Crown Resorts Deemed Unsuitable to Operate $1.7 Billion Sydney Casino
Posted on: February 9, 2021, 05:30h.
Last updated on: February 9, 2021, 05:30h.
Read MoreCrown Resorts is currently unfit to operate a Sydney casino. That’s the verdict of Patricia Bergin, former New South Wales Supreme Court judge and chair of a year-long inquiry into the company’s licensing suitability in the Australian state.
Crown Sydney is the tallest building in the city but its future is unclear. (Image: Nikkei Asia)The decision means the future of company’s $1.7 billion high-end casino resort, Crown Sydney, which opened in December minus the casino, hangs in the balance.The inquiry has scrutinized in particular Crown’s relationship with Asian junket operators and whether the company ignored criminal elements within their ranks, allowing them to launder money though Crown Melbourne’s VIP rooms.In her 751-page report, Bergin said Crown was clearly “facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals” connected to organized crime.“It is obvious that such attributes would render an applicant quite unsuitable to hold a casino license in New South Wales,” she said.End of the Road for Packer?To be considered for licensing, Bergin said Crown would first need to make sweeping corporate changes that include parting ways with its current CEO, Ken Barton, and limiting individual ownership stakes at 10 percent. This would rein in the power and influence on Crown affairs of its biggest shareholder, the billionaire James Packer, who, along with Barton, was singled out for criticism.Bergin noted that Packer acted as a “de facto director” even after stepping down, often with “rather disastrous consequences for the company.”Meanwhile, Barton presided over a company with “poor corporate governance, deficient risk-management structures and processes, and a poor corporate culture,” according to the report.The scorching light of this inquiry has exposed a number of problems that would have otherwise remained unearthed and unresolved,” Bergin added.Crown Resorts requested a halt in trading of its shares on the ASX on Tuesday morning, prior to the report’s publication. Those shares are expected to take a hit when trading restarts, not least because Crown’s licenses elsewhere in Melbourne and Perth could now be under pressure.What Next for Crown Resorts?Bergin’s report is not final. It’s a recommendation to ILGA, the New South Wales gaming regulator, with whom the formal decision now lies.One of the issues for ILGA is that, as part of the original agreement for Crown Sydney, the NSW government has agreed to pay punitive compensation to Crown for adopting laws or imposing new obligations that are detrimental to the company. Thus, any decision to revoke Crown’s license could end up in court or at least come with a hefty settlement of up to ten times the economic damage judged to have been done to Crown.Crown could also opt to cut its losses and run by selling the Sydney property to a more suitable operator. In 2019, Wynn Resorts declared an interest in acquiring the company’s Australian assets.Meanwhile, Crown Resorts founder James Packer is under no obligation to sell his 36 percent ownership stake in the company, although he expressed a willingness to do so when giving testimony to the Bergin inquiry, if it would help Crown retain its license.