The Final Report of the Perth Casino Royal Commission into Burswood Nominees Ltd (Crown Perth) and its associated entities was tabled in Western Australian Parliament yesterday (Report). The Report, delivered by Commissioners the Hon Neville Owen AO, the Hon Lindy Jenkins and Colin Murphy PSM (the Commission), found that Crown Perth and its associated entities are not suitable to hold a Western Australian casino licence (Licence) or to be concerned in, or associated with, the operation of the Perth casino.
A copy of the report can be found here.
Crown Perth was granted the Licence to conduct casino gaming at the Perth casino on 24 December 1985. Crown Perth is a wholly-owned subsidiary of Crown Resorts Limited (Crown Resorts). Other members of the Crown group include Crown Sydney Gaming Pty Ltd (Crown Sydney) and Crown Melbourne Limited (Crown Melbourne).
The Commission follows a similar inquiry in New South Wales (Bergin Inquiry) and the Royal Commission in Victoria (Victorian Royal Commission). Both the Bergin Inquiry and the Victorian Royal Commission found that Crown Resorts and its associated entities were not suitable to hold casino licences, or to be associated with a casino licensee, in either jurisdiction and made a number of recommendations that were required to be implemented by Crown before suitability could be achieved1. All recommendations of the Bergin Inquiry and the Victoria Royal Commission have been accepted in-principle respectively by the New South Wales and Victorian governments, and each government is taking steps to implement those recommendations.
In addition to findings as to suitability, the Bergin Inquiry found that Crown Resorts:
- facilitated money laundering unchecked and unchanged in the face of warnings from its bankers;
- disregarded the welfare of its China-based staff, putting them at risk of detention by pursuing an aggressive sales policy and failing to escalate risks through the appropriate corporate risk management structures; and
- entered into and/or continued commercial relationships with junket operators who had links to organised crime groups.
Much of the conduct considered by the Bergin Inquiry related to the conduct of Crown Melbourne and Crown Perth.
The report of the Bergin Inquiry was released in February 2021. Shortly after (in March 2021), the Commission was convened to inquire and report on the allegations which arose from the Bergin Inquiry concerning the operation of Crown Perth.
Specifically, the Commission was established to inquire and report on2:
- the suitability of Crown Perth to continue to hold the Licence, or to be concerned in or associated with the organisation and conduct of the gaming operations of a licensed casino;
- the suitability of Crown Resorts, and other associated entities, to be concerned in or associated with the organisation and conduct of the gaming operations of a licensed casino;
- if relevant, any changes that would be required to render Crown Perth, Crown Resorts or any other associated entity suitable;
- the adequacy of communications by Crown Perth, Crown Resorts or any other associated entity with the Western Australian regulator (the Gaming and Wagering Commission (GWC)), including responses and disclosures to the GWC prior to and during the Bergin Inquiry; and
- any other issues incidental to the above matters.
The Commission was also required to inquire and report on the Western Australian gambling regulatory framework, namely:
- the adequacy of the existing regulatory framework in relation to casinos and casino gaming in Western Australia to address the risks identified in the Bergin Inquiry report;
- the appropriateness of the manner in which powers were exercised and responsibilities and obligations were discharged by the GWC under State and Commonwealth laws;
- the capability and effectiveness of the GWC in discharging its regulatory functions and responsibilities, including in relation to identifying and addressing any actual or perceived conflicts of interest by officers involved in casino regulation; and
- matters which may enhance the Western Australian regulatory framework and the GWC’s future capability and effectiveness in addressing any of the matters identified above (including any policy, legislative, administrative or structural reforms or changes).
The Commission was required to have regard to the Bergin Inquiry report, including public transcripts of evidence given before the Bergin Inquiry, and was empowered to make any recommendations the Commission considered appropriate.
An Interim Report was released publicly by the Commission in August 2021. The Interim Report concerned only some aspects of the adequacy of the Western Australian regulatory framework.
Suitability of Crown Perth and Associated Entities.
In the Report, the Commission made findings that Crown Perth was not a suitable person to continue to hold the Licence, or to be concerned in or associated with the organisation and conduct of the gaming operations of a licensed casino. The Commission also found that Crown Resorts (and other associated Crown entities) was not a suitable person to be associated with the operations of Crown Perth.
Consistent with the recommendations made by the Bergin Inquiry and the Victorian Royal Commission, the Commission did not recommend that the Licence be cancelled or suspended. Rather, the Commission provided a detailed list of recommendations to be actioned by Crown Perth to achieve suitability.
