Crown & Star Scandals: How Royal Commissions Reshaped Australian Casinos

The Fall and Rise: How Scandals Reshaped Crown and Star into the Post-Inquiry Landscape

Welcome back to GambleGrounds. For years, Crown Resorts and The Star Entertainment Group stood as the glittering, unchallenged titans of Australian gaming, their immense resorts dominating the skylines of Melbourne, Sydney, and Brisbane. They symbolized luxury, tourism, and massive state revenue.

Then came the reckoning.

Beginning in 2020, a series of devastating public inquiries—dubbed Royal Commissions in Victoria and equivalent probes in NSW and Queensland—exposed catastrophic failures in governance, ethics, and, most critically, Anti-Money Laundering (AML) compliance.

This is not just a story of corporate misbehavior; it is a profound narrative of corporate redemption forced by government authority. The inquiries didn't just issue fines; they fundamentally shattered the regulatory relationship, replacing decades of 'trust-based' oversight with an 'intrusive' and punitive regime. This new landscape has redefined what it means to operate a major casino in Australia.

Digital illustration symbolizing the Australian casino regulatory crisis, showing the logos of Crown Resorts and Star Entertainment Group under scrutiny, overlaid with regulatory text or a government seal, representing the post-inquiry landscape and the Anti-Money Laundering (AML) crackdown.

Part I: The Core Findings – A Systemic Failure of Ethics and Law

The inquiries (primarily the Bergin Inquiry in NSW, the Finkelstein Royal Commission in Victoria, and the Queensland probe) uncovered issues so widespread and egregious they shocked the nation and triggered the unprecedented intervention.

1. Anti-Money Laundering (AML) Failures: The Central Sin

The most damning findings centered on the casinos acting as a conduit for criminal funds, a massive regulatory failure known in the industry as the Crown Resorts Scandal and the Star Entertainment Regulatory Risk.

• Crown's Sin: The Finkelstein Commission in Victoria revealed that Crown knowingly allowed criminal syndicates and money launderers to wash hundreds of millions of dollars through its accounts, often via non-transparent "junket" operators and specific "money cages" and bank accounts within the resorts. The culture prioritized VIP revenue over legal compliance.

• The Star's Duplicity: The Star was found to have been similarly negligent, using sophisticated methods—such as disguising hundreds of millions of dollars in VIP gambling expenses as "hotel expenses" to evade detection and deceive banks and regulators. The inquiries found that the pursuit of high-roller revenue blinded executives to the law.

2. Governance and Culture:

The commissions concluded that the failures were not due to a few rogue employees, but were endemic—rooted in a toxic corporate culture driven by a "win at all costs" mentality. Boards were found to be passively accepting questionable practices, and management teams actively concealed non-compliance from regulators.

3. Social Harm and Responsible Gambling:

Both companies were found to have been negligent in protecting vulnerable patrons, often overriding self-exclusion requests and prioritizing the player's expenditure over their welfare. This failure compounded the public outrage against the institutions.

Part II: Structural Changes – The Price of Redemption

The outcomes of the inquiries were brutal and mandatory. They stripped both companies of their fundamental right to operate, forcing them to embark on a painful, expensive, and public journey of rehabilitation.

1. The Installation of Monitors and Special Managers

This was the most immediate and symbolic change. Both Crown (in Victoria and NSW) and Star (in NSW and Queensland) were made subject to the authority of a Special Manager or Government Monitor.

• Intrusive Authority: These monitors are not consultants; they are government appointees with sweeping, intrusive powers to observe, direct, and veto operational decisions. Their job is to effectively run the regulatory side of the casino until it can demonstrate full fitness.

• Suspension of Licences: In NSW, Crown Sydney's licence was initially denied (it only later received a conditional licence), and Star Sydney was subject to a suspension and a massive fine, signaling that the government was willing to shut down the most lucrative licenses if compliance faltered.

2. Mandatory Governance Overhaul

Structural transformation was mandatory:

• Board Clear-Out: Virtually all long-serving directors and top executives across both organizations were forced to resign, severing ties with the era of scandal. New, independent boards with specific expertise in compliance, risk, and ethics were installed.

• Separation from Junkets: The practice of dealing with third-party junket operators—which the inquiries identified as high-risk AML avenues—was formally banned across all jurisdictions.

• Anti-Money Laundering Australia systems were overhauled, requiring billions of dollars in investment into new transaction monitoring software, compliance teams, and enhanced patron identification procedures.

Part III: The Shift in Regulatory Philosophy – From Trust to Intrusive Regulation

Perhaps the most significant and lasting legacy of the Royal Commissions is the complete overhaul of the regulatory relationship between the state and the casino.

The Death of "Trust-Based" Regulation

For decades, Australian casino regulation operated under a model of mutual trust. Regulators essentially trusted the casino companies, provided they were publicly listed, to implement robust compliance internally and report issues honestly.

• The Flaw: This model failed spectacularly because it created a regulatory blind spot, allowing commercial pressures to override legal and ethical duties in secret. The companies treated fines as a cost of doing business, knowing the regulator would be reluctant to pull the lucrative licenses.

The Birth of "Intrusive" Regulation

The new landscape is defined by government authority and active interference:

1. Regulators with Teeth: New, dedicated independent casino regulators (such as the new NSW Casino Control Authority and the revamped Victorian Gambling and Casino Control Commission) were established with enhanced powers, larger budgets, and a clear legislative mandate to be highly aggressive.

2. Continuous Scrutiny: The focus shifted to continuous, real-time monitoring. Regulators now have the power to embed staff within the casino operations, demand immediate access to all data (financial, communications, and customer data), and intervene instantly if high-risk transactions are flagged.

3. The New Standard: Suitability: Both companies are now operating under a cloud, constantly having to prove their "ongoing suitability" to hold the license. Any future misstep, no matter how small, could result in the immediate and permanent cancellation of their licence—a true Sword of Damocles hanging over the executive suite.

Part IV: The Post-Inquiry Business – A Different Kind of Casino

The dramatic overhaul has had a profound impact on the day-to-day operations and financial models of both Crown and Star.

• The End of the VIP High-Roller Era: Without junkets and with the intensely scrutiny, the high-margin international VIP business has collapsed. The resorts are now forced to pivot to the domestic premium market and tourism, focusing on hotels, dining, and lower-volume, domestically sourced VIPs who can be easily vetted.

• Compliance as a Profit Center: Compliance is no longer a cost center; it is a prerequisite for survival. The size and cost of the AML and responsible gambling teams have multiplied, fundamentally changing the company structure.

• Erosion of Shareholder Confidence: The extensive Star Entertainment Regulatory Risk has led to deep instability. Share prices plummeted, the brand was severely damaged, and both organizations saw changes in ownership (Blackstone's acquisition of Crown). The market now prices in a significant "regulatory risk premium" when valuing these assets.

The journey of Crown and Star from national icons to cautionary tales is a monumental chapter in Australian corporate history. It demonstrates that the Australian government, once perceived as soft on its major revenue generators, is now willing to apply extraordinary force to enforce integrity. For the Australian audience, the message is clear: the glittering palaces remain, but the culture inside has been forcibly changed, ushering in an era of intrusive regulation defined by zero tolerance for AML failure.