In a decision that echoes through the Australian business landscape, Crown Resorts has finally secured approval to operate its Sydney casino. This long-awaited green light, granted on April 23rd, 2024, by the New South Wales Independent Casino Commission (NICC), signifies a turning point for the company.

However, the path to this point has been controversial, forcing Crown to undergo intense scrutiny and implement significant reforms. The approval will have significant implications, not only for the company but also for the broader Australian gambling industry and the local economy.

A Look Back at Crown’s Tumultuous Journey

Crown’s Sydney aspirations were initially met with enthusiasm. In 2013, the development of a $1.5 billion luxury resort with an integrated casino at Barangaroo, a prime location in Sydney Harbour, was approved.

However, the path to opening wasn’t smooth. In 2021, a devastating inquiry led by former judge Patricia Bergin, SC, exposed a series of concerning practices within Crown Resorts. The issue unearthed evidence of money laundering, irresponsible gambling practices, and connections to organized crime syndicates through the company’s dealings with high-roller junket operators.

These revelations sent shockwaves through the Australian public and regulatory bodies. Crown’s license for the Sydney casino was suspended, and its suitability to operate in New South Wales was called into question.

Regaining Trust

Faced with the potential loss of its Sydney venture, Crown embarked on a comprehensive reform program. The company underwent a leadership overhaul, with a complete restructuring of its board and senior management.

Furthermore, the organization focused on cultural change. It puts a high priority on responsible gambling, anti-money laundering, and strong governance. Crown also implemented stricter compliance protocols and risk management strategies.

This commitment to reform was further strengthened by a change in ownership. In June 2022, US private equity giant Blackstone acquired Crown Resorts for $8.9 billion. Blackstone, known for its focus on responsible investment, pledged to uphold the highest standards of governance and compliance. This commitment resonated well with regulators, demonstrating Crown’s dedication to reform.

What’s more, this shift brought in new leadership and significant investment. It includes $200 million specifically allocated to support responsible gambling initiatives and anti-financial crime initiatives.

Notably, Crown Sydney adopted cashless gaming for all electronic table games, a first for casinos in New South Wales. This demonstrated its commitment to addressing money laundering concerns.

A New Dawn for Crown

The NICC’s decision to grant Crown Sydney its license reflects confidence in the company’s reform efforts. However, the approval comes with a set of stringent conditions. The NICC will maintain close oversight, and Crown will be obligated to demonstrate ongoing adherence to new regulations and compliance protocols.

This period of conditional operation serves as a probationary phase. During this time, Crown must consistently prove its suitability as a responsible casino operator.

For the Australian gambling industry, Crown’s Sydney approval signifies a potential turning point. The industry has faced increased scrutiny in recent years, with calls for stricter regulations to curb problem gambling and enhance anti-money laundering measures.

Crown’s experience serves as a cautionary tale. It highlights the severe consequences of non-compliance and the importance of responsible practices. The industry will likely see a ripple effect with other gambling operators, including the online casino in Australia. They will re-evaluate their own internal controls and compliance measures to avoid a similar situation.

The economic impact of Crown Sydney’s opening is expected to be substantial. The casino complex is projected to create thousands of jobs and generate significant tax revenue for the New South Wales government. It should also contribute to the revival of Sydney’s tourism industry.

However, concerns remain regarding potential social costs associated with increased gambling activity. Measures to mitigate problem gambling addiction and ensure responsible practices will be crucial in the long run.

The Public’s Verdict: A Jury Still Out

While the green light for Crown Sydney signifies a step towards regulatory reconciliation, the court of public opinion remains in session. The controversies that engulfed Crown have left a deep scar on the company’s image. Regaining the public’s trust won’t be a quick fix; it will be a long and arduous process demanding sustained commitment from Crown.

Regaining trust requires more than just regulatory compliance. Crown needs to demonstrate a genuine commitment to responsible gambling practices. As part of this effort, it is important to implement effective player identification and monitoring systems as well as provide support services for problem gamblers. It should also encourage a culture that prioritizes player well-being over maximizing profits.

Transparency will be a key factor in this process. Open communication with the public about Crown’s reform efforts, including detailed information on implemented changes and their effectiveness, is crucial.

