Melbourne might need the casino but what about its owners

October 27, 2021 â€" 7.00pm

Is Melbourne’s Crown Casino too big to fail?

That’s the question on everyone’s lips following Tuesday’s release of the Royal Commission into the Casino Operator and Licence, which damned unreservedly the owner and operator, Crown Melbourne, yet nevertheless opted not to recommend it lose its licence.

To answer this question, we need to be clear about what it is that’s too big to fail. Is it the mega entity that has at its heart a casino? Or is it the company that has the licence to operate it, Crown Melbourne, which in turn is a holding company owned by Crown Resorts?

Victoria’s royal commission exposed a litany of legal and ethical breaches at Crown. Credit:The Age

Let there be no mistake. As a mega entity, the Melbourne casino complex is truly huge. It was designed in the mid-1990s not as a casino, but an entertainment extravaganza of impressive scale and architectural significance, designed to entice intended and unintended gamblers of today and tomorrow, from both here and overseas.

Its scale is worth recounting. It has three hotels with 1600 guest rooms, a conference centre, a 1500 seat ballroom, a 900 seat cabaret venue, 13 premium restaurants, 16 casual restaurants, three sports bars and a movie theatre complex. Then there is the casino, with 540 games tables, and 2628 electronic gamic machines. It employs 11,500 people, making it the largest single site private employer in the state.

In addition to all that, it happens to be a very big provider of vocational education and training through Crown College, funded in part by government-subsidised places and student loans. In total, and in a good year, the entity generates over $1.5 billion in revenues and pays to the state almost $250 million a year in gambling taxes.

Victorian royal commissioner Ray Finkelstein, QC, has expressed disbelief at some of Crown’s practices during the hearings. Credit: Supplied

The scale of the casino complex was driven partly by a desire by the Kennett government in the mid-1990s to fill the void left by the rapidly shrinking manufacturing sector, which had been torched by the federal government’s removal of tariff protection.

Melbourne, the staid manufacturing capital of Australia, was to become instead a dynamic entertainment and sales powerhouse of regional significance.

It was no accident that one of the original purposes of the Casino Control Act and its associated regulations was to promote “tourism, employment and economic development...″⁣.

And it has indeed achieved that goal. The casino complex is so big and so extensive, it is difficult not to conclude that it is too big to fail, especially right now when the Victorian economy struggles out of its prolonged corona-recession.

But the question whether Crown Resorts should continue to be the owner of it and keep its casino licence is another thing altogether.

Big companies do go broke. If the underlying business is sound, which it most surely is and even under the most onerous of regulatory arrangements, a buyer will be found. There may be disruption. Jobs may be lost. Supply chains might be disrupted. But that will all be temporary rather than permanent. And taxes will still be paid.

What then might make Crown Resorts indispensable as the owner?

The royal commission provides this convenient summary.

“(F)or many years Crown Melbourne had engaged in conduct that is, in a word, disgraceful ... (It) was variously illegal, dishonest, unethical and exploitative. The catalogue of wrongdoing is alarming … It is difficult to grade the seriousness of the misconduct. Some was so callous that it is hard to imagine it could be engaged in …”

Why did Crown act this way? In short, it had a badly compromised and unethical board as well as executive team, lawyers who were happy to look the other way, and lastly what the commission conveniently describes as “the Packer/Consolidated Press Holdings influence”, which placed profits first and social responsibility as something for someone else to worry about.

What are the implications for Crown Melbourne continuing to keep its licence? Again, the royal commission is unambiguous: “When these facts came to light, it was inevitable that Crown Melbourne would be found unsuitable to hold its casino licence. No other finding was open.”

And yet the royal commission settled on a position that has enabled Crown Melbourne to keep its licence, and that is despite furnishing ample evidence that Crown Melbourne had become yet a shell company controlled by the NSW-based Crown Resorts, with little direct interest in Melbourne’s economic and social development.

Yes, Melbourne’s casino complex is too big to fail.

What has yet to be fully explained is why it isn’t about to get new owners?

Professor David Hayward is Emeritus Professor of Public Policy at RMIT University.

Professor David Hayward is Emeritus Professor of Public Policy at RMIT University.

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