James Packer dealt a blow as NSW commits to casino reform

Crown Resorts’ major shareholder James Packer will almost certainly be forced to offload his 37pc stake in the $6bn casino group.

James Packer will almost certainly be forced to offload his 37 per cent stake in Crown Resorts after the NSW government announced its intention to redesign the regulation of casinos.

Crown Resorts’ major shareholder James Packer will almost certainly be forced to offload his 37 per cent stake in the $6bn casino group after the NSW government agreed to support the regulatory recommendations of the Bergin inquiry, slapping a 10 per cent shareholder cap on casino operators in NSW.

The government will also radically overhaul the way it regulates casinos by supporting the recommendations, which will see the creation of an immensely powerful independent casino regulator.

It comes as a further blow to Mr Packer after the Bergin inquiry earlier this year temporarily revoked the casino giant’s NSW casino licence, as he will now need regulatory approval to maintain his 37 per cent stake – a hurdle he is unlikely to clear.

It will also create additional pressures for the state’s other casino operator, Star Entertainment group, with the overall regulatory burden on the casino business lifted to combat the risk of money laundering.

On Wednesday, Digital and Customer Service Minister Victor Dominello said the NSW government would support all 19 recommendations made by commissioner Patricia Bergin, reversing the prevailing self-regulation model of casino regulation that has governed NSW for years.

“The NSW government response to the Bergin inquiry will see a redesigned regulatory structure for casinos in NSW, with a clearer focus on addressing money laundering risks inherently associated with casino activities,” Mr Dominello said.

“It is critical the management and operation of casinos in NSW are free from criminal influence and exploitation.

“Committing to implement the 19 recommendations from Justice Bergin’s report is an important first step in the process of reforming the casino sector.”

James Packer fronts the NSW casino inquiry last year.

The move will see the casino regulator created in line with commissioner Bergin’s wishes – an “independent, dedicated, stand-alone, specialist” body separate from the gaming and liquor regulatory bodies, with the incredible powers of a standing royal commission and sole power over punishing wayward casino operators.

It will also ensure that the regulator is funded by a supervisory levy on casino operators, while any suspicious transactions passing through gaming tables or pokies must now be reported to the state regulator as well as the federal financial crimes regulator AUSTRAC.

A person or business will not be able to “acquire, hold or transfer” more than 10 per cent in a casino operator in the state without regulatory approval – dashing any hope Mr Packer might have had about retaining his state, with the Bergin Inquiry singling out his conduct as one reason for revoking Crown’s licence.

But it will also make it harder for Mr Packer to offload his stake to any potential suitor of Crown such as Blackstone, or rival Star Entertainment Group, as a move would be subject to regulatory approval.

International high roller tour operators or “junkets” will most likely be banned, with the NSW government saying it will be the decision of the new regulator – although Crown and The Star have already agreed to stop partnering with junkets after the NSW Bergin inquiry probed their links to organised crime gangs.

Any new applicant for a casino licence must prove to the regulator “clear and

convincing evidence” it is suitable, subject to a review every five years.

In addition, Mr Dominello said that the NSW government would continue to monitor ongoing royal commissions into Crown Resorts and consider applying any regulator recommendations they might make.

“In addition, we will continue to monitor the current casino Royal Commissions in Victoria and Western Australia and consider any proposals for regulatory reform recommended by those inquiries, including stronger gambling harm minimisation measures,” Mr Dominello said.

The current NSW casino regulator – the Independent Liquor and Gaming Authority – earlier this year reached individual agreements with Star and Crown to phase in cashless gaming, and has reached an agreement with Mr Packer to stop him exercising his shareholding until 2024.