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Losses stemming from the 2021 Royal Commission continue to mount for Crown Resorts' Melbourne casino after the operator was today handed a $30 million fine for allowing punters to cash in bank cheques made out to themselves - even before those cheques had cleared.
The action follows an investigation by the Victorian Gambling and Casino Control Commission (VGCCC) of Crown’s undocumented practices at its Melbourne casino and comes on the heels of separate fines totalling $200 million over the past year in the wake of Royal Commission's findings.
The Casino Control Act explicitly prohibits the use of cheques at the casino in most circumstances as a measure to both prevent problem gambling and guard against money laundering.
The wayward cheque-clearing practice is listed in Chapter 15 of the Royal Commission’s final report, titled Miscellaneous Breaches. It notes that between 2014 and 2019 a subsidiary of Crown Melbourne, Southbank, held a bank account used by patrons to deposit funds they needed for gambling at the Melbourne casino.
The report contends that the account, into which patrons deposited ‘hundreds of millions of dollars’ over five years, was in breach of the Act as Southbank had established an account ‘into which patrons paid their funds rather than establishing an account in its own name into which patrons’ funds would be deposited’.
The VGCCC says this was a ‘serious contravention because it was undocumented, long-running and subverted the important controls on the use of cheques at the casino’.
The severity of the contravention was compounded by the Royal Commission’s findings that Crown ‘likely also accepted blank cheques in exchange for gambling chips’.
However, the VGCCC conceded that in reaching the decision to fine the casino operator $30 million it was not convinced further serious breaches could be proved against Crown Resorts in relation to its cheque-cashing practices.
“At the Royal Commission, it was suggested that this practice involved Crown writing the amount of the debt a patron incurred on the blank cheque after the patron had finished gambling,” said the VGCCC. “If this practice occurred, it would be a further serious contravention of the Act.”
The commission says there was insufficient evidence to determine whether Crown had engaged in this practice. However, in reaching its penalty decision, the commission has ordered Crown to:
- ban the bank and blank cheque practices at the Melbourne casino
- require a review of Crown’s current policies and procedures on accepting bank cheques, and
- investigate undocumented practices at the Melbourne casino.
“This is the second time we’ve taken action on undocumented practices at the casino, and we will investigate further to ensure there are no more,” says VGCCC chair Fran Thorn.
“To be clear, we will not allow the casino to conceal its practices to avoid scrutiny. Practices like accepting bank cheques expose Crown to the risk of money laundering, put patrons at risk of gambling harm, and compromise our ability to ensure the casino runs with integrity, safety and fairness.”
A Crown Resorts spokesman says that Crown Melbourne has accepted the outcome from the VGCCC.
“These practices have ceased, and we have implemented significant improvements to reduce and prevent risk across our business,” the spokesman says.
“Under new ownership and leadership, our Future Crown program is driving whole-of-company reform as we continue to uplift our culture and build a Crown that exceeds the expectations of our stakeholders and the community.
“We will comply with the directions issued and work constructively with the VGCCC and the government to address this and other issues raised as part of the Victorian Royal Commission.”
US private equity group Blackstone acquired Crown Resorts following an $8.9 billion takeover bid that was completed in June last year.
The VGCCC notes that the latest fine is the third time that it had used its strengthened enforcement powers against Crown for conduct revealed by the Royal Commission.
In May last year, the VGCCC fined Crown $80 million in relation to its China Union Pay process, which reflected similar findings from separate inquires into The Star Entertainment Group (ASX: SGR) by NSW and Queensland regulators in 2022.
The CUP payments were listed as ‘hotel transactions’ when the funds withdrawn from the cards were instead used by Chinese nationals to gamble at Crown Melbourne, in contravention of China’s currency controls and the conditions of use for CUP cards.
In November last year, Crown was hit with a separate $120 million fine for breaches of its responsible service of gambling obligations.
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