The rise of a behemoth

  Lloyd Williams drove the construction of Crown Southbank with an obsessive focus and a disregard for cost blowouts. The original estimate of $560 million billowed out to $2.1 billion as Williams insisted on radical changes to the design.

  With Crown, Williams and his consortium were under pressure to deliver something special. Since the opening of Jupiters Casino on the Gold Coast in 1985 – a 21-storey, 1171-room luxury facility – investors had pushed for similar large-scale, American-style casinos. As the pressure mounted, states began to vie with each other to come up with more lavish venues. In turn, this called for bigger marketing efforts to attract patrons.53

  It was legendary Las Vegas casino developer Steve Wynn who blazed the trail for the modern style of casinos. He created some of Las Vegas’s most garishly notable casinos, including The Mirage, Treasure Island, Bellagio and Wynn Las Vegas. In fact, Wynn is credited with having reinvented the Las Vegas strip after he moved to the town in 1967. He had a vision for casinos that linked gambling with a broader entertainment experience and an immersion in opulence. ‘It’s about the non-casino parts,’ he once explained. He explored his wildest dreams as he developed his casinos: he had hotel lobbies housing exploding volcanoes, giant fountains gushing to classical music, and exotic wild animals.

  Wynn believed that people didn’t come to Las Vegas just for poker machines and blackjack tables. ‘What moves people is when they have time for recreation and leisure,’ he said. ‘That they can go somewhere and have an experience that’s richer, more exciting, maybe more beautiful, and more fun than they can get any other day, every other day of their life.’54

  Journalist Stephen Mayne interviewed Lloyd Williams shortly before Crown opened in 1997; he recalled Williams saying something like: ‘I’m a complete plagiarist of Steve Wynn.’55

  Williams valued total immersion in the experience: casinos should conform to the ideal ‘gargantuan corporate megaresorts – total environments – whose meticulous architectural calculations left little to chance’. A casino’s design was predicated on escapism: mazes of alcoves to limit human connection, and a lavishness that promoted self-abandonment. This was the standard blueprint for maximisation of profits by casinos and revenue by government through taxes on casinos.56

  Williams took these influences to heart and had plans drawn up by architects at three of Melbourne’s major firms. On countless occasions the ink had barely dried on the draughting paper before Williams ordered changes to be made. He changed the style of taps, the colour of walls, the shape of rooms and even the placement of walls and ceilings, often just to satisfy his own tastes.57

  Williams made frequent trips to Asia during this period, where he learned that many people in Asian cultures regard the presence of water as lucky. So, halfway through the Crown design process, fountains were included, which got bigger and bigger with each iteration of the plans.

  The frenetic rethinking extended to the construction phase. Ron Walker recalled joining Williams on one occasion to inspect the work in the glitzy atrium. The next week he walked in and the staircase was gone – Williams had decided it was in the wrong spot, so down it came.58

  On another occasion, Williams rang the design team after driving past the western façade of the building – he didn’t like what he’d seen, and the designers had to erect an entire second layer to please him. It was a case of ‘here we go again’, as one of the architects later explained: ‘We got calls from Lloyd all the time, often late Friday night.’ Williams wanted a building that would be an instant Melbourne icon.59 Some of the workers on the site began calling him ‘The Pharoah’.60

  Micromanaging such a colossal project took a toll on Williams’ health.61 He had been working up to 120 hours a week, propelling the project forward and immersing himself in its infinite details. As the building neared completion, Williams was reported to have become physically and mentally exhausted. He hadn’t taken a holiday in five years. The board of Hudson Conway was concerned and had wanted him to take some time off. But holidays, Williams explained, ‘are not something that I enjoy very much’. He’d be fine, he said.62

