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Paul Newson: How The Star has been allowed to fall

Advisor to Australian Gambling Regulation Law Firm Senet, Paul Newson, speaks exclusively to Gambling Insider about the current legal issues facing casino operator The Star. This is after the NSW Independent Casino Commission (NICC) deemed The Star unfit to hold a casino licence.

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Advisor to Australian Gambling Regulation Law Firm Senet, Paul Newson, speaks exclusively to Gambling Insider about the current legal issues facing casino operator The Star. This is after the NSW Independent Casino Commission (NICC) deemed The Star unfit to hold a casino licence.

Click here for more on The Star's recent legal issues.

Comprehensive probity arrangements for the gambling industry are designed as an important gateway to prevent the infiltration of Ben “Bugsy” Siegel-like criminality within the sector. However, such arrangements don’t sufficiently contemplate ethical contortions and leadership and governance failures as featured in the latest inquiry report into The Star Casino Sydney.  

Should the probity threshold involve more nuanced inquiries to better ascertain and understand indicators of character and ethical leaning? On one hand, there is little merit in building a more cumbersome screening process, but perhaps the recognition in the report from Adam Bell SC that The Star had a “systemic cultural problem” that flowed from the top down, signals the existing probity framework is misaligned with contemporary risks and unsupported by effective regulatory oversight. After all, the existing framework was informed by the Las Vegas experience in ousting the Mob.

As shocking as the cultural malady and associated wrongdoing surfaced in the inquiry report are, extensive shortcomings and misconduct have been ventilated in the long march of inquiries since the sensational Crown Unmasked investigation.

Crown’s pathway to redemption has involved a fundamental reset supported by renewed leadership and commitment to achieving best practicesPaul Newson, Australian Gambling Regulation Advisor, Senet

Sans partisan motivations, it’s uncommon for a government to rush towards establishing a Royal Commission. But notwithstanding the caution around initiating these formidable arm’s length inquiries, they have uncovered endemic leadership, governance and compliance failings, and revealed an organisational culture wholly incompatible with societal and industry integrity expectations.  

The failure of leadership revealed by the succession of formal inquiries underscores the seemingly miserable condition of casino culture and operations in Australia. But has the catalogue of inexplicable behaviour and damning findings insulated us from this latest condemnation, or is this belated review of NSW casino operations the tipping point, where an operator deemed by many as too big to fail is stripped of its licence? 

Well, on paper this is largely a matter for the NICC to determine, most likely in close consultation with the relevant NSW Government minister. But it’s instructive to observe that both the 2019 Bergin Inquiry and the report of the current Review of The Star Pty Ltd led by Adam Bell SC were both conducted under section 143 of the Casino Control Act 1992. This was in accordance with terms of reference issued by the Independent Liquor and Gaming Authority. This is significant because while the Bergin Inquiry principally examined Crown’s casino operations in Melbourne and Perth, arguably the terms of reference derogated from what ought to have been its principal interest: the conduct of the only casino operator in NSW and the effectiveness of the regulatory framework and adequacy of casino oversight.  

Unlike the arm’s length, Royal Commissions established by respective Victorian and Western Australian governments that investigated casino behaviours and regulator performance in Melbourne and Perth, the NSW regulatory arrangements and regulator performance haven’t been upset by such independent scrutiny. As unsettling as the cultural malaise and associated behaviours of The Star are, it’s also troubling that NSW regulatory arrangements and regulator performance, as well as the merits of NSW Government decisions, remain unexamined, unexplained and unaccountable. This includes dismantling the regulatory capability and undermining industry supervision by shuffling the gambling regulator into the Department of Customer Service in 2019.

“The failure of leadership revealed by the succession of formal inquiries underscores the seemingly miserable condition of casino culture and operations in Australia” Paul Newson, Australian Gambling Regulation Advisor, Senet

Suspension of disbelief might be necessary to understand why an inquiry did not rigorously examine NSW regulatory settings and performance, and government decision-making that undermined the regulator’s capacity to identify and effectively respond to what the Bell Report reveals as a malignant industry culture and serious leadership, governance and compliance shortcomings. Even worse, the disruption to the regulator from repeated machinery of government changes may have created the conditions for a malignant culture to flourish.

Crown’s pathway to redemption has involved a fundamental reset supported by renewed leadership and commitment to achieving best practices. Its remediation efforts are extensive and underpinned by enormous investment in building its anti-money laundering and responsible gambling functions and capability while sophisticating its approach.

So energetic overhaul of leadership and organisational posture and approach is necessary to avoid licence cancellation. If precedent means anything, the chances of The Star losing its licence seem remote, but some form of close and continuous monitoring as well as more intense regulatory intervention; as The Star commences the arduous work of remediating its reputation and attempting to secure its future. 

So energetic overhaul of leadership and organisational posture and approach is necessary to avoid licence cancellation, but if precedent means anything, the chances of The Star losing its licence seem remote. No doubt some form of close and continuous monitoring will occur and more restrictive conditions will be imposed as The Star commences the arduous work of remediating its reputation and attempting to secure its future. 

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