WA royal commission raises break-up stakes for Crown Resorts

The WA royal commission says it will examine whether it is in the public interest for Crown’s Perth casino to be controlled by a ‘large corporate group’.

With an interim report now with the WA state government, commissioner Neville Owen on Monday said the probe would focus on Crown going forward, with hearings to run into October. Picture: Colin Murty

Western Australia’s probe into Crown Resorts will examine whether it is in the state’s interest for the company’s Burswood casino in Perth to be owned by “a large corporate group”, further raising the prospect of a forced break-up or restructure of the company.

It comes after the commissioner of the Victorian commission into the James Packer-backed group – which recently heard that it should rule Crown unsuitable to operate its Melbourne casino – expressed his concern that an agreement with the Victorian government precludes Crown Melbourne from being owned by a centralised company with rival casino assets.

At opening statements of the second part of the WA commission in Perth on Monday, counsel assisting Patricia Cahill said this interpretation could have an impact on Crown’s suitability to retain control of its Perth Casino.

“(Under the agreement) Crown Casino Limited has promised to ensure that Crown Resorts Limited maintains the Melbourne casino as the flagship casino of Crown Resorts’ gaming business in Australia,” she said.

“How Crown Resorts Limited acts to fulfil that promise and its effect on the operations on the Perth Casino is something this commission wishes to examine.”

Ms Cahill said that when the Burswood casino complex was developed in the 1980s, it was not envisioned that it would be owned by an operator with competing casino interests like Crown, the Packer-controlled precursor of which gained control of it in 2004.

She added the commission would examine “whether the diversity of interests of the corporate group inevitably lead to divided loyalties or conflicts between those interests”.

Ms Cahill’s comments come shortly after the WA government announced the commission would have its reporting date extended from November to March 4 next year, after its three commissioners asked for more time to carry out their investigations.

Both the WA and Victorian commissions were called in February after the NSW Bergin Inquiry recommended that Crown was not suitable to operate its $2.2bn Sydney casino.

The scope of the WA commission’s terms of reference required it to examine the efficacy of the WA casino regulator, the Gaming and Wagering Commission, which was the focus of its hearings throughout May.

With an interim report now with the WA state government, commissioner Neville Owen on Monday said the probe would focus on Crown going forward, with hearings to run into October.

“We came to the view that if we are to properly serve the public interest and to produce a report and a recommendation that both the government and the public would expect of us, the original timeline was not achievable,” he said.

Ms Cahill said counsel assisting would probe Crown on issues that have featured at the other inquiries like governance and risk management structures, its relationship with the regulator, problem gambling harm minimisation, culture, money laundering and junkets.

But an issue unique to WA will be examined: electronic gaming machines (EGMs) at Crown Perth. Under state law, “pokies” are illegal but certain EGMS are allowed at the casino if they do not have certain features like autoplay and a spinning reel.

Ms Cahill said there were 2500 EGMs at Crown Perth, accounting for almost half its revenue, and more than ten times the number of machines the facility had when it opened in 1985.

She said it would be examined whether the state’s EGM policy was “eroded” after the casino fell into the hands of the Packer family.

“It would appear that policy development over the period since 2004 has led to changes in the policy itself, and also the standard, that have eroded the distinction between electronic gaming machines permitted in Western Australia and the machines known colloquially as pokies that have proliferated in the Eastern states,” she said.

The commission will reconvene on Wednesday, when it will hear evidence from its first Crown employee – former Crown Resorts and Burswood Limited board member, John Poynton.

Mr Poynton resigned from both boards in the aftermath of the Bergin Inquiry.

Mr Poynton’s lawyer Peter Ward provided a submission on Monday saying Mr Poynton wasn’t criticised in the Bergin report and at all times acted independently as a director, despite being a nominee director of Mr Packer.

“Mr Poynton was placed under significant pressure by the chair of Crown Resorts and the NSW regulator both privately and in media statements, and he ultimately resigned from both boards at the start of this year,” Mr Ward said.

“That resignation should in no way be taken to be an admission that he had cause to resign.”

Mr Ward also repeated Mr Poynton’s denial that he had formed a consortium to make a bid for Crown Perth.

The commission is also set to hear from other big names, such as former Crown chief legal officer Joshua Preston and former CEO of Australian Resorts, Barry Felstead.

Current CFO Alan McGregor will appear on August 11 and executive chair Helen Coonan will appear on August 12.