  The permanent Crown Casino opened in May 1997. Gaudy, grand and opulent, it covered eight hectares of land across two city blocks, and stretched half a kilometre along the southern bank of the Yarra. It had five times the floor space of the largest shopping centre in the country.63 It was much more than just a casino: it contained boutique shops, cinemas, restaurants, gyms, nightclubs and hotels – virtually a mini-city. When executives from ITT-Sheraton saw the completed project, they howled in protest, stating that the inflated design was nothing like the project that had beaten their bid.64

  A key part of the Crown complex was the Mahogany Room, a gilded enclave for ‘high rollers’ – players who could throw around $1000 betting chips. But these players weren’t the biggest of the big, the so-called ‘whales’. They were catered for in a closed sanctuary within the Mahogany Room, where bets of between $300 000 and $1 million were expected.

  Amid the crystal chandeliers, gold-plated taps and imported marble, the real attraction was the money to be made. And as one visiting journalist found, this singular focus produced a drab atmosphere: ‘[T]here is nothing glamorous about a serious gambler with an after-five shadow chasing his losses in the early hours of the morning.’ 65 One high roller’s wife, watching her husband gamble away a fortune, explained that a man had had a heart attack in the Mahogany Room and ‘even with medical staff pumping his chest, hardly anyone noticed’.66

  Another journalist who toured the inner sanctum noticed a different unpleasant feature: the stench. It seemed that every second player smoked. Dana McCauley thought the wafting smell of cigarette smoke was disgusting but predictable: Crown paid so much tax ‘that the government comes up with this ridiculous legislation that says smoking is allowed’. Next to some of the smaller, more elegant casinos in Europe that McCauley had visited, the vibe at Crown wasn’t ‘as glamorous as you might think’. It was more like ‘Las Vegas without the show’, she thought.67

  The Crown colossus was destined to divide opinion. Supporters described it as an architectural wonder, while critics thought it ugly and crass. ‘Melbourne’s new temple to hedonism’, tut-tutted many of Melbourne’s middle class.68 One critic described the complex as a place ‘Mussolini would have loved’.69

  Tim Costello defied the fawning media that accompanied the opening of the complex to highlight the flaws in Jeff Kennett’s casinoled economic recovery. But, as he later explained, he was a lone voice:

  I actually remember The Age in 1996 before Crown opened, editorialising against me and saying, Go away, you’re a wowser, you’re a killjoy. And I felt very alone … my concerns were twofold. They were that Crown’s business model really was organised on effectively high rollers, laundering their money, enabling organised crime. And secondly, built upon pokies that I’d already suddenly realised were built for addiction.70

  High rollers versus ordinary punters

  Lloyd Williams explained that the key to Crown’s success lay in its ability to attract high rollers from Asia. Hudson Conway opened offices across key Asian cities and deployed a multimillion-dollar advertising campaign to attract big gamblers. Two jets were put into action to fly them to Melbourne.

  Crown treated high rollers like royalty. Each of the top two floors of Crown’s twin towers housed a single apartment the size of a Toorak mansion, and only whales were entitled to stay in them. On the next six floors down were 12 slightly less opulent apartments for second-tier high rollers.

  High rollers and whales were a specialised market, and Williams, almost alone in Australia in the 1990s, understood their potential. Before China had fully opened its economy and created its own crop of whales, most came from Asian countries such as Japan, Brunei and the Philippines, where gambling was either banned or undeveloped. Saudi Arabia also produced a few. The reason casinos are so attracted to these high rollers is straightforward: many are bad players. In fact, the longer they can be induced to play, the more likely a high roller is to lose.71 But embedding high rollers so deeply in Crown’s business model was a highly risky move.

  The other major strand of Crown’s business strategy was to attract ordinary Victorians into the complex. The company often lured them with entertainment opportunities rather than with the promise of gambling. To draw in the numbers required to recoup Williams’ cost blowouts, Crown had to create a gambling-casino culture among Victorians. A massive advertising campaign worth $20 million a year targeted locals, leading Tim Costello to accuse Crown of ‘manufacturing and manipulating choice’.72 A simple message drove the advertising campaign: Crown promised ‘the time of your life’, where the ‘good times roll’ 24 hours a day, every day. The campaign worked. In 1992, Victorians spent only $1 on gambling out of every $75 they earned. Five years later, Victoria was the highest-gambling state in the country, spending $1 on gambling from every $30 earned.73 This increase was off the back of Crown attracting 15 million visitors every year, along with the proliferation of poker machines in the community.

