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Crown Resorts' suitability to run Melbourne's casino will be tested by a new royal commission in Victoria, after a damning NSW inquiry found the gambling giant was not suitable to hold a casino licence.

Former federal court judge and senior barrister Raymond Finkelstein QC has been appointed commissioner.

The royal commission must report back by August 1 this year.

On Monday afternoon, media buyer Harold Mitchell became the latest Crown director to resign from the company's board in the wake of the release of the Bergin report earlier this month.

The NSW inquiry found Crown Resorts was unsuitable to hold a casino licence due to poor governance and a series of issues at the Melbourne casino.

Mr Mitchell's resignation means four directors out of the nine-member board have resigned since the report's release.

Crown Resorts executive chairman Helen Coonan said the company would cooperate with the inquiry.

'It provides us an opportunity to detail the reforms and changes to our business to deliver the highest standards of governance and compliance and an organisational culture that meets community expectations,' she said.

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Ms Coonan said Victorians could be assured Crown recognised its responsibilities.

Casino licence holders must be held accountable: Andrews

Much of the inquiry's evidence against Crown Resorts related to incidents and behaviour at the company's flagship casino in Melbourne, including an admission of money laundering.

The Victorian government said its royal commission was being set up after consideration of the findings of the Bergin Inquiry.

'This is about making sure that those who hold a casino licence in Victoria uphold the highest standards of probity and integrity — and that they're accountable for their actions,' Premier Daniel Andrews said in a statement announcing the royal commission.

The work of the Bergin Inquiry exposed the Victorian Commission for Gambling and Liquor Regulation (VCGLR) and the state government for failing to act on allegations raised by whistleblowers, the media and MPs dating back years.

Up until this week, the Premier and his ministers have defended the work of the VCGLR.

The State Cabinet signed off on the royal commission on Monday afternoon.

The government has chosen a royal commission to make it easier to compel former chief executive Ken Barton and former board members, including Andrew Demetriou, to give evidence.

The Minister for Gaming and Liquor Regulation Melissa Horne said the reports from the Bergin Inquiry in NSW were 'incredibly concerning'.

'Which is why we're establishing a royal commission to get the answers we need about Crown Melbourne,' she said.

'The royal commission will establish the facts and the government and the VCGLR will take any necessary action at the conclusion of the investigation.

'We will not tolerate illegal behaviour in our gaming industry.'

'About bloody time' for an investigation: Wilkie

The VCGLR, which has been investigating some of those allegations including money laundering and junket operators, welcomed the royal commission.

'We look forward to supporting Mr Finkelstein QC and his team as the royal commission progresses,' the agency said in a statement.

Andrew Wilkie, the independent MP who helped whistleblowers air allegations of misconduct, said it was 'about bloody time' a royal commission was set up because it was the 'only credible option left open' to the Victorian government.

'While it's good news, it's long overdue,' he said.

'Finally we have the promise of a truly independent judicial inquiry into alleged crimes at Crown.'

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The state is also establishing a review to examine whether Victoria should set up an independent casino regulator, separate from the VCGLR.

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In the wake of the Bergin Inquiry, the State Opposition called for a judicial review into Crown because the regulator had proven to be a 'lap dog' of the casino.

The Greens have called for Crown to have its licence suspended and revoked, saying the royal commission is 'an admission' that the Victorian government's regulator 'has completely failed.'

Reason Party MP Fiona Patten has pushed for a parliamentary probe into the gambling giant.

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It is a tough issue for the Andrews government given Crown Casino is the biggest single site employer in the state, with more than 16,000 people employed at the Melbourne casino.

According to a 2018 assessment by ACIL Allen Consulting, quoted on Crown Resorts' website, Crown's estimated economic contribution to Australian real GDP was up to $4.4 billion, with Crown Melbourne contributing up to $3.2 billion.

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Crown also pays hundreds of millions of dollars in taxes to state coffers.

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When the former Napthine government extended Crown's licence it included a clause that required the state to pay more than $200 million if there were alterations to the casino's licence by a future government.