Opinion

Tim Costello
Crown has grown into a monster and must be split up

Back in 1997, when Crown casino opened its massive Southbank “entertainment centre”, I was possibly its best-known public critic. Neil Mitchell invited me to take a walk around the gleaming new palace and then drop in for a chat at the 3AW studio in the Crown complex. It was a time for compulsory cheering after Crown’s lavish opening, but I was disturbed.

When Mitchell asked, “But is this not a magnificent complex for Melbourne?” I said it is too big and too powerful, with so much money flowing that politicians and media will not even know when they have been bought. Mitchell took it personally and threw me out of the studio mid-interview.

This memory was triggered as I read the findings of the Finkelstein Royal Commission into the Casino Operator and Licence. The commission finds that Crown is unfit and has been, in a word, “disgraceful”. Barely an adjective is spared to describe its illegal, dishonest and exploitative behaviour. But somehow it gets to keep its licence and be put on probation.

That appears to be because of its size as the biggest single-site employer in the state, the taxes it pays and its importance to the state’s economy. Essentially, despite its illegality, it is too lucrative to be punished. Many innocent parties might be hurt if it lost its licence. Just as big banks in the United States had to be bailed out in the global financial crisis to prevent innocent people being hurt, so with Crown. Banks were seen as too big to fail and so is Crown. Because it is so big and so powerful, we all end up being bought.

Back in 1997 I had never heard of the concept “too big to fail”. But I sensed what was happening in Melbourne. An exclusive licence to print money and a flexible planning process under then premier Jeff Kennett allowed a monster to grow.

Crown was permitted to double its footprint in the original 1994 tender, making its casino twice the size of the biggest casino in Las Vegas. Today, the complex is the largest building in Australia, at 550,000 square metres. The second-biggest building in the country is just 250,000 square metres. It is Parliament House in Canberra.

Jeff Kennett spruiked Crown at every turn. He wrote to its 10,000 employees thanking them for the magnificent job they were doing for Melbourne. He did not write to teachers and nurses to thank them. Gambling once belonged to the cultural margins and was put in the category of gaming and vice by our police departments. That all changed with Crown as it moved to the cultural centre. It became a key part of our vision for a city, hosting the Logies, the Walkleys, the Brownlow and endless gangland meetings and celebrations.

It was now state sponsored and culturally applauded as our economic saviour. This was Jeff Kennett’s gaming-led recovery. He immediately booted the Melbourne Museum that was to be built on the Southbank site, pushing it to Carlton. I could not understand this. Kennett hadn’t found an Eiffel Tower for the prime location in Melbourne; he’d found a casino that would span two city blocks. With it came cultural and even spiritual degradation.

We all knew back then that casinos largely exist to launder money and enable organised crime – as this royal commission has again proved. When Kennett attended Christmas Mass at St Patrick’s Cathedral and the Catholic Archbishop warned that we will not allow ourselves to be dominated by the symbols of the casino culture, he stormed out.

Back then, the democratic process of Melbourne City Council had been undermined by Kennett with council amalgamations. As then mayor of St Kilda I, along with all the 210 mayors across Victoria, had been sacked. Kevan Gosper was appointed the chief commissioner for Melbourne Council and there was no resistance to Crown getting whatever it wanted from either Kennett or the commissioner-led council. When he finished as commissioner, Gosper joined the board of Crown until the Packer family’s PBL shelled out about $1.6 billion to take it over in 1998-99.

During the 22 years of Packer family control, run out of Sydney, the flow of the politically well connected to become Crown’s boosters has not ceased. Labor powerbrokers and Howard government ministers have sat on the board. Victorian Premier Daniel Andrews even greenlighted a Packer proposal to spend $1.2 billion in building Melbourne’s tallest building as recently as 2017, despite strong opposition from the City of Melbourne and Planning Minister Dick Wynne. Thankfully, the permit for this latest Crown expansion at Queensbridge has lapsed.

It is little wonder Justice Finkelstein found Crown bullied the regulator and effectively neutered it. It is just too well connected to be regulated. And this was the same regulator that Andrews and Crown were defending as robust and independent after revelations about misconduct broke in 2019, via Nine’s 60 Minutes program and The Age.

