Casino (Penalties) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 29 August 2024.)

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (12:12): I rise today to speak to the opposition's support for the Casino (Penalties) Amendment Bill, which seeks to amend the Casino Act 1997 and make related amendments to the Gambling Administration Act 2019, focusing on increasing penalties for offences and establishing new causes for disciplinary action. The changes apply solely to casino licensees and not to other gambling providers.

Since the passage of the original Casino Act in 1997, we have seen considerable growth in the size and scope of casino operations in South Australia and across the country. However, what has remained static are the penalties for breaches in the Casino Act, many of which have failed to keep pace with the scale of modern casino operations. The primary objective of these amendments is to ensure that the industry remains fair, safe and accountable, while offering meaningful deterrents against misconduct.

This bill introduces several amendments. Clauses 4 to 7 and 9 to 20 of the bill, and clauses 1 to 3, 5 and 9 of schedule 1 would substantially increase the penalties that can be imposed for offences relating to the operation, supervision and integrity of the Casino. The change would be the first substantial increase in penalties since the Casino Act was passed. The penalties would apply to the Casino licensee, close associates of the licensee and designated persons of the licensee.

Clause 4 of the schedule would amend section 36(1) of the Gambling Administration Act to provide two additional clauses for disciplinary action against the Casino licensee. The new clauses would allow the Liquor and Gambling Commissioner to take the disciplinary action against the licensee if the licensee, a close associate of the licensee or a designated person engaged in serious misconduct had a penalty imposed against them by a court or tribunal in the commonwealth.

Clause 8 of the schedule is consequential, expanding the commissioner's existing scope to take the disciplinary action in section 42 of the Gambling Administration Act, whether or not criminal or civil proceedings have been or are to be taken in relation to the matters subject to the disciplinary action.

Clause 7(1) of the schedule would increase the maximum fine the commissioner can impose on the licensee from $100,000 to $75 million. The significant increase in penalties aligns with changes recently made in Victoria, Queensland, New South Wales and Western Australia, which now permits penalties of up to $100 million. The government advises that a $75 million maximum penalty was determined with regard to the size and scale of Casino operations in comparison with other jurisdictions.

Clause 6 of the schedule would increase the maximum penalty payable for a default notice given by the commissioner from $10,000 to $1 million. Section 38 of the Gambling Administration Act allows for the commissioner to give a notice to a gambling provider specifying grounds for disciplinary action, and that action may be avoided by paying a specific sum.

Misconduct in the gambling industry can take many forms. The amendments increase penalties across various offences, ensuring greater accountability for casino licensees, designated persons and employees. These changes reinforce the message that the state will not tolerate irresponsible practices within casino operations. The penalties are designed to reflect the severity of violations and safeguard our gaming systems' integrity. This strongly signals that protecting the public is paramount and that casinos must operate with the highest governance standards.

This bill is a necessary and timely step towards reinforcing the integrity of South Australia's gambling industry. The significant increase in penalties and new avenues for disciplinary action reflects our unwavering commitment to maintaining a fair and safe gaming environment.

The Hon. S.L. GAME (12:16): I rise to support proposed amendments to the Casino Act 1997 and Gambling Administration Act 2019 that will increase penalties for offences concerning the operation, supervision and integrity of the Casino. These penalties will apply to the Casino licensee, close associates of the licensee and designated persons of the licensee. The proposals will also broaden the scope of disciplinary action available to the gambling commissioner. It will increase the maximum fine from the present $100,000 to $75 million.

The range and increases in monetary penalties is extensive and is designed to improve compliance with legislative standards of conduct regarding casino governance. I note that these increases in penalties are the most substantial since the Casino Act was passed nearly 30 years ago.

Updating of the regulatory framework of the casino sector in South Australia is overdue, and I join with the growing calls for greater scrutiny within this industry. This, along with substantial increases in penalties for misconduct, will improve compliance and ensure that rogue operators do not see penalties as the inevitable cost of doing business.

The Hon. C. BONAROS (12:17): I rise to speak wholeheartedly in support of the Casino (Penalties) Amendment Bill 2024. I hate to say I told you so, but I absolutely told you so, and raised this issue—I do not know how many times it has been raised in this place—plenty of times. In June 2021, SA-Best was calling for a royal commission into the Adelaide Casino following AUSTRAC bombshell revelations.

The former Treasurer at the time sat where the current Attorney-General sits and, in answer to all the questions put to him, suggested that there was nothing to see here, that there was nothing at all that was not being dealt with. As it turns out, there was quite a bit to see. There was quite a bit to see, including literally dirty bags of money that had been laundered through the Casino.

Then steps in AUSTRAC and it instigates an inquiry into the Casino, following a pretty routine compliance audit that they had undertaken. They were identified as part of a compliance assessment, which had commenced in 2019, and it focused on the management of customers identified as high risk and politically exposed persons, something I raised in this place time and time again.