  The advertising blitz was designed primarily to attract people to Crown’s expansive entertainment centre. The message was clear: gambling was just another form of entertainment. Tim Costello maintained that the marketing of Crown as an entertainment complex was ‘deceitful’: Crown, he said, ‘aims to get children pleading with their parents to take them down there. [Crown] want it to be culturally normal for children to spend weekends at the casino before they reach gambling age … the casino has ensnared the idea of a good time for a family outing to the city.’74

  And Crown laid on the incentives for locals to visit: free parking, free snacks and drinks while you were playing the pokies, as well as many special deals, such as cut-price hotel rooms and a rewards system for those who spent money.

  In its scale, its offerings and its elite backers, Crown Southbank symbolised the power of Big Gambling in Australia. No other state had unleashed both a mega-casino and the proliferation of pokies to all parts of the community simultaneously. And nowhere previously had there been such an explicit pursuit of large-scale profits from gambling. Wrest Point was of a much smaller scale, and the clubs in New South Wales ploughed their profits back into amenities. Crown, meanwhile, was an explicit fusion of gambling interests, government and commercial media and advertising.

  With hindsight, it’s clear that Crown was part of a growing trend towards the greater accessibility of opportunities for gambling. As a journalist from The Australian Financial Review noted in 1993, the race was on for the gambling dollar: ‘Every state and territory has a casino, or is planning one.’75 With the backing of governments, gambling would be made an ever more attractive form of entertainment to both high rollers and ordinary punters alike.

  A rocky beginning

  Lloyd Williams’ fanatical pursuit of a mega-casino and entertainment complex nearly sent the project to the wall. Williams was the largest single shareholder, with 38 per cent, but the budget blowout he caused jeopardised his own return on investment, along with that of Walker and Carnegie, who had smaller but still substantial shareholdings.

  Crown came into being at a time when the prevailing ideology of free markets held that corporations could be largely self-regulating. If this approach was controversial in general terms, it was even more so when applied to corporations that were associated with community harm: tobacco, alcohol, fast food and gambling.

  Crown’s management set about devising a ‘Code of Conduct’, as required by the Casino Control Act. Crown’s code included a vaguely worded commitment to preventing harm to gamblers, but it put a heavy emphasis on individual responsibility:

  While the decision to gamble lies with the individual and represents a choice based on an individual’s circumstances, we recognise that to make that choice responsibly, our customers need to be informed about our gaming products and information regarding the services and support available to them should they need or seek help with their gaming behaviours.76

  Crown was putting most of the onus on individual customers to take responsibility for any harm they suffered, and mostly absolved itself from taking responsibility for the harmful nature of its products.

  In any case, Crown placed little store in its own code, as one regular who had gambled at the venue from 1995 knew:

  When I was winning, I would be offered free drinks until I would get drunk and lose all that I had won in the first place. I had a $1000 limit on my EFTPOS card daily, and if I reached that limit at 11 pm I would wait around until midnight so I could access cash again. Once midnight hit I could lose my $1000 limit within half an hour. Not once was I approached to ask if I was okay despite waiting around the ATMs.77

  An army veteran suffering from PTSD visited Crown on three occasions in 2016. On each occasion he stayed with friends at the resort. On these visits they would go to the gambling rooms at Crown while under the influence of alcohol, medications and drugs, including cocaine. ‘We would spend 8 to 10 hours in the casino,’ he told a government inquiry in 2021. ‘At no point was I or any of my friends approached by any staff member to check that we are OK or in need of help. On each occasion that I visited Crown Melbourne I spent $4000.’78

