Counting the cost – A tale of two casinos. How one casino was granted taxpayer funded immunity, whilst another cashed in on an industry gouged of half a billion dollars.

Two and a half years after then premier Barry O’Farrell performed a flip filled routine worthy of Olympic gold in Rio, a city anxiously awaits the findings of Ian Callinan’s review into the impact of liquor law reform. Many are cautiously optimistic. Remarks from lockout advocates in recent times have appeared to offer hope of change, however a deeper look suggests a softening of hard line temperance views is, in reality, a cunning Trojan Horse strategy. Some are pessimistic, believing the damage has long been done and is irreversible. Others are simply hoping for reality to finally take its place at the negotiating table. Whatever ones stance or predictions, it’s fair to say most are equally eager to see what Mr Callinan has to say. But while the rest of us nervously wait for word, there are a couple of parties for whom the findings bear no consequence whatsoever. Most notably, the future casino kings of Sydney – Crown Barangaroo.

Personally I believe all one can hope for is a fair, balanced and thorough evaluation, replete with evidence and devoid of emotion. Fortunately, the blueprint for such an evaluation exists KPMG’s 2008 Evaluation of the Temporary Late Night Entry Declaration. This comprehensive analysis was produced for the Victorian Department of Justice in regard to the Melbourne lockout experiment and detailed in no uncertain terms the shortcomings of the short-sighted regulations. Needless to say, anything short of the scope and range provided by this report would be a categorical failure in giving the issue the consideration it not only deserves, but so desperately requires.

Whilst this may appear to be a modest wish list to some, history shows us that the powers-that-be don’t always play fair. And even when they’re not changing the rules as they go, they don’t always keep within the spirit of the game. It’s been well documented just how unfairly businesses and the community alike were treated in 2014 when the Liquor Amendment Act was introduced. Without proper consultation or time of consideration, the legislation literally came in like a wrecking ball – decimating businesses, destroying livelihoods and turning a once vibrant city into a social wasteland. This overwhelming act of neglect is only magnified when one considers all the ways O’Farrell and co bent over backwards to pave the way for Packer’s paradise to mark its territory on the Barangaroo foreshore.

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Final Report – Crown Casino VIP Gaming Management Agreement – Keith Mason AC QC

First they changed the NSW Government Unsolicited Proposals process to allow Packer a free bite at the cherry. When the Crown Casino VIP Gaming Management Agreement was produced with several key sections suppressed, the house rejected the evaluation of Independent Legal Arbiter Keith Mason AC QC who did not uphold the validity of the claim of privilege over the redacted sections. Mason went as far as to suggest suppression of the document would not be in the interest of good government. His views were supported by the NSW Parliamentary Privileges Committee, yet the house clearly felt acting in the interest of bad government was the way to go. Interestingly, both these documents have been removed from the NSW government website at some point between now and February – when they were first published and examined by this website.

It wasn’t just the O’Farrell regime rolling out the welcome mat either. There has been more evidence in the last few years supporting the existence of Bigfoot and the Loch Ness Monster than the New South Wales Opposition. So much so that many would be hard pressed to name, let alone recognise their leader on the street. But don’t let their apparent lack of activity fool you, they’ve been around – they just haven’t really been doing anything. Either that or they’ve been playing the long game and have been performing a shrewd political rope-a-dope manoeuvre, biding their time until Baird’s inevitable implosion. Why else would they have allowed the government to run rampant? Michael Pascoe from the Sydney Morning Herald was particularly perplexed at their lack of, well, opposition to anything they were presented with.

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Sydney Morning Herald – November 12th 2013

More recently, it was rather odd that Crown had a seat at the recent Safe & Vibrant Sydney Night-Time Economy Roundtables given they don’t actually have any involvement in Sydney’s night time economy, and won’t until late 2019. It’s incredible that an organisation still years from operation in Sydney has been so influential in shaping the cities night life. What on Earth could they possibly contribute to the discussion? And why were they granted a spot when groups such as the Kings Cross Liquor Accord and Darlinghurst Business Partnership, venue representatives or even residents who actually represent their community were conspicuously absent from discussions?

But the devil is in the detail, and whilst the displays discussed above are damning enough in their own right, it’s the little things that truly reveal the extent of O’Farrell’s efforts not just to bring the casino to town, but to secure its long term future and security. Several key amendments to the Casino Control Act opened up a saloon passage for Packer, with scant regard shown to existing legislation or the potential impact on pre-existing businesses. Even Sydney’s original casino, the Star, could have had the right to feel aggrieved had they not been able to reap the benefits of their own special treatment.

