An investigation by the VGCCC found that between 2012 and 2016, the Crown Melbourne casino allowed patrons to use CUP credit or debit cards to access funds to gamble.
The VGCCC said this illegal conduct facilitated access to nearly $164m, from which Crown derived an estimated revenue of more than $32m.
The Royal Commission into the Casino Operator and Licence (RCCOL) investigating Crown deemed the China Union Pay process to be illegal, and in breach of sections 68(2)(c) and 124(1) of the Casino Control Act 1991.
Section 68 prohibits Crown from providing money or gambling chips in a transaction that involves a credit or debit card, as it did with the CUP cards. This measure, the RCCOL said, aims to avoid gambling derived from criminal funds and to support responsible gambling and minimise harm.
Section 124 requires Crown to keep certain accounting records to ensure the handling of money in Crown Melbourne is effectively supervised, as well as that Crown’s taxes and other financial obligations to the state and public are paid in full.
Crown Melbourne admitted that the China Union Pay process was illegal and “completely unacceptable”, while it also acknowledged it was appropriate for the VGCCC to impose a fine.
This marks the first occasion the VGCCC has used its stronger enforcement powers under legislative amendments to the Casino Control Act, with the maximum allowable fine now $100m, up from just $1m prior to legislative changes.
“Crown’s CUP process was a clandestine, deliberate process, which not only breached the Casino Control Act but was also devised to assist patrons to breach China’s foreign currency exchange restrictions,” VGCCC chairperson Fran Thorn said.
“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.”
Responding to the fine, Crown said: “Crown acknowledges its historic failings. The China UnionPay process ceased in 2016. Upon becoming aware of this historical conduct, Crown’s board immediately commissioned an independent investigation and shared the findings with the Victorian Royal Commission, the Victorian Commission for Gambling and Liquor Regulation (the predecessor to the VGCCC) and other regulators.
“Crown’s Board and senior management are committed to the delivery of a comprehensive reform and remediation program to ensure Crown delivers a safe and responsible gaming environment and continues to cooperate with the VGCCC on all matters arising from the Victorian Royal Commission Report.”
The VGCCC added that during the disciplinary proceedings, it became apparent that in addition to the CUP process, there were other mechanisms that persisted after 2016 that enabled CUP cards to be used to access cash at Crown Hotels, which was then potentially used for gambling.
Consideration of this did not form part of the current disciplinary proceedings and Crown Melbourne considers these transactions do not contravene the Casino Control Act.
However, the VGCCC has decided to undertake its own investigation into these transactions and form its own view about whether further breaches have occurred in the period after 2016.
The VGCCC will now consider further disciplinary proceedings against Crown related to the other findings of the Royal Commission, which may each attract a fine of up to $100.0m.
In October 2021, a Royal Commission report found that Crown was not suitable to hold a casino licence in Victoria, after it revealed that Crown had engaged in “illegal, dishonest, unethical and exploitative” conduct.
This built on the Bergin report, which found that Crown was unsuitable to operate a casino in New South Wales. The company was also deemed unfit to operate a casino at the Barangaroo region of Sydney.