When the chips are down, can Andrews walk away from Crown’s table?

In the three decades since Crown opened its first casino in Melbourne it has hedged its bets on both sides of politics.

The mates network it has built, stronger than perhaps anything the state’s body politic has ever seen, has helped grease the wheels in Victoria since the day Labor’s Joan Kirner gave a casino her blessing and the Liberal Party’s Jeff Kennett turbo-charged things.

Last week, Crown’s luck ran out.

Then premier Jeff Kennett (left) and casino boss Lloyd Williams at the cutting of the ribbon to officially open the Crown Casino in 1997.Credit:Jason South

Mayne says Crown is “politically untouchable”. He points to Labor’s war against Crown in 1994, when then Opposition leader John Brumby said it embodied “the new spirit of cronyism”. That venom quickly dissipated when Labor won the 1999 state election, Mayne says, “after the Packer interests donated $100,000 to the Victorian ALP and James Packer sat next to Steve Bracks at a $1000-a-head Labor Party fundraiser”.

As Opposition leader before the 2014 state election, Andrews understood the power of a business elite figure like James Packer publicly backing him.

Famously, in 2014, a purportedly errant microphone picked up Kerry Packer’s close friend Lloyd Williams promising to look after Andrews and Labor. “James is going to kick every goal he can for you,” Williams said. Labor sources suggest this “accident” was Andrews showing, ahead of that year’s election, that he had the big end of town on side.

Daniel Andrews with James Packer in the Crown marquee on Derby Day in 2012.Credit:Jesse Marlow

In 2006, a young Daniel Andrews was appointed Victoria’s gaming minister. After more than a decade entrenched in factional Labor politics, the 34-year-old was finally at the cabinet table, involved in high-level decision-making.

He spent just seven months in the portfolio but it was enough to cultivate relationships. Labor sources point to this time as pivotal; it was during these meetings that Andrews’ enduring relationship with gaming moguls began.

Crown has enjoyed concessions and cosy relationships with Victorian governments over the years, with political transparency activists pointing to the gaming giant’s generous donations to both major parties. Australia Electoral Commission disclosures show that from 2000 to 2020, Crown donated just over $2 million in total.

Labor insiders insist this sort of focus on donations or networks fails to capture the complexity of government decision-making and the benefits to Melbourne of the casino.

For much of his political life over the past decade, Andrews has framed every announcement around jobs. He has long batted away journalists’ questions about Crown’s links to money laundering and organised crime by emphasising the gaming giant’s importance to the local economy. Before the pandemic hit Australia last March, close to 12,500 people worked at the casino. Crown directly employed 7300 and the balance were in retail, food or drink outlets.

When Horne fronted the cameras on Monday, she had the same talking points. “There are thousands of people working in Crown,” she said. “We need to make sure that we’re protecting jobs.”

Any focus on employment can’t ignore the various jobs held at Crown in Melbourne by consultants and government relations advisers over two decades: former federal Liberal Party MP Ian Smith; Gary O’Neil, a former media advisor to Kim Beazley; Ann Peacock, daughter of former federal Liberal leader Andrew Peacock; and Karl Bitar, a NSW Labor right operative. For the last two years, Crown’s director of corporate affairs has been Chris Reilly – Daniel Andrews’ director of parliament and strategic relations until 2018 and central to Labor’s 2014 state election win.

Then there is Helen Coonan, charged with leading Crown through this unprecedented crisis as its executive chairman. She is a former Liberal senator who owes her $3 million-a-year position to James Packer. Coonan left parliament in August 2011 and joined Crown as a director four months later at Packer’s invitation.

In 2006, as communications minister in the Howard government, Coonan changed media ownership laws, making it possible for Packer to sell most of the Nine Network for $4.5 billion and then pump that cash into growing his Crown empire.

Coonan has strenuously denied this compromises her independence from Packer, who the Bergin inquiry found must release Crown from his influence if it is to become a suitable licence holder.

In the 2½ weeks since that inquiry released its final report, Crown’s boardroom and C-suite have been eviscerated. Former AFL boss Andrew Demetriou – chairman of Crown’s Victorian licensee Crown Melbourne – resigned as a director along with well-connected Melbourne ad man Harold Mitchell and two of Packer’s board representatives plus chief executive Ken Barton.

Crown was invited to discuss its influence in Melbourne for this story, but declined.

Too often, say those who have been in government trying to work with Crown, the narrative is twisted far from the more benign reality.