Section 71

The first couple of amendments are fairly obvious ones. An amendment to Section 71 of the Casino Control Act was made to clearly specify any potential restrictions that could potentially apply to trading hours would simply not apply to Barangaroo. I can’t recall a time where the existing casino was ever forced to shut. The Star is in full swing even on Christmas Day and right through Easter. It’s hard to imagine a time where they would actually be forced to close their doors for any given period. So it would appear this section was a moot point. But despite this, O’Farrell and co deemed it necessary to make it official and legislate that no matter what, Crown would be exempt in any instance where trading hours were altered. “This section does not apply in relation to the Barangaroo restricted gaming facility. Simple as that.

Section 89.png

Section 89 states that the Liquor Act that other licensed premises are governed by does not apply to the casino. Another fairly obvious point, given the existence of the Casino Control Act. But the addition of Section 89A certainly raises a few eyebrows. The public health lobby has long waged war on smoking, and the government has been all too happy to introduce pointless plain packaging and continuously hit smokers with grossly unfair taxation. They dictate where, or more specifically where they can’t spark up to the point where smoking a cigarette in Pitt Street Mall could now even get you arrested. Which makes the addition of Section 89A all the more astounding. “The Smoke Free Environment Act 2000 does not apply to or in respect of the Barangaroo restricted gaming facility on and from 15 November 2019″  What I want to know is who had the audacity to suggest it. Why did the public health lobby not throw an almighty song and dance about it and how did it actually get passed? For a nanny state that has long been dictated by doctors, wowsers and the Axis of Abstinence, it beggars belief that something like this would actually fly. The Star has enjoyed temporary exemptions to the Smoke Free Environment Act in the past and there are provisions to allow exemptions in the act, but only under the strictest of conditions and entirely at the Director General’s discretion. Legislating for the act to simply not apply to Barangaroo – unconditionally – is unbelievable and speaks volumes.

Section 147

Section 147 of the Casino Control Act was repealed before Barangaroo was approved. As you can see above, this section related to employment of key officials and seemed to be designed to prevent conflicts of interest and cronyism and acted as a safeguard against potential corruption, branch stacking and “jobs for the boys”. This section was clearly an important aspect of the legislation, so much so that harsh penalties would apply in the event of any breaches. Whilst this section does not appear to have been repealed specifically to benefit Barangaroo, one must question why it was even repealed at all? Given the nature of the industry, the money involved and the potential for large scale corruption, one would assume surely clauses like this should be a given. Even without the threat of corruption, conflicts of interests can be troublesome enough as is. And it would appear that in the years since this section was repealed, a raft of questionable conflicts have presented themselves. These conflicts will be explored in the follow up to this piece, so keep an eye out

Section 156

The amendment made to section 156 of the Casino Control Act is by far the biggest cause of anger, especially amongst business owners who have had their livelihoods stolen in the last two years. Prior to Barangaroo being given the go ahead, the act clearly stated there would be no right to compensation if legislation were to impact revenue. Conveniently, O’Farrell and his cronies made sure to make it official that Crown would be secure in the event of any detrimental regulations ever introduced. “This section does not apply to or in respect of a restricted gaming licence“. This amendment offers a safeguard to billionaire Packer and his Crown empire, a safeguard that was not offered to anyone else, not even the Star. Given Barangaroo is more or less a law onto itself anyway, it’s hard to imagine any circumstances where the government would even be able to introduce anything that would have a negative impact on their bottom line. But in the unlikely event they were to, this amendment ensures the NSW Government (read – taxpayer) would need to pay through the nose to compensate the yet to open casino. It’s a complete kick in the teeth to every business owner robbed of an income as well as any worker whose hours were cut.

The amendment is made all the more sinister thanks to the terminology used. You will have noticed in other amendments, Crown was explicitly referred to as Barangaroo restricted gaming facility, yet in this section, and only this section, the term restricted gaming licence is used. Further investigation reveals the definition of restricted gaming licence is “a casino licence relating to the Barangaroo restricted gaming facility”. The wording suggests what can only be a deliberate effort to muddy the waters. Glossing over the act, one would be forgiven for not picking up on exactly what it was stating. Why was the terminology used in every other amendment not used for this particular clause???

