Crown Resorts hit with $20m fine over ‘historical’ unpaid taxes during James Packer era

The latest fine takes the total penalties that Victoria’s new gaming regulator has issued Crown to $250m as it cleans up after the state’s royal commission into the group.

Crown Resorts’s flagship Melbourne casino has been slapped with a fresh $20m fine from the Victorian regulator for underpaying state taxes over a five-year period from 2014.

The Victorian Royal Commission into Crown revealed that the company formerly backed by James Packer owed the state up to $200m in state casino taxes according to one of its own executives.

It is the fourth time that Victoria’s casino regulator has hit Crown a fine over wrongdoing unearthed in the royal commission and is understood to be one of the last penalties issued as a result of the historical offences.

Crown underpaid casino taxes by improperly claiming deductions. It included the costs of certain promotional activities as amounts paid out as winnings.

VGCCC chair Fran Thorn said Crown’s former management had “deliberately concealed the nature of these (tax) deductions from the VGCCC’s predecessor, the Victorian Commission for Gambling and Liquor Regulation”.

In an 11-page document on the list of reasons for the $20m penalty, Ms Thorn said the fine would have been higher “were it not for Crown Melbourne’s remorse and cooperation”.

“Crown and other gaming licensees have important obligations to pay gaming taxes to the State. Not only did Crown breach its obligations by claiming tax deductions to which it was not entitled, Crown also made significant efforts at concealment,” Ms Thorn said.

“The VGCCC will not tolerate this behaviour. We expect licensees to comply with their tax obligations and to be transparent in their dealings with us.”

Ms Thorn said the $20m fine sent a “clear message that this type of conduct will be met with strong disciplinary action”.

“This fine also sends an important message to other gambling operators about the importance of complying with their obligations to pay gambling taxes and the need for frank and open dealings with the regulator.”

Gaming machines executive Mark Mackay told the royal commission that between 2014 and 2019 Crown may have underpaid the gaming tax by at least $167.8m, and that “it could be over two hundred” when encompassing FY20 and FY21.

Crown has so far repaid $61.5m to the Victorian government, including $24.1m in penalty interest.

The company, which US private equity titan Blackstone took over for $8.9bn last year, has been hit with $250m in fines from the Victorian Gambling and Casino Control Commission (VGCCC) as part of the royal commission’s clean up.

A Crown spokeswoman said: “These historical breaches, decisions and actions have no place at Crown, and under new ownership and leadership, we are committed to an open, constructive, and transparent relationship with our regulators and stakeholders, as well as improving internal controls and our regulatory reporting requirements”.

“Our Future Crown program is driving whole-of-company reform and we are focused on building a Crown that exceeds the expectations of our stakeholders and the community,” the spokeswoman said.

“This practice ceased in 2021 and Crown has since made the required payments to meet its casino tax obligations.”

Crown has also agreed to pay a $450m penalty to financial crimes regulator Austrac over anti-money laundering breaches at its Melbourne and Perth casinos.

The company had faced maximum fines of up to $22.2m per breach. Under the terms of the takeover, Blackstone had an exit clause if the penalty was more than $750m. That made it comfortable enough to proceed with the transaction.

The Australian had flagged in January the Austrac fine was likely to amount to “hundreds of millions of dollars” rather than eclipsing $1bn.

Crown Resorts chief executive Ciarán Carruthers said last month that he was focused on ‘Future Crown’ after apologising for the ‘unacceptable historical failings’.

“The company that committed these unacceptable, historic breaches is far removed from the company that exists today,” Mr Carruthers said.

“There is no place for money laundering or terrorism financing at Crown or anywhere within our communities, and we will continue to invest in developing a sophisticated and robust framework, supported by the right capabilities to combat this illegal behaviour.”