Although I lay a lot of blame at Jeff Kennett’s feet, he lost power 22 years ago and Labor have been equally supine ever since. I was being called the de facto leader of the opposition in 1997, for standing up to Crown and Kennett. Labor figures cheered me on and promised if they won power they would clip its wings. Steve Bracks won in 1999 and I was dismayed to see the opposite. The very same Labor politicians shamelessly became Crown’s best friend, immediately hosting Labor fundraisers and taking political donations. They had been vocal critics of the close relationship between Kennett and Crown developer Ron Walker, but they immediately fell under its sway.

Crown suborns every check and balance because it is just too big and powerful, having fleeced more than $30 billion from gamblers since the temporary casino opened in 1994. Crown Melbourne’s yearly gambling revenue peaked at $1.86 billion in 2015-16 as the colourful VIP high-roller clients collectively dropped about $700 million.

This revenue needs to be managed down to less than $1 billion a year through stringent British-style “know your customer” rules, the elimination of cash play, and mandatory pre-commitment for the gamblers who lose about $460 million a year on Crown’s 2800-plus $10 maximum bet poker machines.

Sadly, when there is that much easy money to make and spread as favours, all of us get bought. Crown had long been subject to charges of money-laundering, crime and predatory behaviour that had contributed to suicides, but every charge bounced off. Indeed, the police department called Crown the Vatican because it was a sovereign immune state effectively existing within another jurisdiction but not subject to the same laws. It could act with impunity and claim sovereign protection from the government of the day, who would rush to its defence against “slanderous accusations” coming from the likes of me.

Now that we have become familiar with the massive regulatory failure at Crown and its failure as a fit and proper licensee, we need to admit that ultimately this was government failure by whoever was in power. Both sides of politics protected Crown so that it was never held accountable. I remember being granted some proxy shares to attend the 2018 Crown AGM – James Packer’s last on the board. I asked some pesky questions and experienced the arrogance of an immune board outraged that anyone would dare to question their magnificent “public service” for Melbourne. They were so superior and so outraged at critical questions. They knew that they were untouchable. Only the 60 Minutes story breaking started to reverse this power equation.

Such was its impunity that James Packer has now admitted to the Perth Casino Royal Commission that although he was chair of the board at Burswood he did not bother to attend board meetings for three years let alone appoint any money-laundering experts on his board. Under cross-examination he belatedly admitted to this being a “mistake”. What other board in Australia can function this way?

The most damning part of Finkelstein’s report was Crown’s callous treatment of vulnerable people and the cost to the community. The commissioner found that the whole community had been hurt by Crown’s approach to problem gambling, saying the harm has been enormous. He made some powerful recommendations to protect gamblers in the future while blasting Crown for claiming it has a world’s best approach to problem gambling. He added “nothing was further from the truth”.

For mine, the best part of Commissioner Finkelstein’s recommendations was that Crown pokies players will need a membership card that makes them set a daily, weekly or monthly limit on how long they can play and how much they can lose. Players that hit their limits would be locked out and unable to change their limits for 36 hours. The Andrews government says it supports this and all 33 recommendations. It should extend this membership card to all pokies in Victoria’s pubs and clubs.

So what should happen from here? The royal commissioner’s probation prescriptions with a special manager overseeing Crown might work. I would have preferred a recommendation for Crown to be broken up into a gaming business and a commercial/retail business for it to keep its licence. The oft-quoted 12,000 Crown employees are mainly subcontracted separate businesses and nothing to do with Crown other than sharing a landlord. The gaming floor has far fewer employees. And making that visible would have reduced this casino’s dominance of Melbourne. Possibly we would not be still bought.

Crown Resorts shares went up 11 per cent on the news that it had retained its licence. Although James Packer must sell down his 37 per cent share to 5 per cent, he is a very relieved and a very happy man. As we have seen after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, federal politicians are weakening the restrictions recommended by Commissioner Kenneth Hayne. I believe the same will happen with Crown. Just like the banks, they now own us. Crown still influences state governments and remains too big to fail.

This article was first published in the print edition of The Saturday Paper on Nov 6, 2021 as "Sleazy lies and heads that spared the Crown".

A free press is one you pay for. In the short term, the economic fallout from coronavirus has taken about a third of our revenue. We will survive this crisis, but we need the support of readers. Now is the time to subscribe.

Tim Costello is senior fellow of the Centre for Public Christianity.