Crown should be proactive in engaging with stakeholders. This includes community groups, problem gambling organizations, and the media. Regularly publishing independent audits and reports on its compliance efforts would also demonstrate a commitment to transparency.

A Second Chance, a Continued Watch

The story of Crown Sydney goes beyond the fate of a single casino. It represents a critical moment for the Australian gambling industry. As Crown Sydney prepares to open its doors, the industry as a whole face a period of heightened scrutiny and potential reform.

Whether Crown can capitalize on this second chance and the industry can navigate a more responsible path remains to be seen. Only time will tell if the lessons learned from Crown’s tumultuous journey will lead to a more sustainable and responsible future for Australian gambling.

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The Star Sydney’s parent company and one of the largest entertainment and gaming groups in Australia, Star Entertainment Group, was involved in a scandal related to alleged breaches of regulations related to anti-money laundering and other issues. As the second inquiry into The Star Sydney loomed, allegations of records falsification emerged earlier this week.

The allegations came after Liquor & Gaming NSW uncovered discrepancies between actual data from The Star Sydney and recorded and submitted gaming interactions by the venue. The probe uncovered that while the casino posted reports about its gambling interactions, CCTV and observations did not match with the reported actions to protect the consumers from excessive gambling.

Nicholas Weeks, the person appointed to the role of manager at The Star Sydney to help guide the venue to compliance, revealed that the Liquor & Gaming NSW inspectors compared recorded player protection data to actual CCTV footage and in-person observations, finding a mismatch between the information. As a result, the casino was accused of “falsification of records,” which occurred not only often but involved a large portion of the employees.

The latest hearing uncovered another major concern regarding The Star Sydney’s “ticket in, cash out”(TICO) machines. An issue with a software update on some of the machines cost the casino AU$3.2 million ($2.1 million) and according to a newly released report, people involved in the activity were reported to the police by the casino for fraud.

More than 40 people exploited the faulty TICO machines at the casino before the error was finally fixed nearly two weeks later. As announced by the Sydney Morning Herald, people who participated in the illicit activity are now facing legal repercussions as they were reported for fraud to the police by The Star Sydney.

The fraudulent activity wasn’t elaborate at all and was in fact caused by a glitch in the TICO machines’ software. Whenever a person placed two tickets into such a machine, they would receive the payout of the two tickets, but one of them would be returned to the customer. Subsequent attempts to redeem the returned ticket were successful and many people started doing so. To make matters worse, the ticket could’ve been redeemed multiple times, which is why the gambling operator lost millions after only 13 days.

The latest report told the story of a woman with the initials T.L.L., who was a recovering gambling addict. After hearing about the TICO glitch at The Star Sydney, she started to withdraw money using the same method. Overall, T.L.L. withdrew AU$57,265 ($36,900) and from that total, she spent everything but AU$5,000 ($3,200).

The TICO machine error happened last summer. Once the casino realized there was an issue, it reported the customers’ activities to the police. As a result, T.L.L. and many others were arrested and charged with fraud.

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Crown Resorts will cut 180 jobs and reduce operating hours at its Sydney casino due to a lack of patronage.

The decision, which was announced to staff earlier this week, comes only two months after the Barangaroo property was forced to close one of its gaming floors.

It means Crown Sydney has now axed 275 positions since opening its doors in August last year.

No longer able to justify remaining open 24 hours a day, the casino will now operate between 10am until 2am from Monday to Thursday and until 4am on Fridays.

The gaming floors will open at 2pm on weekends, closing at 4am on Saturdays and 2am on Sundays.

Crown Sydney CEO Mark McWhinnie said the company was committed to finding the affected staff other roles at its Melbourne and Perth casinos.

“Our priority is to support the 180 impacted team members alongside their union as they determine their next steps,” he said.

Both Crown Resorts and rival operator Star Entertainment have struggled to recover from major regulatory penalties levied against their Australian casinos in the past two years.

Both companies were subject to Royal Commissions that uncovered massive operational failings with regard to anti money laundering (AML) and counter terrorism financing (CTF) regulations, resulting in record fines and licence suspensions.

They have also been affected by significant changes to New South Wales’ gambling tax laws.

