Crown allegedly failed to hand over a document to the Victorian royal commission that shows it could owe the state government $167 million in unpaid gaming taxes.
The commission on Monday heard the casino giant was preparing a spreadsheet calculating "potential underpayments of gambling tax" on February 26, four days after the inquiry was announced.
Mark Mackay, executive general manager of gaming machines, said the task was assigned to him by Crown Melbourne chief executive Xavier Walsh.
The spreadsheet estimated the savings the company made from 2014 to 2019 by deducting loyalty scheme costs from poker machine tax payments, the inquiry was told.
Counsel assisting Geoffrey Kozminsky said those deductions - linked to costs including free valet parking, accommodation and hospitality - totalled $167.8 million.
Mr Mackay said Crown's view was that the expenses were tax deductible but "ambiguity" surrounding the law had raised concerns internally.
"It was obvious to both of you and Mr Walsh that if these amounts were not deductible that was the company's potential exposure - more than $167 million?" Mr Kozminsky asked.
Mr Mackay replied: "I agree completely."
Commissioner Raymond Finkelstein said the document was never produced by Crown for the inquiry into its suitability to retain the Melbourne casino license.
A letter to Crown directors on March 10 requested any information relevant to potential breaches of Victoria's Casino (Management Agreement) Act be provided to the commission.
Mr Walsh became a Crown director on February 15.
Mr Mackay was questioned whether he believed Crown had failed to act on the commission's request.
"There is no acceptable excuse for that failure, is there?" Mr Kozminsky asked.
"I couldn't think of one," Mr Mackay replied.
Mr Mackay agreed Crown adopted the deductions practice to make its loyalty program cheaper to run, and the company was fearful of the Victorian Commission for Gambling and Liquor Regulation learning of the policy.
"It didn't want the regulator to find out that it was making these deductions?" Mr Finkelstein asked.
"The answer is yes," Mr Mackay said.
Mr Mackay noted he had no role in preparing any responses to the inquiry other than his own written statement.
Metadata from the spreadsheet file showed Mr Mackay edited the document on February 26, but he said the original draft was prepared by a commercial financial manager who is no longer with Crown.
The casino's legal team was not aware the possible gaming tax underpayments were going to be aired during Mr Mackay's examination.
"We are dealing with this on the run," Crown's senior counsel Michael Borsky QC said.
The inquiry heard 1000 of the 2628 pokie machines at Crown's Southbank premises are permitted to operate with no maximum bet limit.
No Victorian pokie machines outside the casino are allowed to operate in unrestricted mode.
Mr Mackay said he would support a Crown board-led review into changing the casino's bet limit to $5 in alignment with other machines across the state.
"It's a trade-off between the profits and the welfare of Victorians?" Mr Kozminsky asked.
"It's always a balance between the right limits for all customers," Mr Mackay said.
The inquiry, into its fourth week, continues on Tuesday and will hear from Crown Melbourne's general manager of VIP customer service Peter Lawrence.
Australian Associated Press
