14.12.2023

by Mateusz Mazur

Victoria’s Casino Regulator Investigates Crown Resorts Amid Allegations of Management Misconduct

According to the Financial Review, Victoria’s casino regulator is currently investigating Crown Resorts, owned by the New York-based private equity firm Blackstone, following the company’s internal inquiry into senior management’s conduct.

Australia Victoria

This probe is particularly focused on Crown’s Chief Executive, Ciaran Carruthers, and his alleged involvement in reinstating patrons previously removed from the company’s Melbourne venue.

Background of the Investigation

The investigation, as reported by the Financial Review, stems from at least two incidents where Carruthers is alleged to have intervened to allow patrons back into Crown’s Melbourne precinct.

These allegations have prompted the Victorian Gambling and Casino Control Commission (VGCCC) to launch its own independent investigation into the matter.

A spokesperson for the VGCCC confirmed their awareness of the internal issues at Crown and the commencement of their investigation. However, they did not provide further comments at this stage. The Financial Review clarifies that the allegations against Mr. Carruthers are being investigated and are not yet confirmed as factual.

Scope of the Investigation

The regulator’s investigation extends to claims that a minor was permitted on the gaming floor, a serious allegation given the strict regulations governing casino operations. Crown has responded by engaging external legal counsel to independently review these allegations, affirming their adherence to governance protocols.

This investigation is set against a backdrop of intense regulatory scrutiny faced by Crown in recent years. The company has been under the microscope, including a royal commission in Victoria led by former Federal Court judge Raymond Finkelstein QC. The commission’s findings led to significant changes, including the installation of a special manager with the authority to direct the casino’s management and influence its gaming license retention.

Crown’s recent history is marked by regulatory challenges. The company agreed to pay a $450 million fine earlier this year for breaching anti-money laundering and counterterrorism financing laws. Financially, Crown reported a loss of $199 million due to compliance costs and fines, further compounded by the impacts of the COVID-19 pandemic.

Our Comment on the Article

The ongoing investigation into Crown Resorts underscores the critical importance of stringent regulatory oversight in the gambling industry. It highlights the delicate balance that casino operators must maintain between profitable operations and adherence to legal and ethical standards. The involvement of high-level executives in these allegations, if proven true, could suggest a deeper need for organizational reform within Crown.

The VGCCC’s active role in investigating these allegations and the broader context of Crown’s recent regulatory challenges depict a scenario where the gambling industry is facing increasing scrutiny. This scrutiny is not just about financial transactions but extends to the ethical conduct of those in power.

The outcome of this investigation could have significant implications for Crown Resorts, potentially affecting its operational licenses and future business strategies. It also serves as a cautionary tale for other operators in the industry, emphasizing the importance of compliance, transparency, and ethical governance.

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