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The Perth Casino Royal Commission (PCRC) has found Crown Resorts' (ASX: CWN) casino in the WA capital is "not suitable" to hold a gaming licence, recommending a series of reforms for the company, regulators and legislation that has fallen behind since it was crafted 40 years ago.
Commissioners Owen, Jenkins and Murphy found many of the failings identified at the Perth Casino are similar to what was revealed in New South Wales and Victorian inquiries into Crown, including the facilitation of money laundering, failing to have an effective anti-money laundering program, and permitting junkets with links to criminals to operate at the casino.
They also found the casino had failed to minimise casino gambling-related harm in many ways, including "by seeking changes to the speed of play of electronic gaming machines without adequate investigation of its effect on harm".
The Royal Commission concluded Perth Casino failed to be open and accountable in communications with the Gaming and Wagering Commission about various matters, including allegations made in the media about the arrest in 2016 of China-based staff.
"The public of Western Australia are entitled to have confidence that the licensee of Perth Casino and its associates will conduct and organise the gaming operations of Perth Casino in a socially responsible, lawful and efficient manner," the Commissioners said in the report that was tabled by WA Racing and Gaming Minister Tony Buti in the state's parliament today.
"By examining the extant and emerging risks of casino operations, we have found that the trust that has been placed in the licensee and its associates has been compromised."
The Perth Casino is currently the only holder of a gaming licence in Western Australia, and has been the only meaningful source of profitability for the Crown group that has been plagued by losses due to COVID-mandated closures of Crown Melbourne and Crown Sydney, the latter yet to obtain a licence to open up its gaming floors. Crown Resorts reported an EBITDA loss of $234.4 million in the December half, but Crown Perth was one shining light for the bottom line with $68.6 million in earnings.
Minister Buti told a press conference the Royal Commission has shown that Western Australians, including the thousands of hard-working casino employees, deserve better from the casino operator and Crown's governance.
"It is clear that over decades standards have eroded, integrity has been lost, and transparency of Western Australia's casino operator has diminished," Minister Buti said.
"Put simply, in many cases Crown has demonstrated poor corporate citizenship. It is a privilege to hold a gambling licence in West Western Australia, and the Royal Commission has shown that Crown has at times abused that privilege," he said.
"Crown needs to do better but the state's regulator also needs to do better," he added, emphasising the State Government would introduce reforms that demand accountability of WA's casino operator.
The report did not make a recommendation to revoke the gambling licence, but details remediation activities Crown will need to implement to become suitable to hold a licence during a transition phase.
"The government assessed these recommendations which include establishing an independent monitor to monitor and report on crown's progress in implementing these remediation activities," the minister said.
"The report outlines that the remediation should take two years to implement," he said, noting the report clarified "a lot had changed for the better" following inquiries in NSW and VIC, with remediation now in the process of being implemented.
"This remediation work covers a number of areas including corporate governance, culture, junkets, and significant play review and responsible gambling."
Other recommendations included a mandatory pre-commitment scheme and play period limits, the collection of player card data with open access for researchers to study the prevalence of gambling-related harm, proof of financial capacity for Pearl Room members, maximum bet sizes on pokie machines.
Further items for consideration tabled in the report include mandatory carded play for table games, additional automated risk monitoring, removing losses disguised as wins in pokie machines as well as a further reduction in maximum bet sizes and notifications of average losses, the regulation of promotional activities generally, and a review of ATM/EFTPOS policies to ensure consistency as the current system is "poorly designed in that it allows for daily limits to reset at midnight".
Crown issued a statement today stating it would work cooperatively and constructively with the Western Australian Government in relation to the report's findings and recommendations.
"Significant progress has been made with Crown’s transformation program, the implementation of company-wide reforms, and establishing the highest standards of governance," Crown managing director and chief executive officer Steve McCann said.
"This includes investment in people, systems, processes, culture and a sharp focus on responsible gaming and the prevention of financial crime.
"Crown remains committed to continuous improvement across all facets of the business and is prioritising the delivery of safe and responsible gaming across all of our resorts, including Crown Perth."
The report's release comes shortly after Crown's board unanimously backed an $8.9 billion takeover offer from US investment manager Blackstone - a deal that still needs to be approved by shareholders.
"Our Royal Commission noted the potential Blackstone takeover, but proceeded on the current situation before then," Minister Buti explained.
"The Blackstone offer is subject to several regulatory gateways here, in Victoria, New South Wales and at the Commonwealth level.
"In relation to the independent monitor, it is planned that the role will be in place for two years regardless of who is operating Perth's casino in the future."
Minister Buti said there would be several administrative actions to complement the State Government's priority legislation arising from the report's recommendations, including providing a new statement of expectations to the Gaming and Wagering Commission (GWC).
"Work has already started on a modernised act to replace the outdated Casino Control Act 1984. Meanwhile, as a prudent measure the government has provided copies of the report to relevant investigative agencies including the CCC (Corruption and Crime Commission), WA Police Force, AUSTRAC (Australian Transaction Reports and Analysis Centre), and ASIC (Australian Securities and Investments Commission)," he said.
"In the contents of our stage of reforms, the penalties applicable to breaches of offenses under the Gaming and Wagering Commission Act and the Casino Control Act will be reviewed, including with reference to inter-jurisdictional analysis."
These proposed legislative actions respond to the Commissioners' conclusion the legislation for Perth Casino's regulation is "not fit for purpose and requires replacement with a modern regulatory framework".
"We have further found that there have been numerous deficiencies in the manner in which the Gaming and Wagering Commission has exercised its power and responsibilities in relation to casinos and casino gaming. The Department has contributed to these failures by not adequately supporting the Gaming and Wagering Commission," the Commissioners wrote in the report.
"The Gaming and Wagering Commission has not been assisted by over time being given more duties and functions without a corresponding or sufficient increase in expertise, numbers and funding.
"Neither has it been helped by the legislative framework failing to establish with clarity the relationship between it and the Department. This has resulted in neither organisation having an adequate or accurate understanding of its role in casino regulation."
Today's announcement comes as another major Australian casino operator The Star Entertainment Group (ASX: SGR) is facing a NSW-led Inquiry into its Sydney operations, which so far has heard allegations the group disguised $900 million in gambling transactions from Chinese guests as hotel expenses.
CWN shares were up 0.96 per cent at $12.59 at 2pm AEDT.
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