Crown casino must change its ways

For the likely new owners of Crown Resorts, private equity giant Blackstone, business as usual is not an option. Crown’s credibility has been shattered, first by reports in The Age and 60 Minutes, followed by inquiries by the NSW Independent Liquor and Gaming Authority and two royal commissions which have found evidence of criminal infiltration, money laundering, deliberate underpayment of tax and an irresponsible approach to minimising gambling harm.

As Victorian royal commissioner Ray Finkelstein bluntly declared in his final report, the company’s behaviour was “illegal, dishonest, unethical and exploitative”. Crown only kept its gaming licence by virtue of its size – it employs about 11,500 people in Melbourne – and the damaging impact shutting it down would have had on the state’s tax take. In another vote of no confidence, it was forced to operate for two years under the watchful eye of a government-appointed “special manager”.

Crown will be Blackstone’s latest casino acquisition after building up a portfolio in Las Vegas and Latin America. Credit:Chris Hopkins

With these findings ringing in its ears, and its major shareholder, James Packer, forced (and keen) to sell down his ownership from 37 per cent to 5 per cent or less by September 2024, Crown’s sale was inevitable. While there were a few buyers circling, Blackstone made the offer that proved too good to refuse. The only possible hurdle will be the gaming authorities in Victoria, NSW and Western Australia, who need to give it the green light.

Blackstone has yet to make public what a future Crown may look like, but it has form for buying, overhauling and selling casinos across Las Vegas, Europe and Latin America while pocketing substantial profits. According to a respected casino industry analyst, Blackstone would most likely focus on cutting costs, repairing the reputational damage to the business, then put it back on the market.

We should all be watching closely what happens next. Crown lost its way under the supposed supervision of the state’s gaming and liquor watchdog. It is now evident that it was a toothless tiger without the resources, focus or skills to properly monitor what was going on in the industry.

As part of a package of government reforms, the Victorian Commission for Gambling and Liquor Regulation has been split into two, with gambling and casino oversight being separated from the regulation of liquor licensing and compliance. It’s a welcome move, but, while Crown remains a dominant employer, and the state government remains addicted to the tax revenue flowing from Southbank to Spring Street, the new regulator will need to be substantially louder and braver than the one it replaced.

For now, the state government is saying the right things. Its commitment, reported by Josh Gordon today, to force punters to commit to limits on how much will spend and how much time they will gamble, is the fulfilment of a much-delayed recommendation of Mr Finkelstein. It should reduce the losses of problem gamblers and therefore should be commended.

The sale of Crown will end a significant chapter in the life of Melbourne’s CBD. Since its opening in 1997, the complex has seen many millions of people through its doors. In recent years, Mr Packer has loomed large over the company and he helped establish the awful culture revealed in The Age reports and in the string of inquiries they prompted.

If the sale goes ahead, Mr Packer will walk away with more than $3.2 billion. It’s a big price Blackstone has paid, and it will want to recoup that investment, and some. The people, the government and the regulators of Victoria will all need to stand firm to make sure that from now, the company is run in a way that does not further damage our society.

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