Notably, the Commission determined that each Crown entity should be required to embark on a pathway to suitability, with remediation activities to be overseen by an independent monitor. The Commission anticipates that these remedial steps would take two years to be completed (noting that the Commission acknowledged in the Report that Crown Perth and its associated entities have already embarked on numerous remediation activities over the past two years). If implemented by the Western Australian Government, the independent monitor would be required to provide a report to the GWC at the end of this two-year period. This is similar to the recommendations of the Bergin Inquiry and the Victorian Royal Commission, which had recommended the appointment of an independent monitor and “Special Manager” respectively to oversee Crown’s operations.
However, unlike the Victorian Royal Commission, the Commission did not recommend that the Licence be cancelled automatically should suitability not be demonstrated at the end of this two-year period. Additionally, unlike Victoria, the Commission did not consider it necessary to grant the independent monitor the full powers of oversight of the affairs and decision-making of Crown Perth, largely due to the recent renewal of the boards and senior management of Crown. The Commission also did not recommend that the independent monitor be granted a power to direct the affairs of Crown Perth, in the manner similar to the powers granted to the Special Manager under the Victorian regime3.
The Commission stated that the period of appointment of the independent monitor is a matter for determination by the Western Australian Government, but observed that a period of approximately two years from the date of the Report would likely be a reasonable period of time to allow for the effective implementation of remediation activities4.
Like the Bergin Inquiry and the Victorian Royal Commission, the Commission also found that Crown Perth:
- facilitated money laundering;
- failed to implement an effective anti-money laundering and counter terrorism financing (AML/CTF) program to ensure that financial transactions which were suspicious were detected, reversed and reported;
- permitted junkets with links to criminals to operate at the Perth casino;
- failed to minimise casino gambling-related harm; and
- failed to be open and accountable in communications with the GWC about various matters, including in relation to media allegations concerning the arrest of Crown’s China-based staff in 2016.
In relation to the Western Australian regulatory framework, the Commission found that the GWC failed to identify its strategic objectives, garner adequate resources and organise itself to be a vigilant and modern casino regulator. The Commission attributed this finding to the “often inadequate support” the GWC received from the Department of Local Government, Sport and Cultural Industries (Department), being the Western Australian government department responsible for gambling regulation. As a result, the Commission expressed the view that the findings against Crown Perth were contributed to, in part, by deficiencies in the regulatory framework and the “inadequate regulatory actions” of the GWC5.
The Commission made a total of 59 recommendations. A summary of the 59 recommendations is set out in the Schedule.
The recommendations fall into several categories, being recommendations relating to:
- the corporate structure, operations, governance responsibilities, roles and accountability of Crown Perth, Crown Resorts and other associated Crown entities;
- mitigation of risks of the conduct and organisation of gaming operations at the Perth casino;
- enhancement of the Western Australian regulatory framework, including amendments to Western Australian legislation;
- enhancement of the capability and effectiveness of the GWC and the Department; and
- establishment of an “Independent Advisory Body” for the establishment and maintenance of data collected by Crown Perth.
Like the Bergin Inquiry and the Victorian Royal Commission, the Commission recommended that the current gambling regulator, the GWC, be restructured. In the Commission’s view, the most appropriate models for restructure are to establish an independent statutory body within a new legislative framework or establish a stand-alone casino regulator. In relation to the latter option, the Commission doubted whether the cost of a stand-alone casino regulator could be justified in Western Australia, where Crown Perth has a monopoly on electronic gaming machines. The GWC was also concerned about the capacity of a Western Australian regulator to attract staff with requisite knowledge and experience and the vulnerability of a stand-alone regulator to “regulatory capture” (being a situation where a regulator is influenced or effectively dominated by those who it regulates).6
The Western Australian Government has acknowledged the findings of the Commission and has announced that it will take a staged approach to implement the recommendations. The implementation of the recommendations will be at the discretion of the Western Australian Government.
The Western Australian Government has announced that its initial priorities in response to the Report will be to:7
- introduce legislative amendments to allow the Racing and Gaming Minister and the GWC to enact remediation processes within the Perth casino;
- appoint new members to the GWC;
- initiate the process to appoint an independent monitor to oversee remediation by Crown Perth for a two-year period;
- improve the effectiveness of the Department and the GWC;
- investigate additional regulation of electronic gaming machines at the Perth casino; and
- consider a modernised Act to replace the current Casino Control Act 1984 (WA).