Among them is Tony Robinson, Labor’s state gaming minister from 2007 to 2010. He says any state government will naturally have a close relationship with the casino operator because it is constantly redeveloping and expanding its property, and this brings with it very real benefits.

The casino would offer to invest in a new hotel – creating jobs and supporting tourism – but ask for more gaming tables in return to fund the expansion. “Those conversations will go on in confidence between the premier and the treasurer and they reach an agreement. And when they’re published of course everyone says ‘Oh there’s a secret deal!’ [But] there’s nothing untoward about that.”

Robinson says some people will always be against gambling, “but there’s an awful lot of people who are agnostic about gambling as an industry and just see the government’s ability to secure more investment from a business as a good thing for the state”.

Robinson also says every state administration has been “horribly embarrassed” by Crown when misbehaviour is exposed as “happening under their noses”.

“They don’t want it to happen again,” he says, pointing out the Bergin report has found matters the Commission for Gambling and Liquor Regulation should have exposed.

Robinson says the government now desperately needs to make sure there is an alternative operator. “What happens if Finklestein says ‘no, not even a restructured Crown can hold the licence’? There are thousands of workers who depend on it, there’s a whole major events strategy. It’s not necessary that Crown continue.”

The listed entity that is Crown needs it to continue though – it has earned an enormous fortune from its Melbourne casino. In 2000, the year after the Packer family’s Publishing and Broadcasting Limited took over, Crown Melbourne generated revenue of $1.03 billion. Then, as today, the bulk of that money was taken from punters.

By 2019 it raked in revenue of $2.16 billion. Of that, $1.2 billion was from its blackjack, poker and roulette tables, including its high-roller rooms where VIP gamblers laid bets worth a gobsmacking $32 billion.

Crown Melbourne generates around 70 per cent of the group’s earnings, which in turn had – until COVID put the group into suspended animation – been showered on major shareholder James Packer in the form of regular dividends.

Crown’s ASX-listed shares have barely budged since Monday, when the Victorian royal commission was announced. They also hardly moved after the Bergin report was released, reflecting a belief from investors that Crown will either be able to hold on to both casinos or is set for a takeover if Packer decides to offload his 37 per cent stake.

Some Crown insiders were this week optimistic about the outcome of the royal commission, saying it was likely that by the time Finkelstein hands down his report the casino will be operating so smoothly and without issue that it will retain the licence.

Tim Costello thinks this is probably right. “Crown would still be feeling quite comfortable,” he says. “During the Bergin inquiry, [Daniel] Andrews said ‘Of course we won’t be cancelling Crown’s licence’. We know Crown still has a fair bit of protection.”

But Costello says one thing is crystal clear to him: “Victorians have lost confidence in Crown and in the government’s ability to govern Crown.”


VICTORIA’S BIG GAMBLE: A TIMELINE

1990 Joan Kirner announces initial plans for a casino in Melbourne.
1992 Jeff Kennett elected premier.
1993 Crown selected as operator, with Kennett saying he believed “all Victorians will be terribly proud of this development as it grows and ultimately as it provides for our needs”.
1994 Crown begins paying its $1 a year rent for a prime Southbank site; meanwhile, a temporary casino opens in the World Trade Centre on the Yarra’s northern banks.
October The Age reveals the financial adviser to the government’s casino authority did not recommend Crown consortium to win the bid over the runner-up; prime minister Paul Keating describes the tender process as corrupt.

1996 Victorian Auditor-General Ches Baragwanath finds the Kennett government granted Crown 150 extra gaming tables for just $85 million, instead of the $259 million the licences should have brought the government.
1997 Southbank casino, twice the size of the planned complex approved when Crown won the tender in 1994, opens.

1998 Gambling addict Nick Vlahopanagos threatens to set off a bomb outside Crown Casino.
2005 Crown Casino’s Heat nightclub closed down after mounting complaints over anti-social behaviour and a massive brawl.
2009 High roller Harry Kakavas unsuccessfully sues Crown for $35 million in losses, arguing they lured him to the casino to exploit his addiction.
2011 Anthony Dunning dies after being restrained by up to six security guards. Two of the guards were eventually acquitted of manslaughter and a third of assault.
2016 County Court judge Michael McInerney labels Crown a “a blot on the community” over money and drugs changing hands on a large scale within the casino.
2018 Crown fined $300,000 in April after it is found to have tampered with poker machines.
August Crown Melbourne reports revenue in its annual report of $2.27 billion; the Andrews government renews its licence to operate in Melbourne for another five years.

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