Mixed verdict in Star Casino inquiry; Crown’s Packer slams Echo Ent. board


star-casino-inquiry-mixed-verdictThe Star Casino in Sydney, Australia may face disciplinary action following Thursday’s release of the Independent Liquor and Gaming Authority report into alleged shenanigans by the Star’s management team. First, the good news: the report stated that it couldn’t verify allegations by former Star employees that there was a culture of permissiveness regarding drug use at the casino. The report also couldn’t independently verify claims that casino management turned a blind eye toward bad behavior by high rolling gamblers.

However, the report found that Star execs might have breached contractual and statutory obligations by not informing regulators that former managing director Sid Vaikunta was facing sexual harassment allegations (for which he was subsequently sacked) while the casino’s license was under statutory review. The report also called out Star’s parent company, Echo Entertainment, for initially denying that it was the source of leaked emails that purported to show outside interference in the investigation by Peter Grimshaw (the former communications director to Premier Barry O’Farrell) and Grimshaw’s partner, who worked at the Star and was one of the individuals allegedly harassed by Vaikunta.

Despite having caught Echo in a lie about being responsible for the leaked emails, the report said this discovery “does not call into questions Echo’s suitability” to continue its relationship with the Star. That’s not good enough for James Packer, head of rival gaming operator Crown Entertainment. Packer’s peeps issued a statement saying Echo’s board needed to come clean on when it authorized the leak and why it delayed correcting public statements saying Echo wasn’t the source of the leak. The Crown spokesman twisted the knife by reminding the public that Echo had previously used the leaking of confidential info as sufficient grounds for firing casino employees. “The Echo board must enforce the company’s code of conduct. We are waiting.”

Of course, there’s more at play here than mere righteous indignation. Crown recently doubled its stake in Echo to 10%, reportedly as a step towards an eventual takeover of the company. Packer covets Echo’s monopoly hold on casino operations in Sydney, where Crown would like to build a $1b casino specifically catered toward lucrative Chinese baccarat whales. (Mind you, Crown is not alone in considering a bid for Echo.) Echo’s response claimed Crown’s comments “lack foundation and should be seen in the context of Crown campaigning for director representation at Echo which has been rejected by the Echo board.”

Elsewhere, Echo announced it was cutting jobs at two of its three Queensland casinos – Brisbane’s Treasury Casino and Jupiter’s Casino on the Gold Coast. Echo originally claimed it was cutting 65 positions, but United Voice Union, which represents workers at both casinos, told GoldCoast.com the number is closer to 115. The discrepancy appears to be based on how many of the affected employees can be reassigned to other Echo properties. A total of around 3600 people work at the two gaming establishments.

While Echo is cutting jobs at its Gold Coast casino, Chinese developers are reportedly hoping to add a second gaming joint to the popular holiday region’s list of attractions. Savills Gold Coast agent Roland Evans told the Daily Telegraph that these deep-pocketed developers were “actively looking to break Queensland’s casino monopoly.” Colliers International’s Gold Coast special project director Darrel Irwin seconded this claim. “Absolutely, it has been discussed. But, obviously, at the end of the day that will be a political decision.” Evans suggested the Queensland government would do well to think about adding a second casino if it wanted to attract more Chinese tourists. “You can invest heavily in attracting these people, but if you don’t have the correct facilities, they’re going to think it’s just a one-horse town.”