Victorian regulators hit Crown with fresh disciplinary proceedings over gambling services

Victorian regulators hit Crown with fresh disciplinary proceedings over gambling services

Two months after the Victorian Gambling and Casino Control Commission (VGCCC) slapped resort and casino operator Crown Resorts with an $80 million penalty for evading anti-money laundering rules, the company is back in the hot seat and facing fresh disciplinary proceedings from the regulator.

This time, the VGCCC has commenced proceedings against Crown Melbourne in relation to its Responsible Services of Gambling obligations, alleging the company’s failures caused “thousands” of vulnerable patrons to be affected.

The proceedings stem from the Victorian Royal Commission into Crown, which found the company committed multiple breaches in delivering its Responsible Gambling Code of Conduct.

While regulators let Crown Melbourne keep its casino licence in the wake of the Royal Commission, it wasn’t without caveats; the company is currently running the casino in Melbourne with a conditional licence, approved as part of the group’s now-completed merger with US investment giant Blackstone.

The VGCCC alleges Crown's breaches include the inadequate supervision of potentially thousands of customers who exhibited signs of problem or risky gambling - something that was highlighted in the Royal Commission’s final report.

“The cost to the community of problem gambling is enormous. It is not only the gambler who suffers. It also affects many other people, and institutions,” the Royal Commission said.

“Crown Melbourne had for years held itself out as having a world’s best approach to problem gambling. Nothing can be further from the truth.

“The Commission heard many distressing stories from people whose lives were ruined by gambling but whose situation might have been improved if casino staff had carried out their obligations under Crown Melbourne’s Gambling Code.”

The VGCCC also alleged Crown Melbourne breached its obligation under Section 69 of the Casino Control Act, which makes it a condition of the casino licence for the operator to implement a Responsible Gambling Code of Conduct that includes a requirement of some form of interaction or referral to specialist services where customers display signs of distress, unacceptable behaviour or signs of potential gambling related harm.

This includes monitoring patrons that are “gambling for extended periods without a break” - an obligation the Royal Commission said Crown breached.

“Crown Melbourne has consistently failed to comply with both the Gambling Code and the Play Periods Policy. Players have been allowed to gamble continuously for 12 hours or more without any observation or interaction. Some customers have been allowed to gamble continuously for well over 24 hours,” the Royal Commission said.

“Crown Melbourne has for many years consistently breached its Gambling Code and, therefore, a condition of its casino licence.”

According to a Crown spokesperson, the matters raised by the VGCCC announcement come as little surprise to the company, considering they were referenced as part of the Victorian Government's response to the Royal Commission.

"Our priority remains delivering on our reform and remediation program to ensure we deliver a safe and responsible gaming environment," the spokesperson said.

"The VGCCC announcement today relates to issues raised in the Victorian Royal Commission Report and we continue to work cooperatively and constructively with the VGCCC to close out this and all other outstanding matters.”

Crown is staring down yet another hefty penalty, with possible actions available to the regulator including a fine of up to $100 million, a variation of the casino licence, and directions to force Crown to take rectification steps.

“Crown’s responsible gambling obligations are a condition of the casino licence, designed to protect vulnerable patrons and to prevent gambling related harm to patrons, their families and the community. There is no more important obligation,” VGCCC chair Fran Thorn said.

“We heard many distressing stories at the Royal Commission of vulnerable patrons being encouraged to gamble beyond their means. 

“The VGCCC will therefore be unflinching in its resolve to deal with the issues uncovered at the Royal Commission regarding Crown’s approach to responsible gambling, and to ensure the casino operator acts in line with its legal obligations and the community’s expectations.”

The regulator will soon make another announcement once it has considered Crown’s response to a request for further information about its Responsible Service of Gambling obligations.

“The VGCCC is considering further potential disciplinary proceedings arising from other matters highlighted by the Royal Commission,” the VGCCC said.

The announcement comes amidst heightened regulatory scrutiny by gambling regulators nationwide of Australian casinos, particularly into Brisbane-based The Star (ASX: SGR) which had its C-suite and board grilled at a public hearing earlier this year.

In the closing days of the New South Wales Independent Liquor and Gaming Authority (ILGA) review into The Star Sydney, counsel assisting the Bell Review Naomi Sharp SC submitted that the company was "not suitable" to hold a casino licence, and possibly even misled shareholders.

Since then, Queensland gambling regulators jumped into the fray, announcing The Honourable Robert Gotterson AO would lead a probe into The Star Gold Coast and Treasury Brisbane on similar matters covered in the Bell Review into Star Sydney, including but not limited to anti-money laundering practices, facilitating the use of China UnionPay cards for gambling to allow Chinese nationals to subvert their country's currency controls, and the management of VIPs and high rollers.

Down in South Australia, the state's gambling regulator has also announced an independent review of its own into whether SkyCity (ASX: SKC) is suitable to hold a casino licence for its Adelaide operations.

“Commissions of Inquiry have been undertaken in New South Wales, Victoria and Western Australia into the Casinos operating or proposing to operate in those states and a further inquiry is about to be commenced in Queensland,” South Australia's Liquor and Gambling commissioner Dini Soulio said.

“Inquiries to date have highlighted significant failings on the part of Crown Resorts as operators of Crown Casinos. In addition, Star Entertainment Group is the subject of a current inquiry in NSW where significant failings have been identified. A number of the matters raised to date extend beyond any one organisation and point instead to broader systemic issues within the casino industry.

“As a result, an investigation will be undertaken by the Honourable Brian Martin AO QC to ensure that the way that SkyCity operates demonstrates that the licensee is still suitable to hold the casino licence in South Australia.”

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