Crown Resorts prepares for release of Victorian Royal Commission’s verdict on Melbourne casino ownership

Crown Resorts is hoping it will hang on to its flagship Melbourne casino, with the verdict of a royal commission into the group to be made public before the end of October.

Crown has argued at the inquiry that the impact of a casino licence cancellation would wreak economic havoc. Picture: NCA NewsWire/David Crosling

The final verdict on whether Crown Resorts will be permitted to maintain control of its flagship Melbourne casino will be known by the end of the month, with the Victorian government committing to release the final report of a royal commission into the James Packer-backed group shortly after it receives it on Friday.

On Thursday the office for the state Consumer Affairs, Gaming and Liquor Regulation Minister Melissa Horne confirmed the report, authored by the probe’s commissioner Raymond Finkelstein, and the government’s response to its contents “will be released prior to the end of this month”.

Executives at Crown view it as likely that Mr Finkelstein will find Crown an unsuitable licensee of the state’s only casino after counsel assisting the commission recommended he do so in July, following revelations of state gaming tax underpayment and other illegal conduct.

But they won’t learn whether the report will contain a path to suitability – similar to the NSW Bergin inquiry’s temporary cancellation of the group’s Sydney casino licence – or an outright scrapping of its Victorian casino licence until shortly before the report is due to be released publicly.

Ms Horne said the government would act on the report’s recommendations.

“We’ll consider the findings and recommendations from the royal commission in detail and take whatever action is necessary to strengthen casino oversight in Victoria and ensure this never happens again,” she said.

Mr Finkelstein has not concealed his opinions on Crown’s suitability as a licensee, remarking at one point during public hearings that ran from May to August that “wherever I look I see not just bad conduct, but illegal conduct, improper conduct, unacceptable conduct, and it permeates the whole organisation”.

Commissioner Raymond Finkelstein. Picture: NCA NewsWire/David Crosling

The group has prepared for an adverse finding, inking a deal with its creditors to avoid triggering a default event if found unsuitable by temporarily suspending dividends.

Counsel assisting the Victorian commission Adrian Finanzio SC told Mr Finkelstein that Crown should be found unsuitable as the commission, which kicked off in March, had revealed “serious misconduct, illegal conduct and highly inappropriate conduct” that was facilitated “by a culture which has consistently put profit above all other considerations”.

The recommendation came despite a management exodus and reform efforts after the Bergin inquiry reached similar conclusions, finding that the company likely enabled money laundering through a profits-first culture in part pushed by 37 per cent shareholder James Packer.

Counsel assisting the Victorian commission picked holes in Crown’s new money laundering regime, laid bare the issue of problem gaming at the casino and discovered that Crown once employed an illegal gambling chip payment method for Chinese high rollers while incorrectly deducting expenses from poker machine revenue, costing the state government millions.

Although Crown attempted to right the wrongs, including by repaying $61m in taxes and penalties to the state government, counsel assisting still recommended a finding of unsuitability against former executive chairman Helen Coonan and Crown Melbourne CEO Xavier Walsh, who have since resigned from their positions.

Mr Finanzio also submitted it was open for Mr Finkelstein to cancel Crown’s licence outright immediately or after a transition period to a new operator despite noting such an outcome “would in all likelihood be highly disruptive to many people” by threatening the jobs of the casino’s 11,500 staff.

But in written submissions a week later, counsel assisting threw Crown a lifeline by proposing a plan where the company could continue to operate the casino while an independent government monitor tracked its reform efforts over two years, at which point it could reapply for the casino licence.

“Having regard to the nature and extent of Crown’s failings, the task of reform is enormous, the path is uncertain, and the outcomes are speculative,” counsel assisting wrote.

Crown Resorts tentatively backed the plan, submitting that although it is open for the commission to find it is not presently suitable, the further implementation of its reform program overseen by an independent monitor should help it achieve probity.

Crown Resorts former executive chair Helen Coonan.

Mr Finkelstein’s report could contain a number of curveballs such as a recommendation that Crown Melbourne be run as a stand-alone entity, remarking during hearings that legislation establishing the casino made it clear that it should be a “Melbourne-run show.”

A finding that Crown be broken up or have its licence scrapped immediately will revive takeover plays for the company, with 9.99 per cent shareholder Blackstone and rival gaming company The Star Entertainment Group known to be waiting in the wings after making failed tilts earlier this year.

New Crown CEO Steve McCann has said Crown “will consider all options to maximise shareholder value in the context of however the regulatory environment plays out”, including assessing takeover offers or leasing the Melbourne casino to another operator.

Mr Finkelstein may also implement counsel assisting’s recommendation that shareholdings in Crown be capped at 5 per cent without regulatory approval.

It would force Mr Packer, who is unlikely to receive regulatory approval, to sell his stake down below the 10 per cent shareholding cap set to be introduced by the NSW government. 

Crown Resorts is also facing a royal commission into its Perth casino, which is due next March.