Crown Resorts Fined $58m Over Cashcard Scam

May 31, 2022
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Australian casino operator Crown Resorts has suffered another financial and regulatory blow after the Victorian state gambling regulator fined the company a record A$80m ($58m) over its China UnionPay (CUP) cashcard scam.

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Australian casino operator Crown Resorts has suffered another financial and regulatory blow after the Victorian state gambling regulator fined the company a record A$80m ($58m) over its China UnionPay (CUP) cashcard scam.

The Victorian Gambling and Casino Control Commission (VGCCC) on Monday (May 30) issued the fine plus costs to Crown subsidiary Crown Melbourne for allowing customers to use UnionPay cards for gambling between 2012 and 2016 while masking the transactions as hospitality expenses.

The scam, which was exposed by last year’s state government Royal Commission into Crown Melbourne’s activities, “facilitated access to nearly A$164m, from which Crown derived an estimated revenue of more than A$32m,” the VGCCC said in a statement.

“In taking disciplinary action, the VGCCC had regard to Crown’s cooperation and contrition,” it said.

The fine comes as New York-based financial services behemoth Blackstone Group awaits Australian state regulatory approval for its takeover of Crown Resorts, following Crown shareholder approval of the deal on May 20.

Fran Thorn, the chair of the VGCCC, said Crown’s “CUP process” was a “clandestine, deliberate process” that was in part “devised to assist patrons to breach China’s foreign currency exchange restrictions”.

“Crown was aware of the risk that the CUP process could be illegal but decided to run that risk. In doing so, it showed no regard for upholding its regulatory obligations. Indeed, it went to some lengths to hide what it was doing.

“Crown benefited handsomely from its illegal conduct. The fine will ensure that Crown is stripped of the revenue it derived from the CUP process and will send a clear message that it must comply with its regulatory obligations.”

The regulator is proceeding with additional probes into the company, including on cashcard mechanisms in place after 2016 that potentially broke the law, the statement said. Crown contends that these mechanisms were legal.

Other federal government probes into Crown are ongoing, including by transactions regulator AUSTRAC into “hundreds” of alleged offences.

The record VGCCC fine quickly followed a legislative amendment that lifted the maximum fine for individual casino compliance breaches from A$1m to A$100m.

That change is part of two tranches of tough amendments suggested by the Royal Commission that have been implemented, with more to come.

In a statement on Monday, Crown Resorts ⁠— now under the supervision of a government-appointed special manager ⁠— said it “acknowledges its historic failings” and that it is “committed to the delivery of a comprehensive reform and remediation program” to ensure the company meets its responsibilities.

Meanwhile, the Independent Liquor & Gaming Authority inquiry into Crown rival Star Entertainment Group in neighbouring New South Wales state has entered the final submissions phase, with counsel assisting the inquiry stating that Star Entertainment and its Sydney casino are “not suitable” to operate a casino licence.

Counsel assisting Naomi Sharp told the inquiry on Tuesday (May 31) that Star Entertainment and its Star casino in Sydney are “only at the beginning of their journey” to achieving suitability and that the companies are yet to display “deep reflection” on their misbehaviour.

In an ongoing presentation covering 26 topics, Sharp said Star Entertainment’s legal team showed “unethical behaviour'', and that there were “very serious failures” in risk management.

Along with other witnesses, she recommended that evidence given by former CFO Harry Theodore, who resigned in early May along with other top executives, be rejected over lack of credibility.

Counsel submissions to the inquiry will continue until June 24, followed by presentation of Adam Bell’s report of the inquiry by August 31.

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