The Western Australian Government has indicated that it had already implemented several reforms to address the issues raised in the Commission’s Interim Report, including the appointment of a dedicated Executive Director for Racing, Gaming and Liquor, the diversion of additional resources for the GWC and the implementation of an updated conflict of interest policy.
Each of New South Wales, Victoria and Western Australia has now committed to wide-reaching changes to their respective regulatory regimes as a result of the investigations and inquiries into Crown. It is clear that the casino sector as a whole will be subject to a far greater level of regulatory scrutiny in Australia going forwards.
This is likely to have a flow-on effect for other land-based venues in which there remains potential for money laundering to occur (such as pubs and clubs). Indeed, it is clear that the operation of Australian land-based gambling venues will be subject to enhanced monitoring by Australian regulators as a result of the Bergin Inquiry and each of the Royal Commissions. This is especially the case following the recent commencement of Federal Court proceedings by the Australian financial crimes regulator (AUSTRAC) against Crown in relation to alleged AML/CTF failings at Crown Melbourne and Crown Perth, in addition to ongoing AUSTRAC investigations into other Australian casino operators. It has also recently been announced that the NSW Government is conducting an inquiry into money laundering at licensed premises in New South Wales.
Schedule of Recommendations
|In relation to the corporate structure and of Crown Perth, Crown Resorts and other Crown entities|
|1 – Crown Perth and Crown Resorts, in conjunction with the GWC give consideration to adopting a trust and (or) corporate structure that has more clarity than the current arrangement concerning operational and governance responsibilities, roles and accountability|
|2 – The roles of, and division of responsibilities between Crown Perth and other Western Australian Crown entities be clarified, documented and implemented|
|3 – The GWC and the Minister for Racing and Gaming, in conjunction with Crown Resorts, consider whether the head office requirement8 is necessary or desirable and whether there are any alternative means to achieve the objects for which the head office requirement is apparently intended|
|4 – The Burswood Limited board be reconstituted to increase its size from the current complement of four, comprise a majority of non-executive directors and include at least two persons who are independent of Crown Resorts Limited|
|5 – The Burswood Limited9 board establish board committees chaired by non-executive, preferably independent, directors|
|6 – Consideration be given as to whether it is desirable to amend Licence documents to include board committees in Burswood Limited’s constitution|
|In relation to mitigation of risks of the conduct and organisation of gaming operations at the Perth casino:|
|7 – The 22 recommendations made by Peter Deans in relation to existing risk management frameworks and systems of Crown Resorts be implemented10, and any failure to do so be explained in an update of the “Remediation Plan” provided to the Western Australian regulator|
|8 – The GWC direct Crown Perth to introduce a full, mandatory, binding loss pre-commitment and play period limits scheme for electronic gaming machine (EGM) play at Perth Casino (EGM Scheme) as soon as practicable|
|9 – The GWC stipulate that the EGM Scheme require patrons to pre-set weekly loss and time limits. The maximum figure is to be prescribed by the GWC. Patrons who wish to raise their limit above the prescribed maximum will be required to apply to Crown Perth for approval and provide documentation to be prescribed by the GWC.|
|10 – The GWC stipulate interim play period time limits for the EGM Scheme – namely, patrons be required to take a minimum 15 minute break after three hours of continuous play, be restricted from gambling for no more than 12 hours per 24-hour period, and be restricted from gambling for more than 28 hours in a seven-day period|
|11 – The EGM Scheme is to be administered by Crown Perth through mandating carded play on EGMs (so as to capture player data and to enforce loss and play limits)|
|12 – The GWC direct Crown Perth to impose conditions regarding applications for “Pearl Room membership” (Perth casino’s high-roller room) and request updated documentation at periodic intervals to be specified by the GWC|
|13 – The Gaming and Wagering Commission direct Crown Perth to reduce the maximum bet size of all EGMs on the main gaming floor to $10|
|In relation to the Western Australian regulatory framework:|
|14 – The Casino Control Act 1984 (WA) be replaced by a new Act and a revised Gaming and Wagering Commission Act (if required) containing all matters relating to the regulation of licensed casinos in Western Australia and the composition and structure of the regulator|
|15 – The new Act and revised legislation include a number of prescribed provisions, such as a list of the regulator’s powers (which are to be enhanced), a requirement for periodic reviews of the Licence by the Western Australian regulator at least every five years, a definition of what it means to be a suitable licensee/close associate, a prohibition on junkets, a requirement for a new responsible service of gaming code and the establishment of an independent gambling research and advisory body to be funded by a levy imposed upon the gambling industry (Independent Advisory Body)|