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Crown Resorts is set to cut jobs at its Sydney casino, which continues to struggle with low visitation. The casino operator will also reduce its working hours, according to a report by The Sydney Morning Herald.

The NSW news outlet said that the casino operator’s Sydney property does not have enough visitors to justify the 24/7 working hours of the property. The casino, which already shut down one of its gaming floors, will thus reduce its work hours and will close down for eight hours every day.

Under the new schedule, Crown Sydney will close at 2 am and will reopen at 10 am from Monday to Thursday, as well as on Sundays. On Fridays and Saturdays, the casino will close at 4 am instead.

This change will also affect Crown Sydney’s workforce as the operator prepares to part ways with as many as 180 workers. This would mean that the gambling company has cut off a total of 275 since it opened the Barangaroo property in August 2022.

According to a Crown spokesperson, the dismissed workers include many people in frontline gambling-related roles. Some people in casino support and hospitality are also likely to be affected by the layoffs.

Crown Sydney promised to redeploy as many people as it can to its other casinos in the state and promised to provide support to the rest.

Crown’s Business Remains Troubled

Crown Resorts continues to struggle in the aftermath of the regulatory trouble it recently encountered. Multiple violations forced the company to introduce changes to its leadership and implement remediation measures to prevent repeated offenses.

Amidst these hurdles, Crown recently tried to renegotiate its AUD 1 billion tax guarantee with the government of New South Wales. However, Premier Chris Minns said that he believes Crown should either honor its agreement or return the land.

Adding to Crown’s woes, the company narrowly avoided a strike at its Melbourne property. Luckily, the casino operator was able to reach an agreement with its workers.

In the meantime, a former guard is preparing to sue the casino company once again, alleging that Crown and its ex-president James Packer failed to pay him the AUD 260,000 they owed in relation to a previous lawsuit.

One of Crown’s competitors, Star Entertainment, has encountered similar troubles and recently sold its Grand Mirage Resort Gold Coast property.

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Amid the Bell probe into The Star’s operations, the operator temporarily stopped serving free alcohol at the Star Sydney. The government inquiry uncovered that some gamblers received alcohol as an inducement which was only one of the issues flagged by the probe. Ultimately, the Bell Inquiry, which was published last year, found that the operator was not suitable for a casino license. Still, The Star was given a chance to remedy the situation and implement changes to its operations, seeking to ensure compliance and discontinuing bad practices.

Now, a new report suggests that the Star Sydney resumed serving free alcohol to high rollers. As announced by The Australian, the venue discussed the matter with the NSW Independent Casino Commission (NICC). The Commission revealed that the Star Sydney voluntarily stopped serving free alcohol to visitors in light of the release of the government inquiry. Yet, The Star asked the NICC on multiple occasions to resume serving alcohol and according to the latest report, the Commission didn’t object to that return but only under certain conditions.

While the Star Sydney resumed serving free alcohol for VIP patrons, the same practice won’t be allowed for the main gaming area. This is in fact in line with NICC’s view on the matter. “The Star voluntarily ceased the service of free liquor to patrons following the release of the Bell Report, but following numerous requests from The Star, the NICC has since not objected to the service of free liquor in certain circumstances,” explained the Commission.

Still, the NICC said that in the upcoming months, it will continue to monitor the matter closely. Finally, it reminded gambling operators to ensure compliance with the established rules.

The announcement comes after late last month, The Star released its FY23 financial results, posting a statutory net loss of AU$2.44 billion ($1.57 billion). At the time, the operator confirmed that it remains committed to strengthening its anti-money laundering and safer gambling policies. Further efforts toward ensuring compliance with the rules included the replacement of Board members as well.

Robbie Cooke, The Star’s group CEO and managing director, outlined that the last year was incredibly challenging for the company. Still, he highlighted the important changes to The Star’s policies that ultimately seek to protect the jobs of thousands of workers.

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The gambling industry’s backing of the University of Sydney’s new Centre of Excellence in Gambling Research doesn’t sit well with industry critics, who believe that the tie-up is a recipe for a conflict of interests.

The university recently unveiled its new multi-disciplinary center, which is tasked with advancing research on gambling behavior and minimizing harm. However, it became known that the University of Sydney will receive over AUD 800,000 (around $511,700) from gambling-related parties.

