoria and the VCGLR. Crown Resorts is currently facing a royal commission in the province that will decide if it remains suitable to keep operating its Melbourne casino. The Victorian government is set to receive a report on the commission’s findings by August.

MP Andrew Wilkie said that the fine is “laughable”

Some people were not overly enthused after hearing the news of the AU$1m (US$777,200) fine. Victorian Greens party leader Samantha Ratnam labeled the size of the fine as being “loose change to Crown” and that the regulator had stood by for too long. She hopes that the government will now permanently break up the casino company. Independent MP Andrew Wilkie said that the fine is “laughable” and believes that it should have been “tens or hundreds of millions of dollars.”

Issues elsewhere

A hearing in News South Wales (NSW) already took place regarding Crown Resorts’ suitability to hold a casino license in Sydney. The resulting report went public in February 2021 and it deemed that the company is not suitable to hold a license until it makes widespread changes. Crown Resorts can still operate the hotel, restaurants, and bars at the AU$2.2bn (US$1.7bn) casino resort in Barangaroo.

Notable findings from the NSW inquiry included instances of money laundering, links to organized crime, and poor treatment of employees. Crown Melbourne is also currently under investigation from financial crimes watchdog AUSTRAC regarding potential money laundering breaches, which could result in up to AU$100m (US$77.7m) in fines.

Following concerns about his influence over Crown Resorts, major shareholder James Packer has agreed with the NSW regulator to certain measures that will see him step back from having too much influence in the operations of the company.

In addition to the inquiry in Victoria, a royal commission into the casino company also recently began in Western Australia to investigate the operations at the Crown Perth Casino. Private equity firm Blackstone Group offered in March to pay AU$8.02bn (US$6.23bn) for a 90.1% stake in Crown Resorts. It already holds a 9.99% stake in the casino company. The deal is conditional on no further Crown Resorts license suspensions, revocations, or failures in any of the three states.