Crown Resorts has been hit with a record $80 million fine over its illegal practice of accepting Chinese bank cards at its Melbourne casino to fund gambling and disguising the transactions as hotel expenses.
The gambling giant processed $164 million in China UnionPay card payments and netted more than $32 million in revenue through the scam between 2012 and 2016. The matter came to light last year during Victoria’s royal commission into the group.
Crown has been hit with a record $80 million fine. Credit: Chris Hopkins
The newly formed Victorian Gambling and Casino Control Commission said on Monday afternoon that it would impose an $80 million fine on the James Packer-backed group over the scandal.
It is the first time Victoria has hit Crown with a fine of more than $1 million after the state increased the maximum possible penalty it could impose to $100 million last year following the explosive royal commission.
“Crown’s [China UnionPay] process was a clandestine, deliberate process, which not only breached the Casino Control Act but was also devised to assist patrons to breach China’s foreign currency exchange restrictions,” commission chairperson Fran Thorn said.
“Crown was aware of the risk that the [China UnionPay] process could be illegal but decided to run that risk. In doing so, it showed no regard for upholding its regulatory obligations. Indeed, it went to some lengths to hide what it was doing.”
During last year’s Victorian royal commission into Crown – one of three sparked by The Age and The Sydney Morning Herald’s investigative reporting into the company – Commissioner Ray Finkelstein described the processes as a “fraudulent scam” which “everybody involved would have known”.
The scam breached the prohibition on Crown accepting credit or debit cards at the casino for gambling and its obligation to keep accurate accounting records. It also left Crown susceptible to dealing with the proceeds of crime.
Crown said in a statement that it “acknowledges its historic failings” and that it was “committed to the delivery of a comprehensive reform and remediation program”.
The commission said it was also considering further penalties against Crown related to wrongdoing uncovered during the royal commission, which, as with inquiries in NSW and Western Australia, found Crown was unfit to hold its casino licence.
The casino group still faces a blockbuster fine which could run to the hundreds of millions of dollars from the financial crimes watchdog, AUSTRAC, which has alleged Crown took $1 billion in revenue from “high-risk” VIP customers, including some with known criminal links.
Crown’s regulatory pain comes as a takeover by the New York-based private equity firm Blackstone reaches its final stages. Shareholders, including major investor James Packer, voted to accept the $8.9 billion deal on May 20. Blackstone still needs final approval from state gambling regulators before it gets the keys to Crown’s casinos in Melbourne, Sydney and Perth.
The commission said Crown had admitted the UnionPay process was illegal and unacceptable, that it considered the casino’s contrition when deciding on the size of the fine.
However, the watchdog added that during the disciplinary proceedings it became aware that the casino used “other mechanisms” enabling credit card transactions after 2016, which it was now investigating. Crown believes the new transactions were legal.
A public inquiry into Crown’s main rival, the Star Entertainment Group, heard earlier this year that it also used the UnionPay scam to process $900 million of transaction at its Sydney casino, in possible breach of NSW gambling rules.
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