While some believe that the investment demonstrates the industry’s commitment to minimizing its negative impact and supporting safer gambling initiatives, others fear that it might cause a potential conflict of interest.

The Centre of Excellence in Gambling Research will be primarily supported by the International Centre for Responsible Gaming (ICRG), which will contribute AUD 600,000 to the cause. However, the ICRG is itself financially supported by gambling companies.

In addition, the University of Sydney’s new center is set to receive backing from Entain Australia, Sportsbet and the Australian Research Council’s Life Course Centre, which will provide it with AUD 180,000, 50,000 and 100,000, respectively.

The Research Needs to Stay Away from the Industry, Critics Say

Since the Centre of Excellence in Gambling Research will receive backing from the gambling industry, some fear that its work will not be fully independent. While the University of Sydney reassured interested parties that this is not the case, experts still fear that an industry-funded organization might be biased.

A Deakin University gambling expert, Samantha Thomas, expressed her thoughts on the matter. She noted that the gambling industry contributes to the problem at hand and therefore should not have a role in the research of gambling harm or development of regulatory policies.

Thomas argued that if the research seeks to understand gambling harm, then it needs to be “completely at arm’s length from the industry.”

However, the University of Sydney trusts that the ethics committee of its new center will be able to mitigate potential conflicts of interest. A spokesperson noted that the funding bodies will not have a say in the center’s decisions and research. In addition, the partnership with operators will provide the center with valuable data, the spokesperson added.

The Centre of Excellence in Gambling Research’s lead researcher, Sally Gainsbury is much more optimistic about the center than Thomas, calling it an “unprecedented collaboration” that will overcome previous limitations.

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Wharton’s decision to leave Star leaves the operator leaderless amidst ongoing anti-money laundering reforms, up to $1 billion in fines, several lawsuits, and a potential tax hike on the horizon. As the person responsible for restoring order and compliance to the struggling casino, his departure has caused substantial concern among regulators. However, Star Entertainment CEO Robbie Cooke remained unfazed, promising the group would soon appoint a new Sydney CEO.

The Star Sydney chief executive will officially resign on 28 April to assume a new position as CEO of salary packaging company Smart Group. His departure came out of the blue for the beleaguered operator, as Wharton stepped away from the struggling operator after only eight months in charge.

The Star Sydney CEO was the primary driving force behind the ongoing remedial measures at the Sydney casino, heading the company’s transformation division. The company struggles to rescue its reputation and remain afloat after last year’s regulatory probe revealed severe AML failings and possible ties to terrorist organizations.

As a stopgap measure, Star Entertainment CEO Robbie Cooke plans to split Wharton’s responsibilities, delegating his remediation duties to current general manager of transformation Nicola Burke. She is well-acquainted with the position’s requirements and will be hard-pressed to navigate the ongoing regulatory challenges.

The board and the management team have an unwavering focus on proving our suitability to hold casino licenses in NSW and Queensland.

Robbie Cooke, Star Entertainment CEO

Wharton thanked The Star team for their commitment and hard work, extending special gratitude to the company’s leadership. CEO Cooke remained confident that the group would soon find a new Sydney chief executive and continue its long way toward redemption. However, Wharton’s departure leaves a void during a short but possibly critical period for the operator due to a looming taxation overhaul.

The Star Continues To Struggle With Poor Financials

Wharton was one of the people involved in the discussions regarding a potential new tax increase for poker machines which could significantly impact The Star’s bottom line. NSW Premier Chris Minns did not take a firm stance on the matter, preferring to first get a clearer picture of the tax hike’s implications before committing to a specific course of action.

We’ll be having discussions with the Treasury in the coming days as we get a full picture of the revenue side of the budget and future policy measures.

Chris Minns, NSW Premier 

With trouble looming on all sides, the company finds itself hard-pressed to find a competent replacement for the departing CEO. Financially, The Star Sydney continues to reel from the ongoing turmoil, as rising competition caused FY22 domestic revenue to lag 14% behind pre-COVID levels. The operator hopes that extra funding, like the recent AUD142 million ($96 million) investment from tycoon Bruce Mathieson, would help it stand back on its feet in the coming months.

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