|16 – Consideration be given to whether or not the statutory prohibition of poker machines should be maintained|
|17 – If it is determined that the prohibition should be maintained, or that it should be replaced with a prohibition of some other type(s) of games or gaming machines, consideration be given to defining poker machine or providing statutory guidance on its meaning so that what is prohibited can be readily ascertained|
|18 – In defining a poker machine or providing guidance on its meaning, regard be had to likely future technological advancements in games and gaming machines|
|19 – If it is determined that the prohibition should be changed, such that new style electronic gaming machines (or spinning reel machines) are to be permitted at Crown Perth, consideration be given to the imposition of controls to minimise the risk of gambling-related harm that New Style EGMs pose|
|20 – There be a review of the penalties for regulatory offences, and that in most cases, those penalties be increased (in respect of the penalties for offences relating to the conduct of casino gaming and casino operations by the casino licensee, those penalties be increased very substantially)|
|21 – The regulator be given the power to recover its reasonable costs and expenses of investigation and enforcement action taken against the licensee|
|22 – The Western Australian regulator has, as a minimum, a full time CEO, a CFO, an administrative/executive assistant with regulatory experience and any other necessary employees (such as inspectors or experts for the provision of advice or training retained on a contract basis)|
|23 – The casino regulator be the employing authority pursuant to Part 3 of the Public Sector Management Act 1994 (WA) for the Chief Casino Officer, Chief Financial Officer and other dedicated casino regulation staff or, if another person or body appoints the Chief Casino Officer, Chief Financial Officer or other dedicated casino regulation staff, that the appointment be made only with the approval of the casino regulator|
|24 – The regulator’s Chief Casino Officer, the Chief Financial Officer and other dedicated casino regulation staff be accountable to the casino regulator for casino regulation activities|
|25 – Only the casino regulator be able to direct the Chief Casino Officer, the Chief Financial Officer and other dedicated casino regulation staff to perform their casino regulation activities|
|26 – The chair of the regulator be independent of the Department, be appointed by the Minister, have sound governance and/or regulatory skills and experience, and have a fixed term of no more than five years|
|27 – The deputy chair of the regulator be elected by the board members from among their number|
|28 – There be criteria for the appointment of regulator board members to ensure that the appointments are appropriately skilled for regulating gambling and casino gaming in Western Australia|
|29 – The regulator be required to provide advice to the Minister about particular skills or experience, not referred to in the criteria, that the Commission requires and may be provided by future members|
|30 – The definition of close associate or associate be amended to include the holding company and each intermediate holding company of the casino licensee, any person who has a relevant interest in at least 10% of the issued capital of the casino licensee, any director or officer of the casino licensee, any of its intermediate holding companies or its ultimate holding company, and any individual or company certified by the regulator to be an associate|
|31 – The casino regulator’s delegation powers be reviewed to determine if they are too broad|
|32 – There be a requirement for a register of delegations and decisions made under delegation to be kept|
|33 – There be a requirement that the regulator maintain a schedule of the instruments of delegation|
|34 – There be a cross-jurisdictional exclusion regime|
|35 – Several legislative amendments be made (pending the enactment of the new Act and revised legislation) to, for example, replace the Director-General of the Department, elect a new deputy chair of the GWC and review the scope and operation of s 21A and s 21B of the Casino Control Act11|
|In relation to the enhancement of the capability and effectiveness of the GWC and the Department:|
|36 – The GWC pursue an information sharing arrangement with AUSTRAC|
|37 – The GWC consider obtaining expert assistance from an external adviser in relation to AML/CTF in order to better equip itself with the skills and experience to discharge its obligations to regulate the management of the money laundering/terrorism-financing risk of a licensed casino|
|38 – The remuneration of members of the board of the GWC be increased|
|39 – The GWC Code of Conduct be expanded including by providing additional guidance on how conflicts can arise for a GWC member in respect of casino operations and interactions with the staff of a casino licensee|
|40 – The GWC Code of Conduct be amended so that the procedure it prescribes for the declaration and management of conflicts of interest in respect of pecuniary interests is consistent with s 17 of the Gaming and Wagering Commission Act (which concerns meetings of the GWC) and it provides for its biannual review|