It also referred to similar royal commissions and investigations that had been taking place in other states. The royal commission that we asked for was further sparked by legal action that had launched in the South Australian Supreme Court at the time by Chinese millionaire Mr Linong Ma against SkyCity Adelaide and junket operators Xiongming Xie and Fang Zhuangqian in relation to gambling sessions at the Casino in May 2019 during which Mr Ma allegedly won more than $5 million.

In his statement of claim, which was going on at the same time, Mr Ma claims Mr Xie was arrested in Sydney in July 2019 and charged with having allegedly threatened a man with a knife, demanded the transfer of a $10 million property and stabbed the man to death. Mr Ma further claimed that when SkyCity transferred the money to the Supreme Court it was put on inquiry as to whether or not Mr Xie was a dangerous and violent criminal and had links with Asian triad criminal gangs.

The most recent revelations that came about in 2021 absolutely confirmed all of the concerns SA-Best had in relation to criminal activity at the Casino, but it appears that was just the tip of the iceberg. The Federal Court in June 2024 ordered, as a result of the case against the Casino, that it pay a $67 million penalty for its breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

That is the second order of significant civil penalties against an Australian casino, after the Federal Court last year also ordered Crown Melbourne and Crown Perth to pay a $450 million penalty over two years for their breaches. I must say it was a pretty good deal for the Casino, because the figure in terms of the penalty they would have paid without that settlement was substantially higher than $67 million.

As a result of that case, SkyCity admitted to operating in contravention of the respective legislation over many years, so as we said there was absolutely plenty to see here. It also allowed high-risk customers to move millions of dollars through the Casino, hiding the source and ownership of their funds. Those are the things the Casino admitted to. There is absolutely no question that there were serious risks of exploitation from criminals seeking to launder illicit funds at the Casino, and they have now been laid bare.

There is another issue in relation to, as I understand it, a payroll tax liability. I think it might be in the order of around $50 million that I understand the Casino is still in discussions with the government about on top of the $67 million. It has been an extraordinarily expensive lesson but one very much in the public interest, something, again, the former Treasurer did not think the public needed to know about or that would certainly not result in the sorts of actions we saw by AUSTRAC.

I note that at the time this was all occurring I wrote to the then gambling commissioner and requested that they undertake their own inquiry. I was then advised that there was in fact an inquiry that had been instigated but that had been put on hold pending the outcome of the AUSTRAC trial. In June of this year, I was subsequently advised that following AUSTRAC's decision that investigation would be recommenced, and it is my understanding that is still ongoing. So there is yet more to see in this space in terms of the Casino's compliance with regulatory conditions.

I do not say that lightly, because we issue the Casino a licence which comes at great financial benefit to the licensee but it also carries a high degree of responsibility and obligations that rest with the Casino, and it is clear—and it should have been clear to all of us given what was happening interstate—that that confidence that ought to exist was severely breached.

It is for those reasons that I am extremely pleased to see this bill actually provide some significant penalties and I note that it is the first time the Casino Act has actually been amended substantially since its introduction in 1997. It does seek to ensure that there are now meaningful consequences for acts that are serious and fundamental in terms of the integrity of casino gaming governance and accountability under the casino licence and that is achieved by increasing penalties to significant extents. There are new causes for disciplinary action, which include:

(ii) an event occurs, or circumstances come to light, that show the licensee, a close associate of the licensee or a designated person has engaged in serious misconduct; or

(iii) a court or tribunal in this State, the Commonwealth or a State or Territory of the Commonwealth has imposed a penalty…on the licensee, a close associate of the licensee or a designated person…

According to the briefing notes we have, over the last three years there have been a series of independent inquiries in New South Wales, Queensland, Victoria and Western Australia and now here that have all exposed widespread and serious integrity, compliance and risk management issues at casinos operated by subsidiaries of Australia's two largest casino operators. The new clauses that are being proposed will allow the commissioner to take disciplinary action if there is evidence of serious misconduct or following the imposition of a penalty by a court.

There are also some consequential amendments in the bill that expand the application of section 42 to allow the commissioner to take disciplinary action regardless of whether civil or criminal proceedings have been or are to be taken in relation to the matters the subject of the disciplinary action. We have seen that play out in South Australia, where we have had investigations go on hold because of those commonwealth proceedings and an investigation having to be put on hold pending those. This amendment, as I understand it, will deal with that.

In terms of the maximum penalties for disciplinary action, I do note that in those other jurisdictions, Queensland, New South Wales, Western Australia and Victoria, the penalties were increased to $100 million on casino licensees. In South Australia, we are proposing $75 million and that was determined, as I understand it, having regard to the size and scale of casino operations in comparison with those other jurisdictions, so it is slightly less, but it is also, as I said, having regard to the size and scale of the operations.

