Announced today (23 April), Crown will now operate its Sydney casino under an unrestricted licence. This brings to an end more than three years of uncertainty for Crown in NSW.
Crown was deemed “unsuitable” to operate a casino at Barangaroo in central Sydney in February 2021 in the Bergin report. This came after the New South Wales Casino Inquiry found evidence its facilities and accounts were used for money laundering.
The inquiry also found Crown engaged with junket operators with alleged connections to organised crime without carrying out proper due diligence. Furthermore, it put employees at risk of harm in its promotion of gambling in Mainland China.
As such, Crown was unable to operate a casino in its dining and hotel tower to patrons for more than a year. However, Crown did secure permission to operate in NSW 16 months after being deemed unfit to hold a licence. During this time, Crown was acquired by private equity giant Blackstone for AU$8.87bn (£4.74bn/€5.38bn/US$5.72bn).
The agreement with the NSW Independent Liquor & Gaming Authority (ILGA), predecessor to the NICC, was conditional on Crown being closely monitored. Incidentally, this period of monitoring was assessed and has led to the licence being retained without restrictions.
What did Crown do to secure the licence?
According to Crown, it invested AU$200.0m in a comprehensive transformation of its business in order to retain the licence. This includes implementing extensive reforms across harm minimisation, financial crime, governance, compliance and risk.
This work, it said, has been implemented under new ownership and executive leadership, following the Blackstone deal in June 2022. Crown also noted the formation of new boards, including Crown Sydney’s board under the chairmanship of John Borghetti.
To address money laundering concerns, Crown said it had introduced “rigorous” standards to tackle such issues. This includes becoming the first gambling business in NSW to put in place cashless gaming on all electronic table games.
In addition, Crown has committed to continue to work with the NICC to ensure ongoing compliance.
NSW regulator acknowledges changes
In its suitability assessment of Crown, the NICC praised the work done at the Sydney casino. It established Crown Sydney “fundamentally” reformed its business and is operating the casino in line with required rules and regulations.
In addition to proving it can run the casino lawfully, the NICC said Crown had remediated its business in other ways. This includes building a “culture of transparency and accountability” across its integrated resort.
NICC chief commissioner Philip Crawford says Crown has come a long way. He adds that it must demonstrate long-term commitment to maintaining suitability.
“Hard work and transformation aside, the NICC has not forgotten the level of misconduct exposed in 2021 when Crown was found unsuitable,” Crawford said. “Crown Sydney has ongoing work to reach steady state and it must continue to lift standards and maintain its cultural transformation.
“There is and will always be room for improvement. But Crown is a changed business that is looking toward the future. Likewise, the NICC is a changed regulator with enhanced powers, a singular focus on casinos and a mandate to address the risks of harm.
“This decision is a positive outcome for Crown Sydney, its staff and the community – who can be sure the NICC will use all of its powers to keep the casino in check.”
What is in the new licence?
In addition to implementing hundreds of new internal controls, Bergin-based reforms feature in a new licence and regulatory agreement. This has been struck between Crown Sydney, the NSW government and the NICC.
These agreements include updated settings, such as the removal of fetters to the NICC’s powers, as well as previous compensation trigger clauses that are no longer part of the casino legislation.
This ultimately means that Crown can operate the casino without the restrictions and close monitoring it has faced in recent years.
“Crown cannot disregard the responsibility and privilege that comes with holding a casino licence,” Crawford said.
“Crown Sydney’s ability to provide a destination hospitality and entertainment venue underpinned by the restricted gaming facility is contingent on its steadfast commitment to continuing suitability, accountability and compliance.”
Rebuilding Crown from the inside out with Blackstone
Crown Resorts CEO Ciarán Carruthers is keen to highlight the impact of Blackstone. The private equity giant brought in new executive leadership, management and boards. This, he says, means the business has been rebuilt from the inside out.
“We’ve spent the past two years pioneering a monumental transformation unlike anything seen before in corporate Australia,” Carruthers said. “We must continue to build and maintain trust and respect while showing that success and commercial viability go hand in hand with trust, care and integrity.
“We know holding a casino licence is a privilege and an obligation we take extremely seriously. Crown will continue to build trust with our communities and stay focused on our vision to become a beacon of excellence for integrated resorts.”
Crown Sydney CEO Mark McWhinnie also praises the work done by the team at the casino to ensure it retained the licence.
“Since opening the Crown Sydney casino in August 2022, we have worked tirelessly to implement wholesale reform across our business,” Mark McWhinnie said. “We have delivered 432 remediation activities to the NICC across key areas, including harm minimisation, financial crime, compliance, risk and culture.
“The NICC’s decision today recognises the genuine and sustainable changes we’ve made and our ongoing commitment to operating at the highest industry standards. Crown Sydney is the safest place to gamble in the state.”
More good news for Crown after Victoria ruling
The decision comes just weeks after Crown was also allowed to keep its casino licence in Victoria. Last month, the Victorian Gambling and Casino Control Commission (VGCCC) ruled Crown is suitable to hold a licence and continue operating its Melbourne property.
Like in NSW, Crown implemented widespread changes at the casino in the wake of the Royal Commission into casino licences. The Commission was scathing in its criticism of what it deemed “illegal, dishonest, unethical and exploitative” behaviour.
In October 2021, a report from the inquiry deemed the casino “unsuitable” to hold a casino licence in Victoria. However, Crown should not immediately lose its licence due to the potential economic impact, it added.
Instead, the Commission set out a series of recommendations to improve practices. Over the following two years, Crown made changes to operations to comply with the measures. This ultimately led to the operator retaining the licence.
This, however, did not come without setbacks. In November 2022, the VGCCC issued Crown with two fines totalling a record $120m for a series of failings. The VGCCC said Crown failed its responsible service of gambling obligations. Customers gambled for long periods without a break, sometimes for more than 24 hours, it found.
Property CEO Mike Volkert said retaining the licence ranks among the most significant milestones in Crown Melbourne’s 30-year history.