Crown Resorts Pays VCGLR $61 Million
Crown Resorts paid the Victorian Commission for Gambling and Liquor Regulation (VCGLR) $61 million this week. The monster-sized payment relates to the casino tax underpayment to the Victorian government.
Crown paid VCGLR $37 million for underpaid casino tax for the period of the 2012 financial year to the present date. A $24 million penalty interest payment takes the total amount to $61 million.
“Crown Resorts Limited refers to previous announcements regarding its review of potential casino tax underpayments by Crown Melbourne Limited referred to in the Victorian Royal Commission.”
“Crown has resolved to make a payment to the VCGLR, representing an underpayment of casino tax by Crown Melbourne of approximately $37 million over the period commencing in the 2012 financial year to date relating to incorrect deduction of certain bonus rewards provided to patrons in connection with play on Crown Melbourne’s electronic gaming machines.”
“Under the terms of Crown’s regulatory agreement with the State of Victoria, Crown is required to pay penalty interest on any underpayment of casino tax. The penalty interest component up to and including today is approximately $24 million.”
“Crown has notified the VCGLR of the outcome of this component of its ongoing review and has now paid the State approximately $61 million, being the amount calculated by Crown as the underpayment of casino tax and applicable penalty interest as referred to above.”
$61 Million VCGLR Payment Send Crown’s Share Price Tumbling
Paying the VCGLR such a massive fine sent Crown Resorts’ share price tumbling. Shares in Crown currently trade 12.29% cheaper than only five days ago. Furthermore, the current $8.78 per share is 26.28% less than this time last month. They bottomed out at $8.60 on July 29 before recovering.
Takeover and merger talk artificially inflated Crown’s share price. Shares in Crown hit $13.15 on May 17 amidst takeover bids. However, the takeover talk has cooled, and Star Entertainment categorically withdrew its merger proposal. The future looks bleak for Crown’s shareholders.
The VCGLR has not commented on the $61 million Crown paid.
A lack of interest in acquiring Crown, the $61 VCGLR payment, and current COVID-19 related restrictions is hammering the under-fire gambling giant. Th
The Victorian Government gave Crown the green light to resume non-gaming operations at Crown Melbourne. Capacity and social distancing restrictions remain in place for gaming. For example, there is a 100 patron capacity in each indoor space. A density quotient of one person per four square meters remains active.
Plummeting Share Price Sees Vultures Circle
Such a significant drop in Crown’s share price makes the stricken company ripe for the taking. Blackstone Group, which already owns 9.99% of Crown’s stock, offered $11.85 per share in March 2021. The offer represented a 19% premium on Crown’s share price. Crown rejected the offer, stating it undervalued the company and its potential. We are willing to bet Crown will not reject a similar bid.
Crown does not have a licence for its $2.2 billion Sydney resort. Its hotel and non-gaming facilities are in operation, but the casino remains off-limits. The company faces the prospect of losing both its Melbourne and Perth licences, too. The share price will drop like a lead balloon if that happens. What good is a casino operator without the relevant gaming licences?
The Gaming and Wagering Commission (GWC) made it known it is prepared to request the cancellation of Crown’s gaming licences even before the suggestions from the ongoing royal commission.
Paul Evans, a lawyer for GWC, revealed GWC is closely watching the royal commission and its findings.
“The GWC will not necessarily await these conclusions if matters disclosed give rise to a need to take action immediately.”
The royal commission publishes its final report on October 15 after the Victorian Government granted it an extension from August 1.