|41 – There be a GWC policy regarding the regulatory posture that the GWC will adopt and how the Gaming and Wagering Commission Act will address the risk of regulatory capture|
|42 – As a priority, the GWC investigate the currently available research and information about appropriate play period limits for EGM play to inform the content of the EGM Scheme|
|43 – In the event there is insufficient research and information available about appropriate play period limits for EGM play to inform the content of the EGM Scheme, or Crown does not conduct the research it has indicated it will conduct on that topic, the GWC commission the necessary research|
|44 – The imposition of appropriate and meaningful sanctions if Perth Casino breaches a requirement of the EGM Scheme|
|45 – The GWC direct Perth Casino to collect, to the extent practicable, player data relating to buy-ins, buy-outs, play periods, turnover, losses and wins, gambling product and such further information as the GWC reasonably requires|
|46 – The GWC devise and introduce a board charter and that the charter be reviewed and updated as necessary at regular intervals|
|47 – The GWC develop a member skills matrix that is regularly reviewed and forms a nominations committee|
|48 – The regulator develop a strategic plan and review it regularly to ensure it adequately articulates the regulator’s goals and the strategies by which the goals will be achieved and funded and review and amend the current key performance indicators to ensure they measure the substantive effectiveness of the regulator across its broad range of activities|
|49 – The adoption of a streamlined induction process for board members of the regulator including casino regulation training consistent with the Public Sector Commission’s governance guidance and the inclusion in member induction packs of processes for exercising powers under delegations and the GWC’s strategic plan, key performance indicators and regulatory philosophy|
|50 – Where the GWC does not consider it has the requisite expertise to discharge its responsibilities, the regulator engage an external expert (for example, forensic accountant; responsible gaming expert or consultant) to fulfil that responsibility|
|51 – A continuing education program in casino regulation, governance and risk management be established for board members|
|52 – The GWC prepare a job description for the Chief Casino Officer|
|53 – The GWC implement a specialised induction and training programme for the Chief Casino Officer|
|54 – If junkets are approved to operate at a licensed casino, directions be given so as to regulate the risks posed by junket operations|
|55 – The Departmental Code of Conduct be expanded to require the disclosure of attendance at social events at Crown Perth Resort by Departmental officers who perform duties under the Casino Control Act|
|In relation to the establishment of the Independent Advisory Body:|
|56 – The Independent Advisory Body, in consultation with the GWC and Crown Perth, be responsible for the establishment and maintenance of a repository containing data collected by Perth Casino|
|57 – The Independent Advisory Body be required to identify the data to be included in the repository and ensure the data is up-to-date and comprehensive|
|58 – The Independent Advisory Body, in consultation with the GWC and Crown Perth, be required to oversee the design and structure of the repository and its user interface, identify the data that is to be publicly available and the data that will have restricted access, ensure processes and procedures are put in place for the efficient maintenance and updating of the repository, establish protocols to anonymise data to respect the privacy of gamblers, establish a register of recognised researchers and establish a simple process by which a request for data is to be made|
|59 – To the extent possible, anonymised data that is suitable to be made publicly available be made available for general public inspection via an information website|
1 For further details regarding the Bergin Inquiry and the Victorian Royal Commission, see our previous publications Report of the NSW Casino Inquiry – Key Recommendations and Crown: Part 2. Crown Casino found unsuitable in Victoria.
2 A full list of the Commission’s Terms of Reference can be found at: https://www.wa.gov.au/government/government-initiatives-and-projects/perth-casino-royal-commission.
3 Report, Volume III page 846.
4 Report, Volume III page 846.
5 Report, Volume 1 page 9.
6 Report, Volume 3, page 791.
7 See McGowan Government commits to reforms following Perth Casino Royal Commission (Media Statement).
8 The “head office requirement” refers to a requirement for Burswood Limited to have its place of business, central management and control exercised in Western Australia.
9 Burswood Limited is an associated entity of Crown Perth and a subsidiary of Crown Resorts.
10 Peter Deans is a risk and strategy consultant who was retained to assist the Victorian Royal Commission. Mr Deans prepared a report outlining his opinion on the effectiveness and robustness of Crown’s risk management framework and systems for the Victorian Royal Commission.
11 Sections 21A and 21B of the Casino Control Act 1984 (WA) relate to the GWC’s powers to investigate and report on the operations of Crown Perth.