Crown Resorts calls for quick decision on casino licence
Crown Resorts has urged a Victorian royal commission to make a quick call on any decision around the potential cancellation of its casino licence.
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Crown Resorts has urged a Victorian royal commission to make a quick call on any decision around the potential cancellation of its casino licence, saying any delays to losing control of its flagship Melbourne casino would not ease the economic damage on the state.
The plea came within a cache of written responsive submissions by parties to the Victorian probe released on Wednesday night, just over a week after lawyers for the Crown formally made their case before commissioner Ray Finkelstein for a second chance.
In the submission, Crown warned that any cancellation of its licence would place the group at risk of defaulting of its almost $1bn of net debt and threaten the jobs of the 11,500 staff it employs at its Melbourne casino and hotel complex, which is the state’s largest single site employer.
Crown also warned a cancellation-led default could smash the Victorian economy, as the company spends $900m in general procurement every year and provides 10 per cent of all of Melbourne’s hotel rooms.
The casino operator noted it had paid least $1.4bn in taxes to the state government since 2014 and poured more than $2.2bn of capital expenditure into Melbourne since 2006.
“Cancellation, or even suspension, of Crown’s licence would have the very real potential to trigger events of default under Crown‘s debt facilities that would put the continued provision of these significant public benefits in jeopardy,” Crown contested.
But the group also warned a delayed cancellation of a year or two to transition the casino into new ownership or to allow Crown to reapply after furthering its reform efforts was unworkable, knocking back an idea floated by counsel assisting the commission last month.
“Deferral is not a solution to the problem of cancellation,” Crown wrote.
“It is common ground that the successful execution of Crown’s reformation involves attracting and retaining the right people to lead the significant program and to keep Crown’s staff motivated and focused on that critical work.
“As a matter of commercial reality, that will be made far more difficult in a scenario of deferred cancellation with only a right to reapply.”
Crown also confirmed that if it were made to give up its casino licence, it would be able to sub-let the casino area of Crown Melbourne to the new operator – erasing fears it would have to give up the casino for nothing, as it sits on state government land with a 99-year lease.
“In the event that the Melbourne Casino licence is cancelled, Crown accepts that the state may require it to grant a sublease at market rent,” it said.
“However the area to be subleased is limited to the casino area, and does not include the other parts of the Melbourne Casino Complex.”
Crown argued that even if such a situation materialised, it would not provide the economic benefits of an “integrated resort.”
“In Crown‘s submission, disintegration of the integrated resort would be more likely to result in reduced casino tax, significant inefficiencies, an inferior offering for customers and employees and a substantially diminished offering to tourism and the State of Victoria,” Crown said.
The document cache also contained a submission from Crown Resorts executive chairman Helen Coonan pushing back on a recommendation that she be found unsuitable as an associate of the Melbourne casino.
Counsel assisting made that recommendation primarily due to her alleged failure to ensure that a tax underpayment issue, brought to her attention in February by Crown Melbourne CEO Xavier Walsh, was properly investigated and disclosed to the commission.
Ms Coonan argued that Mr Walsh misrepresented the issue to her, and nothing brought before the commission “impeaches her honesty, integrity or good character.”
She added that the commission did not need to consider her suitability, as she had announced she would retire from Crown around the end of August, before Mr Finkelstein is due to finalise his report in October.
It was revealed at the Victorian royal commission into Crown in June that the company had been knowingly incorrectly deducting loyalty club expenses like free meals and parking from poker machine revenue since 2012.
Crown has repaired $61m in tax and penalties to the Victorian government, but could be hit with a larger bill once the state gaming regulator completes its own review of the issue.
Also on Wednesday, Crown Resorts CFO Alan McGregor told another royal commission into the company in WA the company would soon know if they underpaid taxes in that state too.
“There is a review being undertaken by Ernst and Young, our tax advisers … I‘ve seen a draft report, but it hasn’t been finalised, so I am hoping it will be finalised in the coming days or week.
Ms Coonan will appear before the WA commission on Thursday.
Originally published as Crown Resorts calls for quick decision on casino licence
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