SYDNEY—To evade Chinese rules on overseas money transfers, Chinese high rollers arriving in the city of Melbourne in the mid-2010s had a playbook they could follow.

They could visit a hotel run by casino operator Crown Resorts Ltd., have Crown put a fake hotel charge on certain credit and debit cards, and then visit Crown’s Melbourne casino to collect their money, according to a report commissioned by the government in Australia’s Victoria state.

In...

SYDNEY—To evade Chinese rules on overseas money transfers, Chinese high rollers arriving in the city of Melbourne in the mid-2010s had a playbook they could follow.

They could visit a hotel run by casino operator Crown Resorts Ltd., have Crown put a fake hotel charge on certain credit and debit cards, and then visit Crown’s Melbourne casino to collect their money, according to a report commissioned by the government in Australia’s Victoria state.

In another episode detailed in the report, lawyers retained by Crown put together a guide commenting on the appropriateness of various marketing activities in Asian countries, where rules around gambling promotion can be strict. The document enabled Crown to assess the chance its staff could be charged with a serious offense, and whether it was prepared to run the risk, the report said.

Tuesday’s report concluded that Crown engaged in illegal and dishonest behavior and in theory isn’t suitable to hold a casino license. But it stopped short of recommending that Crown be immediately stripped of its license, noting the closure of the casino in central Melbourne would have negative economic impacts and wouldn’t be in the community’s best interests.

Instead, the report—which offered a detailed view into what is usually the opaque inner workings of a major casino—said Crown appears willing and able to reform itself and that a “special manager” should be appointed to oversee Crown’s operation of the casino for two years as the company makes changes.

In a statement, Crown said it is reviewing the report and the government’s response and that it will cooperate with authorities.

The company has embarked on a major overhaul to address some issues in the report, including ceasing ties with junket operators in Asia that bring high rollers to Australia, creating a compliance and financial-crimes department, and replacing much of its board and senior management.

Crown has faced increased scrutiny from regulators recently following reports on some of its business dealings by local media. Earlier this year, a similar inquiry in New South Wales state determined Crown wasn’t suitable to operate a new casino on Sydney’s waterfront without significant reforms. That report found bank accounts at Crown’s subsidiaries were used to launder money and that Crown improperly worked with junket operators.

It also found Crown disregarded the welfare of its employees in China by pursuing lucrative high rollers, which ultimately culminated in the arrest of Crown employees in China for gambling-related crimes.

The Melbourne casino is a big moneymaker for Crown and losing the license to operate it would have been a major blow. Some analysts believed it was unlikely that Crown would be stripped of its license, though the Victoria report was being widely watched because it could set a precedent for other Australian regulators. Crown, which counts Australian billionaire James Packer as a major shareholder, is facing another inquiry in Western Australia, where it operates a casino in Perth.

Crown shares rose nearly 9% in Tuesday trading to 10.50 Australian dollars, the equivalent of $7.88.

Melissa Horne, the Victorian minister for consumer affairs, gaming and liquor regulation, said the government accepts all the findings in the report, which was delivered by a royal commission. The government also said it is introducing a casino-oversight bill that will go further than some of the report’s recommendations, including a provision that will automatically cancel Crown’s casino license after the two-year special-manager period if regulators aren’t satisfied with the company’s progress.

“Crown is on notice,” said

Daniel Andrews, Victoria’s premier.

The Victorian report on Tuesday found that many senior executives involved in misconduct were indifferent to ethical, moral and sometimes legal obligations. The report indicated there were consistent patterns of noncooperation with state regulators, tax breaches undertaken with the knowledge of multiple senior staff, and serious breaches of responsible-gaming obligations.

Crown staff told the commission that customers in the casino’s high-roller Mahogany Room sometimes gambled for more than 16 hours at a time.

The report said Crown discontinued its credit and debit card program in October 2016, after its employees were arrested in China. Local regulations generally prohibit a casino operator from providing money or chips as part of a transaction involving a credit or debit card, though there are some exceptions, such as credit being provided to a non-Australian resident involved in a junket, the report said. The matter has been referred to Austrac, Australia’s financial-crimes regulator, for further investigation, the report said.

The report also called the legal advice outlining the risk of marketing in Asian countries a “most troubling” document.

“This is a very useful guide if Crown was interested in having its staff engage in illegal conduct in those countries,” the report said. “The guide might also be construed as an encouragement to carry out prohibited conduct,” it said.

Write to Mike Cherney at mike.cherney@wsj.com