Independent Review of SkyCity Adelaide Paused

The South Australian Liquor and Gambling Commission has put on hold a review of SkyCity Adelaide's suitability to continue holding a license to operate its South Australian casino. This isn't SkyCity's first run in with the law. Landbased casinos seem to find themselves in hot water a little more frequently than top real money casinos.

The commission will submit its review after the resolution of a civil case filed against SkyCity by AUSTRAC, Australia’s anti-money laundering watchdog. It was expected to publish the review on February 1, 2023, but states that it is not possible to determine suitability reliably until the resolution of the civil case proceedings.

So, the commission has put the review on hold and extended the deadline for providing a written report of the independent review until the resolution of the proceedings.

The Commissioner’s Statements

Dini Soulio, the South Australian Liquor and Gambling Commissioner, confirmed the receipt of preliminary material from Honorable Brian Martin AO KC, the retired Supreme Court judge who is conducting the independent review.

Announcing the delay in publishing the review on February 6, 2023, the commissioner said an overlap has to be considered, although Mr. Martin’s investigation is independent of the civil proceedings against SkyCity initiated in the federal court by AUSTRAC.

Mr. Martin advises that the AUSTRAC proceedings should be first resolved to reliably determine the suitability of SkyCity Adelaide to continue holding its casino license. The judge has, therefore, put on hold the independent review to determine the question of suitability.

The commissioner wrote to SkyCity about allegations raised during the civil proceedings initiated by AUSTRAC and certain preliminary issues raised during Mr. Martin’s investigation.

Right now, the commissioner is considering options regarding potential actions he could take.

The Background

The South Australian Liquor and Gambling Commission announced an independent review of SkyCity Adelaide’s suitability to continue holding its license in July 2022, five months before AUSTRAC announced the launch of civil penalty proceedings against the operator in the federal court.

AUSTRAC uncovered allegations of serious and systemic non-compliance with Australian counter-terrorism financing (CTF) and anti-money laundering (AML) laws against SkyCity.

Here is a list of the allegations levelled against SkyCity:

Failure to assess its terrorism financing and money-laundering risks, including the impact and likelihood of those risks
Failure to identify changes in risks and respond to those changes appropriately
Failure to include risk-based controls and systems to manage and mitigate the risks to which SkyCity properties were exposed in its AML and CTF programs
Failure to create a framework for senior management and board oversight of CTF/AML programs
Failure to establish a system to monitor transactions and identify suspicious activity
Failure to establish an appropriate customer due diligence program to conduct checks on high-risk gamblers
Failure to conduct appropriate customer due diligence on customers who displayed high risks of violating AML laws

AUSTRAC uncovered 124 cases of failure to conduct due diligence on gamblers, 59 cases of gamblers displaying high risks of violating AML laws, and 65 cases of customers permitted to launder funds through SkyCity accounts.

Australian Casino Operators in Trouble

According to an analyst estimation, AUSTRAC’s allegations of failure to comply with anti-money laundering laws at SkyCity Adelaide may result in fines exceeding $40.62 million for the operator. Other Australian casino operators also had to pay similar fines.

The Star, for example, has been in serious trouble following reviews conducted by gambling regulatory bodies in Queensland and New South Wales.

Also, AUSTRAC initiated a civil penalty proceeding against the operator late in November 2022, alleging that the operator had failed to comply with AML and CTF regulations.

The operator had to pay a fine of $100 million, and its Queensland Casino license was suspended for a 90-day period after the Queensland Attorney General took strong action against it following the Gotterson review of its operations in Gold Coast and Brisbane.

The Australian Securities and Investment Commission sued the chief executive officers of The Star in December 2022 for allegedly breaching their director duties.

Some of the people who got into trouble were the former CEO and MD Matt Bekier, former non-executive directors Sally Pitkin, Gerard Bradley, and Richard Sheppard, and former CFO Harry Theodore.

New South Wales conducted an independent review of The Star's suitability to hold a license, leading to a $100 million fine for the operator and mass resignations from its board of directors.