A Riddle of Polarised Outcomes
Compliments between rival jurisdictions are rare and even unbecoming for entrenched partisans, but Victoria and its gambling regulator deserve recognition for navigating the political maelstrom; and their management and handling of the leadership, governance and compliance failings identified though the 2021 Royal Commission into the Casino Operator and License.
Sans a partisan agenda, it’s rare for governments to willingly establish a Royal or Special Commission, because once unleashed it’s a sentient creature buttressed with independence, a weighty appetite, and enormous powers to forensically inquire and examine past events and conduct, amid charged atmosphere and craving for punitive action. It’s also terribly difficult to put the genie back once unbottled, or shepherd towards a politically helpful or preferred outcome. But once advocacy surmounts attempts to corral or divert an issue, and manoeuvring is exhausted, Letters Patent are issued and Pandora eagerly fossicks through the corporate underclothes.
The announcement of a Royal Commission leaves some stakeholders braying for scalps, creates uncertainty, and competing forecasts of the outlook and meandering path ahead.
The Victorian Gambling and Casino Control Commission’s (VGCCC) emphatic decision in March this year found that Crown Melbourne was suitable to operate the Melbourne casino and that it was in the public interest that the licence continue in force. Having an understanding about the compelling reform agenda and key talent involved in uplifting capability and performance, the VGCCC’s decision was unsurprising.
Royal and Special Commissions lift the corporate veil, with suasion or brute force where necessary, surfacing all manner of failings. The magic ingredients? Appoint an esteemed commissioner armed with compelling terms of reference, underpinned with unassailable independence. Then assemble a posse of senior legal minds marshalling coercive powers, and whether its misconduct in banking and financial services, greyhound racing, aged care quality and service, or violence, abuse, neglect and exploitation of people with disability, the meticulous fossicking will surface a plethora of shortcomings, wrongdoing possibly rising to criminality and stories of human misery. This is the apex of scrutiny and, while disheartening, I am unpersuaded that any mercantile field or human endeavour could be carefully weighed and measured by such instrument – and not be found wanting.
The powerful independent monitoring arrangements established to maintain close and continuous oversight and exert control over Crown Melbourne were an extraordinary and unprecedented regulatory intervention. And while the scale of intervention is unmatched, it provided a comprehensive mechanism and pathway for Crown’s redemption. While enormously costly, the comprehensive independent monitoring arrangements, VGCCC’s stewardship and Crown’s response have re-postured it as a global leader in financial crime and safer gambling in casino operations, and accelerated the rehabilitation of its tarnished brand.
It’s a stark contrast with the parlous outlook for The Star, Sydney. The Star is reported in recent media arising from another Inquiry as ‘leaderless and depleted.’ The Star’s highly accomplished Chief Executive Robbie Cook has departed, as it navigates the latest examination into its suitability. It’s tempting to sheet the weight of culpability for the seeming disfunction to the casino operator, but it’s perhaps prudent to pause and ask how did we get here? What explains the contrast in approaches and outcomes between jurisdictions, largely tackling the same issue i.e. shortcomings in leadership governance and compliance at a major casino operator?
On its face it’s difficult to comprehend how, after three regulatory inquiries, NSW casino arrangements remain in disrepair. However, a shorthand attempt to highlight some apparent differences in approach between Victoria and NSW might be instructive:
In August 2019, the NSW regulator issued an instrument of appointment under the Casino Control Act to establish the ‘Bergin Inquiry’ and received the Inquiry report in February 2021. The NSW regulator had principally directed the Inquiry to look into and report on matters involving Crown Resorts, and the adequacy of its own powers into the future. The Star, the only casino operator in NSW at that time, was not the subject of the Inquiry.
In response to adverse media concerning The Star, in late 2021 the NSW regulator issued terms of reference and appointed a senior barrister under the Casino Control Act to conduct a review of The Star’s suitability to hold a casino licence and received the Inquiry report in August 2022. In response to adverse finding, the regulator took disciplinary action against The Star: suspended its licence indefinitely, issued a pecuniary penalty of AU$100m (US$66.6m), and separately appointed a manager with full control and responsibility for the business of the casino.
In February 2024, the NSW regulator announced it was establishing another inquiry under the Casino Control Act to look into The Star and appointed a senior barrister to conduct the inquiry.
If the NSW Government had adopted a similar approach to Victoria and established a Royal Commission independent of the regulator, would it have comprehended the importance of inquiring and reporting on casino operations and regulatory settings in its own jurisdiction? Would an early and persuasive examination of NSW regulatory arrangements and performance of The Star have better informed NSW Government policy decisions?
Instead of a comprehensive overhaul, the NSW Government established the NSW Independent Casino Commission (NICC), adding another piece and shuffling the already muddled board.
The addition of the NICC created a third organisation with responsibility for gambling regulation, joining the Independent Liquor and Gaming Authority and Liquor & Gaming NSW. Regulatory structures move in cycles, often a back-to-the-future arrangement, and are at the whim of ministerial preference and machinery of government changes, but further segmenting gambling regulation in NSW after ruinously rationalising the function into its Customer Service Department in 2019 was a curious move.
The independent monitoring arrangements for Crown Melbourne involved the appointment of a statutory Special Manager from January 2022, supported by an office consisting of public sector and professional advisory staff. The special manager produced regular comprehensive public reports, as well as a confidential final report on its structure, approach and activity, evaluating Crown’s progress towards its reform program.
The NSW regulator appointed a manager in October 2022, with full control and responsibility for the casino business of The Star; however, it does not appear to have produced comprehensive public reports on its activities and evaluation of The Star’s remediation efforts.
Regardless of whether the NSW position is viewed as a complex puzzle or an intractable problem, Victoria deserves commendation for its effective stewardship in creating the conditions for rehabilitation of Crown Melbourne and by extension Crown Resorts. While onerous, through rigorous supervision and strategic oversight, Victoria has not only revamped regulatory practices but also enabled Crown to rejuvenate its brand. This transformation has rekindled the allure and vibrancy of its entertainment and hospitality services, setting a benchmark for regulatory success in the casino industry.
Paul Newson is Principal at Vanguard Overwatch and Founder and Director of Regulating the Game, a premier gambling law and regulation conference held in Sydney and London. Paul is a Patron and former President and Trustee of the International Association of Gaming Regulators and a former Trustee of the NSW Responsible Gambling Fund. He has also held the position of Deputy Secretary in the NSW Department of Industry, with responsibility for liquor, gambling, and racing policy and regulation.
