Victorian Crown Resorts not expected to lose licence

Crown Resorts is expected to be allowed to keep control of its Melbourne casino, but will have to meet tough new standards to keep operating.

The fate of Crown Melbourne will be known on Tuesday. Picture: NCA NewsWire/David Crosling

Crown Resorts is expected to be allowed to keep control of its Melbourne casino, but have to meet tough new standards to keep operating.

The state government will on Tuesday release the final report of a royal commission into the embattled casino group and its response to the recommendations, amid evidence of money laundering.

There have been concerns the government could strip Crown of its licence to operate the Southbank casino, which employs 11,500 people and raises more than $200m in tax revenue every year.

But sources close to the process say they do not expect Crown to lose its licence, but will instead face “unprecedented scrutiny and thresholds” for its operations.

Now led by former Lendlease boss Steve McCann, the report – and the government’s response to its recommendations – could have major implications for Crown, the 11,500 people employed at the Southbank facility, and the more than $200m in taxation revenue it provides the state government every year.

Commissioner the Hon Ray Finkelstein inside the Crown Royal Commission in Melbourne. Picture: NCA NewsWire / David Crosling

It also means Mr McCann, Packer and other Crown executives will have to balance managing the implications of the report with their planned appearances in front of Western Australia’s separate royal commission into Crown’s Perth casino this week.

Victorian Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne confirmed the commission’s final report would be tabled in parliament on Tuesday morning, 11 days after it was handed to the government by inquiry chief and former Federal Court judge Raymond Finkelstein.

“The final report of the Royal Commission into the Casino Operator and Licence will be tabled in the Victorian parliament tomorrow,” Ms Horne said in a statement.

“The Victorian Government thanks Raymond Finkelstein AO QC for the extraordinary amount of work that has gone into the Royal Commission.

“The Government will not be making any further comment regarding the Royal Commission until the report is tabled.”

The release of the report will bring the commission’s whirlwind eight-month process to a close.

The probe was formed in February after the NSW’s Bergin Inquiry temporarily revoked the licence to Crown’s brand new Sydney casino after it uncovered likely instances of money laundering at Crown’s long-held Melbourne and Perth casinos.

The inquiry also linked corporate governance failures at Crown to the influence of Mr Packer, his nominee directors and several long-time executives.

It led to NSW pledging to overhaul casino regulation in the state, restrictions on Mr Packer’s ability to exercise his 37 per cent stake in the company, and an exodus of longtime executives and directors.

Originally due to report in August, the Victorian commission had its reporting date pushed out to October 15 and its budget doubled, with the Victorian government citing the “seriousness of evidence produced.”
Through eight weeks of hearings the commission unearthed new scandals like an illegal gaming chip payment method used by Chinese high-rollers and the underpayment of millions in state casino tax,

It is viewed as likely that Mr Finkelstein will recommend Crown be ruled unsuitable to operate the casino in line with his counsel assisting’s formal recommendation.

The crucial qualifier is whether that recommendation of unsuitability comes with a chance for Crown to continue operating Crown Melbourne while it reforms itself, or whether it is recommended the Victorian government scrap the licence outright.

The latter option could force Crown to lease or sell off its most profitable asset, while causing a share price dip that would attract would-be suitors for a takeover attempt

US equity giant, global casino operator and Crown 9.99 per cent shareholder Blackstone is understood to still be interested in Crown after its $8bn takeover offer was knocked back earlier this year.

Rival casino company The Star Entertainment Group proposed a merger that was ultimately withdrawn, but it is understood to be watching the outcome of the commission closely while battling its own money-laundering related regulatory troubles.

Mr Finkelstein’s recommendations will also help shape the outcome of WA’s royal commission into Crown, which is due to report next March.

Meanwhile, a multi-week shareholder class action trial into Crown due to kick off on Monday was delayed until Wednesday.

The class action was brought against Crown Resorts in the Federal Court by Maurice Blackburn on behalf of shareholders in December 2017 amid the fallout of the arrest of 19 Crown staff in China for allegedly illegally promoting gambling.

Maurice Blackburn alleges Crown failed to warn shareholders of the risks in continuing to promote Crown’s Australian casinos to China’s high rollers after a well-publicised crackdown was launched on foreign gambling promotion.

Maurice Blackburn is also running a second shareholder class action against Crown Resorts over anti-money-laundering breaches in the Victorian Supreme Court.

Shares in Crown closed at $9.66, up 0.31 per cent.