  Another way Crown protected its profits was by taking a hard line against successful gamblers. One told of his experience:

  I am what is known in the casino industry as an ‘Advantage Player’. ‘Advantage Player’ is a casino industry term used to describe unwelcome customers who try to minimise the mathematical house edge of the casino’s games by skilfull play and exploiting sloppy operating procedures … Crown does not seem to respect this fact and has a history of harassing, banning and spreading misinformation about advantage players. I have been illegally banned from Crown Casino.79

  This wasn’t an isolated claim. Crown’s security staff did ban ‘advantage players’ as a matter of course.80

  All went swimmingly for Crown at the start; from 1994 to 1996 the share price was on fire, reaching a peak of $2.70 per share. Then unexpected disaster struck. In late 1997, Crown announced that high rollers had beaten the odds and walked away with a total of $55 million. One gambler won $12 million. Williams’ high roller strategy wasn’t the gilt-edged source of profits that he and the company had imagined. On top of these losses, the Asian financial crisis of the time meant fewer high rollers were coming. And hanging like the sword of Damocles over the whole project was Crown’s huge debt.

  Consequently, the company’s share price tumbled, bottoming out at 29 cents. Williams’ self-confidence was receding like an outgoing tide. He jettisoned his fondness for talking to the media, but when journalist Leonie Wood of The Age managed to bail him up, she noticed the pressure Williams was under. ‘[H]is chin quivers and he retreats slightly, he stumbled mid-sentence and waves an arm wide, shrugging his shoulders and deflecting questions,’ she noted.81 Something had to give.

  Circling like a vulture over the limping edifice that was Crown was Kerry Packer, Australia’s richest and, arguably, most ruthless businessman. The owner of Channel Nine, among other media assets, was known as a big gambler at Las Vegas casinos. He and son James were still seething over having failed, in 1994, to win the tender to build and run Sydney’s new casino. Packer’s legendary political influence couldn’t, on this occasion, sway the decision in his favour. In the end, it had come down to money. The rival bid for the licence, led by Leighton Constructions in partnership with American casino operator Showboat, had offered $441 million, $80 million more than Packer.82 Although Showboat had to fend off accusations of mafia links, its tender was upheld by New South Wales’ Casino Control Authority.

  As Crown descended into financial dire straits in 1997, the Packer-controlled Publishing and Broadcasting Ltd launched a successful $780-million bid to fold the casino complex into its empire. Willams was squeezed out of his position as chief executive but wasn’t completely shafted. He and Packer were good mates, and the ‘big fella’, never noted for his loyalty to his executives, kept Williams on to look after the high rollers. No one else had such intimate knowledge of the gambling peccadilloes that drove these shadowy creatures. But Williams didn’t stay long, walking away in 1999 with a $7-million termination payment.

  Having Packer as the force behind Crown shifted the dynamics of the business. Instead of the money, power and mateship that drove its creation under Kennett, it was now just about money and power – but with more of both. Ivan Deveson was lord mayor of Melbourne between 1996 and 1999 and a passionate anti-Crown advocate. As he realised, Kerry and James Packer were about to build an empire around gambling, and they ‘didn’t care for anybody who wanted to put a fence around it’.83

  What to make of Crown’s impact?

  Crown Casino and its massive entertainment complex sharply divided Melburnians. On the one hand, the public spoke with their feet. In the first few years Crown attracted 15 million visitors a year, 60 per cent of whom came to gamble. Some of the early critics, including Ivan Deveson, moderated their criticism over time, seeing the benefits of having a more sophisticated entertainment and dining scene in Melbourne as a consequence of Crown’s pulling power.

  But how do we assess the public benefit of such a business? Can the public interest ever be accurately measured when gambling becomes big business? Many people believe that Crown changed Melbourne for ever. But assessing whether this has been good or bad is a difficult task. Data relating to Crown’s economic and social impacts has simply not been collected systematically.