There are also increases in the maximum amount payable for a default notice. Currently, and quite laughably, those penalties sit at $10,000 and the new penalties to be imposed are $1 million. That is a significant increase. I do not think we have seen any other bill with such a significant increase, but, given this has been sitting here since 1997 untouched and given what we now know in relation to those AUSTRAC findings, it is only appropriate that there be such a significant penalty.

I just reinforce again: this is not some sort of anti-gambling crusade. This is based on very serious concerns of criminal activity and organised crime having been run literally from next door and us really not wanting to pay attention to it, or the former Treasurer certainly not wanting to pay attention to it, until it was well and truly brought to our attention. There are provisions in this act that talk about the obligations, duties and responsibilities that the Casino has and for years now they have been blatantly ignored by the operator, so it is very timely that now, in light of these findings, we introduce this bill.

There is very much a public interest in this issue and I for one will continue to watch closely to see what happens with the investigation that is being undertaken by the gambling commissioner and expect that there will be further changes as a result of any recommendations that are made and expect that this government will address those recommendations as rapidly and efficiently as they have the penalties.

The Hon. R.B. MARTIN (12:29): I rise to speak in support of the Casino (Penalties) Amendment Bill 2024. This bill proposes to amend the Casino Act 1997 as well as to make related amendments to the Gambling Administration Act 2019. The bill includes a number of newly created and significantly increased penalties that will apply for contraventions of these acts, whether they are imposed as penalties for criminal offences, as expiation fees or as fines that may be imposed following the taking of disciplinary action.

The bill will also establish new causes for taking disciplinary action. Those causes will apply if circumstances become apparent demonstrating that the casino licensee, a close associate of the licensee or a designated person is found to have engaged in conduct that constitutes serious misconduct. They will also apply if a court or tribunal in this state, the commonwealth or another state or territory of the commonwealth has imposed a civil or criminal penalty on the casino licensee, a close associate or a designated person.

Transitional provisions included in the bill clarify that the changes will apply to past conduct, both in relation to the maximum fine for disciplinary action as well as the new causes for taking disciplinary action. This will address disciplinary action which has commenced but has not yet reached the stage of determining the penalty, as well as conduct which has occurred prior to commencement of this provision.

The last three years have seen independent inquiries relating to casinos across New South Wales, Victoria, Queensland and Western Australia. These inquiries have each brought to light widespread and serious breaches and concerns around integrity, compliance, governance and risk management. They have been uncovered at casinos operated by subsidiaries of Australia's two largest casino operators, Crown Resorts Limited and the Star Entertainment Group Limited. This has led to concerns that the casino sector should be made subject to stronger regulatory scrutiny.

It is worth mentioning that we have seen instances of willing remediation action by casino operators arising from the threat of licence suspension and imposition of significant financial penalties arising from disciplinary action taken by regulators. We have also seen a strengthening of legislation by government in the area of casino regulation. Penalties of up to $100 million are now able to be imposed by regulators in Victoria, Queensland, New South Wales and Western Australia.

Compare this to the current maximum penalty that is able to be imposed on the holder of the South Australian casino licence for a contravention of this act, which is set at a maximum of $100,000. Let me reiterate: in other jurisdictions the figure is $100 million, compared to our $100,000. Further, in most cases, the maximum penalty for an offence, if prosecuted before the court, is actually less than $50,000.

SkyCity Adelaide, which holds the licence for the Adelaide Casino, is currently the subject of a range of regulatory proceedings, as is SkyCity's counterpart in New Zealand. These include, but are not limited to, proceedings relating to serious and systemic noncompliance with anti-money laundering and counterterrorism financing laws—a proceeding in which SkyCity has indicated it will make admissions. These are very serious matters, and our community would expect that we make the necessary legislative frameworks to enable such matters to be dealt with seriously.

The bill before the council provides an opportunity for the government to respond to a recognised need for the Adelaide Casino to be subject to stronger regulatory scrutiny. The bill proposes to increase the maximum fine where disciplinary action is taken against the licensee from $100,000 to an amount not greater than $75 million. A range of penalties for criminal offences will also be subject to prescribed increases to ensure they are proportionate to the gravity of their associated offences and to ensure that they serve as an effective deterrent to offending.

The proposed changes are being sought to ensure that the casino licensee does not view a financial penalty imposed for a breach as a supportable expense that is not a big deal. It is worth reminding ourselves that, in the case of these penalties and in general principle, penalties are designed to apply only to conduct that merits a penalty. Casinos that operate within the law have nothing to fear. I commend the bill.

Debate adjourned on motion of Hon. I.K. Hunter.