Compensation for Crown could be endless if Victoria ends casino agreement

By Mia Chapman Updated
Crown CEO Steve McCann exits the business

Crown could be in line for “uncapped compensation” if the Victorian government cancelled its casino licence in Melbourne.

ABC News reports that the state government has told the Victorian royal commission into Crown Resorts there is a difficult path in turning the inquiry’s recommendations into reality.

The submission from the state government suggests that the regulator lacks the power to cancel Crown’s licence, compensation, believed to be up to $200 million per licence condition change, could, in fact, be limitless and any appointed monitor may be in conflict with the regulator and finding one able to deal with a large casino during a pandemic “might not be straightforward”.

Counsel assisting the royal commission Adrian Finanzio SC submitted it was open to the royal commission to find that Crown was not suitable to hold the casino licence, with a number of possible consequences of such findings, including cancellation, suspension or variation of Crown’s licence.

Commissioner Ray Finkelstein QC will report his recommendations by October 15, 2021.

The state government’s submission said it was appropriate for the recommendations to “take into account the potential consequences…with any cancellation, variation or suspension of the casino licence”.

Crown’s responsible gaming GM wants to stay to fix the problem

Systemic failures in providing responsible gambling were exposed at the commission, but the person in charge wants to stay to fix them.

Sonja Bauer has worked at Crown since 1994, rising to have the title “group general manager responsible gaming”.

Counsel assisting the royal commission said that Ms Bauer was “defensive and unable to accept the glaringly obvious”.

But in her submission, she argued the 13 members of the Responsible Gaming Management Committee, including the chief executive, bore responsibility for failures, not just her.

“Any weaknesses of Crown’s practices are, therefore, issues which members of the committee, Ms Bauer’s line managers and Ms Bauer herself failed to address. Ms Bauer should not be held solely responsible,” it read.

“Any such failings were, unfortunately, collective ones.”

The state government responded to the royal commission in four areas: the potential licence suspension or cancellation, a monitor to oversee Crown’s operations, responsible gambling breaches and underpaid tax.

Clauses added to the contract by the former Baillieu government in 2014 were known as the “regulatory certainty” provisions and limit the power of the regulator or government to kill or even vary the licence.

“The effect of the regulatory certainty provisions is that the state has acknowledged a right for Crown to be compensation…for loss and damage suffered in the event that Crown’s Casino Licence is cancelled or varied other than by mutual prior agreement or in accordance with a specific carve out of the law.”

In discussion about competing parts of the casino’s contract, the state government’s lawyers put forward that the soon to be disbanded regulator, the Victorian Commission for Gambling and Liquor Regulation (VCGLR) lacks the power to cancel Crown’s licence.

The interpretation may be that “cancellation as a form of disciplinary action…is not available to the VCGLR, because it would fall outside the carve out and thus conflict with the statutory prohibition.”

Letter sent by Crown to Victorian Gaming Minister 

An astonishing moment of the royal commission was the revelation that the Crown board sent a letter to Gaming Minister Melissa Horne, while hearings were still underway, that threatened catastrophic consequences if the casino lost its licence.

There would be a “huge problem for the government too”, the letter warned.

The letter was sent by Leon Zwier, lawyer for Crown’s chair and interim chief executive Helen Coonan.

In Ms Coonan’s submission, Mr Zwier disputed what counsel assisting the royal commission said about the letter, that it “shows poor judgement and is the antithesis of the cultural reform that Crown needs to move forward”.

Instead, he argued, Crown and its stakeholders would face significant risks, including potentially defaulting on loans, if the licence was cancelled.

“It could not be assumed that the minister was aware of these matters,” he wrote.

“The sending of the letter could in no sense be seen as an attempt to undermine this commission”.

Back to top