Section 46 - Liquor Amendment Act

To top it all off, mere months later when the catastrophic Liquor Amendment Act was introduced, legislators had the opportunity to provide businesses that would inevitably be crippled some form of compensation. But they straight out refused to. Whilst perhaps it’s a stretch to expect business owners to be fully compensated for the punishment they unfairly received, anything, even a token amount would have been helpful and appreciated. Dave Evans of Hugos estimated their losses to be in the vicinity of $10 million dollars, and speculated the hit taken by the industry to be in the hundreds of millions.

He said that the laws had caused a 60 per cent drop in trade and 80 per cent drop in customers to the Kings Cross area. He claims to have lost $10 million because of their effects, but says the overall cost to businesses was far higher. “We’re talking a loss of hundreds and hundreds of millions of dollars,” he said.

President of the Darlinghurst Business Partnership, Stephan Gyory, estimated a $30 million hit to businesses around Oxford Street. The DBP published a detailed analysis of the impact, which you can find here.

It follows an informal anecdotal assessment by the group which estimated the financial impact of lost revenue since their introduction in March, 2014, to be $30 million, DBP president Stephan Gyory said.

According to Owen Humphries, Senior Analyst at Canaccord Genuity, the overall losses suffered by businesses in the entertainment precinct amounts to roughly half a billion dollars. The most disturbing part about an industry being robbed of $500 million dollars isn’t even the sheer financial loss. It’s where that money went. No prizes for correctly guessing where – The Star.

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canaccord 2

In addition to the damning analysis above, in his submission to the Liquor Law review, Humphries stated-

The clear transfer of wealth from small business owners across Sydney to the Star Entertainment Group (SGR.ASX) is most clearly illustrated by observing the revenue expectations of the Star Entertainment Group by leading research analysts at investment banks over the previous three years.

 As illustrated below, the expected revenue for each financial year of the Star Entertainment group (which is primarily a one asset company – The Star Casino 70% of group revenue) inverted at exactly the time the lock out laws were introduced.

 The consensus amongst analyst at these global investment banks is that the contribution to the groups revenue (and thus offsetting loss to small businesses in Sydney) for the financial year 2016 between April 2014 and today amounts to approximately $500m.

 To say that this hasn’t impacted small business and not directed traffic to casinos during this period is clearly a fallacy and illustrated by the revenue upgrades by analyst over time.

 Please stop this nanny state mentality and promote culture, jobs and small business.

This may not come as a complete surprise for anyone who has been paying attention over the years. Many have long believed the Star to have benefited massively from the destruction of Sydney’s night life. But the huge elephant in the room here is why?!?!

It’s no secret Barry O’Farrell has some pretty serious beef with the Star. This frosty relationship was covered extensively by a number of mainstream media sources – The Sydney Morning Herald covered the quarrel here and here, the ABC here and here, and News Limited here. Former O’Farrell staffer, Peter Grimhaw even suggested O’Farrell “wanted to smash Star City Casino”. If there was ever an opportunity to “smash” the casino, this was it. A new casino had been approved and there was mass public hysteria in regard to “alcohol related violence”. There did not appear to be any safeguards in the Casino Control act to protect the Star from regulation that could damage the business. It did not appear that even the complex Casino-Operations-Agreement offered any protection. The casino was at its most vulnerable, and could very well have been “smashed” as O’Farrell apparently desired. But not only were they not smashed, not only were they not even impacted in the slightest, they became the number one benefactor, profiting at the expense of businesses across the city.

21. baz

In a matter of months, Barry O’Farrell went from publicly ridiculing and vehemently opposing the concept of lockouts all while having major beef with the Star – to fully supporting lockouts and ripping half a billion dollars from an industry only to deliver the spoils directly into the coffers of the Star. Not to mention working feverishly behind the scenes to provide Crown an uncontested passage into Barangaroo, protected at every angle. An industry was gutted for the benefit of a powerful rival, while a future player was wrapped in legislative cotton wool to ensure they would be immune to any future developments – in record time.

Shortly after, O’Farrell opted to fall on his sword in the wake of a corruption investigation and has since enjoyed plum appointments on the Australia India Council, the SCG Trust Board and was tasked with compiling of all things, a review into offshore wagering (which included a number of recommendations some would consider favourable to Packer bookmaking arm, Crownbet). An inexplicable turn of events that defies all logic and reason.

It would appear that #casinomike learnt from the best.

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surelynot.live 17.8.2016
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