Inquiry Deems Crown Perth Unfit For a Casino Licence
Australian casino operator Crown Resorts is unfit to hold a gaming licence in Perth. That is according to the long-running inquiry into the Perth venue’s affairs. However, Crown Perth continues operating with several restrictions and observations in place.
The under-fire casino broke the news via a statement on the Australian Securities Exchange.
“Crown Resorts Limited has today been notified that the Perth Casino Royal Commission Report (Report) has been publicly released after being tabled in the Western Australian Parliament. Crown acknowledges the Perth Casino Royal Commission’s findings and recommendations. We will review the Report and will work cooperatively and constructively with the Western Australian Government in relation to the findings and recommendations of the Report.”
Crown Boss Talks About Perth Progress
Steve McCann is the Managing Director and CEO of Crown Resorts. He posted his thoughts on Crown Perth and his other properties.
“Significant progress has been made with Crown’s transformation program, the implementation of company-wide reforms, and establishing the highest standards of governance. This includes investment in people, systems, processes, culture, and a shared focus on responsible gaming and the prevention of financial crime.”
“Crown remains committed to continuous improvement across all facets of the business and is prioritising the delivery of safe and responsible gaming across all out resorts, including Crown Perth.”
Shares in Crown Resorts increased 0.6% following the news as investors breathed a sigh of relief. There was a real possibility of Crown Perth losing its licence. However, similar to Crown Melbourne, the Western Australian government weighed up the economic impact of cancelling its licence.
Crown Melbourne makes 75% of Crown’s overall profit. In addition, it is the state’s single largest employer. Crown Perth employs over 5,800 Perth residents and pays hundreds of millions in gaming tax annually.
“This is about remediation rather than revocation, protecting the jobs of thousands of employees at the casino.” Those were the words of Western Australia gaming minister Tony Buti.
The Report’s Findings
The royal commission took issue with Crown Perth failures regarding anti-money laundering systems. Crown’s use of junkets did not go unnoticed either. However, Crown no longer uses junkets at any of its venues.
The inquiry revealed Crown staff admitted bending reporting rules for large deposits. All deposits $10,000 or more are reported to AUSTRAC for investigation. However, Crown accepted several deposits under this amount from the same customer and never reported it. For example, Customer A deposited $9,000 four times. A $36,000 deposit should be reported but was not.
Crown Perth received some positive words for the steps it is taken towards reform. It removed several board members and implemented new systems and policies. These changes saved Crown Perth from losing its gaming licence.
$8.9 Billion Sale Going Ahead
The royal commission out of the way means Crown Resorts and Blackstone can focus on pushing the $8.9 billion sale through. Red tape and uncertainty put the brakes on the mega-deal. Indeed, selling the company will appease the regulators that imposed a two-year supervisor period on the casino.
Another hitch is in the pipeline because AUSTRAC recently filed a lawsuit against Crown. AUSTRAC accuses Crown of “serious and systemic non-compliance.” It claims Crown failed due diligence innumerable times which left Australia’s financial system “vulnerable to criminal exploitation.”
AUSTRAC did not state it is seeking damages but Crown could face a massive bill. The regulator files 547 contraventions, noting each carries a $22.2 million fine. This equates to an incredible $1.2 billion potential cost for Crown. Potential suitors Blackstone Group, although very wealthy, would not be happy fronting a $1.2 billion fine.
Expect Crown’s share price dropping like a stone if AUSTRAC does seek $1.2 billion in damages. Furthermore, expect the Blackstone takeover to stop in its tracks.
