Victorian regulator preparing “Plan B” to continue casino ops if Crown’s Melbourne license revoked, but remediation efforts “pleasing”

The Victorian Gambling and Casino Control Commission (VGCCC) is actively working on what it calls its “Plan B” with the goal of ensuring Melbourne’s casino can continue operating should Crown Resorts be found unsuitable, the regulator’s CEO revealed on Monday.

Annette Kimmitt told Inside Asian Gaming that implementation of a strategic plan for Crown’s worst-case scenario was a key initiative of the VGCCC as it prepares to make a decision on the operator’s suitability early next year.

“There has been a lot in the press in Australia about casinos being too big to fail, and not having those contingency arrangements in place or available to them at the time meant the Royal Commissioner in Victoria’s hands were tied,” said Kimmett, who was keynote speaker at the Regulating the Game conference which kicked off in Sydney on Monday morning.

“Crown was found not suitable but there was no ‘Plan B’, so we really need to make sure we are putting in place the legislative framework to ensure continuity of service even if Crown is found unsuitable.”

Crown, whose Melbourne casino facility is currently under the watch of a Special Manager, was found unsuitable to retain its casino license in October 2021 after a Royal Commission uncovered multiple contraventions of the Casino Control Act and the Gambling Regulation Act, including various anti-money laundering and responsible gambling breaches.

It was, however, afforded a two-year window within which to return to suitability. Stephen O’Brien, the Special Manager appointed to oversee Crown’s remediation efforts, is due to hand down his final report on the success of those efforts by the end of the year, after which the VGCCC will make a determination on whether Crown can again be deemed suitable to operate the Melbourne casino.

Asked how a “Plan B” might look should the VGCCC return a finding of unsuitability, Kimmitt told IAG, “That’s a work in progress but think of it like when you appoint receivers or managers into organizations where they come in and take over the running of the organization.

“That’s the intent – somebody able, through a transition-out plan that we are working on with Crown, to go in and take over the day-to-day operations of the casino to keep more jobs going and keep the casino operating, which will give the government time to run a process around the issue of the new casino license.”

While Kimmitt would not be drawn on Crown’s progress in returning to suitability, she did admit she was impressed by the efforts of the operator and its new owner, US private equity giant The Blackstone Group, in addressing past failings.

“They’ve got a lot on the line here and they are running really hard at doing everything they can to return to suitability. We are really pleased with the approach they are taking, the attitude and mindset,” she said.

“They are being very cooperative with us which doesn’t mean they don’t push back on some things, but I think that is healthy. We’ve established a really good working relationship with the new owners and the new leadership team.

“What was really pleasing in working with Blackstone is that when we put to them that much higher bar of expectations, they signed up to it. They have incorporated those into their board charters and they’ve agreed to be bound to them under the deeds we’ve agreed with them in making major changes.

“So that commitment to doing more is really heartening to us, but in the event that they are found unsuitable there is no intent to turn off the casino here. The intent is to have continuity of operations.

“It is public policy in Victoria that we have and will continue to have a casino so that’s not in question. The government is committed to having a casino functioning but a casino that delivers sustainable benefits to Victoria. Where we as a regulator have landed is you don’t get sustainable benefits for Victorians unless you have an operator that’s got integrity, is safe and is fair, so all of those elements are critical to the operating model.”

In response to Kimmitt’s comments, a Crown spokesman told IAG, “Under new ownership and management, Crown has accelerated its Future Crown program, which is transforming the business and delivering whole-of-company reform.

“We are fully focused on delivering against the findings of the royal commission and continue to work constructively with the VGCCC and the Government to ensure we build a Crown that exceeds the expectations of our stakeholders and the community.”

Kimmitt also provided an update on work being done by Crown Melbourne around a move to cashless gaming by the end of the year. Widespread implementation of cashless gaming was one of a dozen recommendations emanating from Victoria’s Royal Commission that were passed into law last September with the express goal of boosting government oversight of Crown and combatting financial crime.

“We’ve established a technology working group that involves the VGCCC, Crown and the government, and we’re all working through that [move to cashless] because there is a very long list of technical issues to make this happen,” Kimmitt explained.

“We are ploughing our way through pretty quickly and where there are barriers because of technology, we’re going through the process of figuring out the workaround.

“So it’s a lot of collaboration happening between us, Crown, the testing labs, the EGM monitoring licensees and the government to navigate through.”