Crown Casino Lands $20M Fine After Tax Claims and Cover-Ups

Crown Casino Lands $20M Fine After Tax Claims and Cover-Ups
A person walks past signage at the Crown Casino in Melbourne, Australia, on March 22, 2021. (William West/AFP via Getty Images)

Gaming giant Crown has been slapped with a $20 million (US$13.8 million) fine for failing to pay its fair share of Victoria’s casino tax and trying to cover up the scheme.

The state’s royal commission into Crown’s Melbourne operations found the casino giant wrongly claimed tax deductions by including the costs of certain promotional activities as amounts paid out as winnings.

It also sought to deliberately conceal the nature of the deductions.

When first proposed, internal lawyers expressed concerns about the validity of the deductions but the company moved to gradually phase them in as part of a risk management strategy.

Crown continued to make the deductions after the former state casino watchdog sought information in 2018 and contrary to advise from an external solicitor.

The practice was uncovered during the 2021 royal commission when a spreadsheet setting out the casino’s total unpaid casino tax was inadvertently noticed by counsel assisting.

Crown accepted it wrongfully claimed the deductions and has since reimbursed the state about $61.5 million (US$42.3 million), including $37.4 million (US$25.7 million) from the unpaid tax and $24.1 million (US$16.5 million) in penalty interest.

A further $20 million fine was issued by the Victorian Gambling and Casino Control Commission (TGCCC) on June 16, taking Crown’s tally of penalties to $700 million (US$481 million) over the past 13 months.

Commission chair Fran Thorn said Crown made significant efforts to conceal the scheme.

“The VGCCC will not tolerate this behaviour,” Thorn said.

“We expect licensees to comply with their tax obligations and to be transparent in their dealings with us.”

In its 11-page list of reasons, the watchdog said it could have imposed a fine of about $28 million (US$19.2 million) but took into account Crown’s remorse and co-operation.

The company has until December 31 to pay the fine and will have to cover the commission’s costs.

Crown Melbourne chief executive Mike Volkert described the breaches as historical and said the practice, which stopped in 2021, had no place under the company’s new ownership and leadership.

“We are committed to an open, constructive, and transparent relationship with our regulators and stakeholders, as well as improving internal controls and our regulatory reporting requirements,” Volkert said in a statement.

U.S. private equity giant Blackstone acquired Crown for $8.9 billion (US$6.1 billion) in June 2022, ending billionaire James Packer’s control of the company.

The Victorian casino watchdog has now meted out $250 million (US$171.8 million) worth of fines to Crown following the eight-month royal commission, which found the company unfit to run the Southbank complex.

Crown has two years to reform itself before a special monitor and the regulator decide whether the company is suitable to hold the licence.

Victorian Casino, Gaming and Liquor Regulation Minister Melissa Horne said the fine demonstrated why the watchdog was given stronger powers, ensuring no repeat of Crown’s “atrocious” conduct.

“It’s incumbent on Crown to prove they are suitable to hold their licence—otherwise they will lose it,”  Horne said.

Opposition spokesman Danny O'Brien said it was incumbent on the government to justify Crown’s entitlement to run the casino after giving it a second chance.

“One wonders when the dramas with Crown will ever end,” O'Brien said.

Crown remains on the hook for a $450 million (US$309.3 million) fine in May after reaching an agreement with the Australian Transaction Reports and Analysis Centre for breaching anti-money laundering and counter-terrorism financing laws.

It will become the third-largest fine in Australian corporate history if approved by the Federal Court in July.

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