(Image: Tom Red/Private Media)

Star Entertainment’s proposal for a merger with Crown wouldn’t merely create a gambling giant controlling casinos in most capital cities, but a juggernaut of political influence.

Crown’s political influence in Victoria and Western Australia allowed it to evade effective regulatory scrutiny in those states, while its national influence ensured cooperation from the Department of Home Affairs. Star’s influence in Sydney was demonstrated in 2014-15 when the NSW Government structured its draconian lockout laws to protect Star’s Sydney casino.

A key component of Crown’s influence was its massive donations: over the last decade, it has handed about $1.2 million in donations to the WA and Victorian Labor and Liberal parties.

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Star isn’t quite in Crown’s league, but it has also been extremely generous to political parties. It has given more than $220,000 in donations to federal Labor since 2015, and $270,000 to the NSW Liberal Party. It also represented, pre-pandemic, a substantial source of revenue for the NSW Government: Star’s Sydney casino by itself provided more than $240 million in government revenue in 2019.

Revenue has dropped substantially since then due to border closures and lockdowns but NSW was still budgeting for more than $300 million in combined revenue from Star and Crown — once its Sydney casino is allowed to commence operating — by 2024.

The merger would give the resulting entity control of all but two capital city casinos, and a corresponding importance in the revenue of Queensland, Victoria and Western Australia.

Like Crown, Star has a history of employing well-connected former political figures and staffers to manage its government relations and regulatory connections, both in NSW and in Queensland.

While the Australian Competition and Consumer Commission will focus on competition for gambling customers as the main area of competition law concern if any merger proceeds, the real impact of the merger will be outside the competition regulator’s remit: the power that a combined casino group would wield through its significance for state revenues, its political donations, and the political connections it can deploy to achieve regulatory outcomes.

Moreover, it can use a potent and underappreciated form of influence: politicians and bureaucrats know such a company would be able to offer an attractive job post-public life, either as a director or senior executive. There’s no regulator to investigate the implications for power and influence-peddling of major mergers.

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Peter Fray
Peter Fray
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