Crown’s high-rolling gamble brought down with a crash

In the end, Packer’s dreams of rivers of gold from Chinese high rollers turned into a nightmare for him.

James Packer has huge hopes for his Sydney casino. Picture: Rohan Kelly

When Crown’s casino in Sydney was first conceived in 2012 by James Packer, a major source of its wealth was to come from Chinese high-rollers.

At the time, Packer was linked with the successful Macau casino operations of Lawrence Ho, son of veteran Macau casino operator Stanley Ho, the Chinese economy was booming and the country’s rising middle class was travelling the world looking for new sources of entertainment, including in Australia.

Now, as Packer remains in near seclusion overseas, thousands of kilometres away from the 71-storey tower that was to be the crowning glory of his career, it is clear that his super bullish hopes for rivers of gold from China have almost brought down his company.

As the detailed and damning report by former NSW Supreme Court judge Patricia Bergin shows, it was his attempt to sell most of his shareholding to his former Macau joint venture partner Lawrence Ho in 2019 that led to the inquiry that has overshadowed Crown for the past year and it still far from resolved.

And it was the internal pressure on Crown’s employees in China to perform that led to their arrests in 2015, which has continued to overshadow its reputation and raised questions about its suitability to hold a casino licence in NSW to this day.

But while the Bergin inquiry has declared that Crown as it is today is not suitable to hold a casino licence in NSW, and it has examined the details of the Packer share sale to Ho, it has cleared the company of any specific breaches of its licence in the state in connection with the proposed share sale.

Part of the issue goes back to longstanding concerns in NSW about Stanley Ho, whose overtures to operate a casino in Sydney were pushed back decades ago because of concerns about his links with organised crime including Asian triads.

So key were concerns in NSW about the Stanley Ho connection that it was a specific condition of Packer’s restricted gaming licence in NSW granted almost a decade ago that Crown have no links with Ho senior, who died last year.

Hence the sensitivity about the sale of Packer’s shareholding in Crown to Ho’s son Lawrence in early 2019.

Unlike the Packer family, the sprawling Ho family was a complex one, with ballroom dance loving Stanley having had 17 children from four wives.

Lawrence was brought up in Canada, the son of Stanley’s second wife, with complicated links to his father. The inquiry found that Packer should have known that Stanley Ho still had an interest in his son’s company, Melco, through a family company called Great Respect when Packer was doing the deal to sell shares in Crown to Lawrence Ho in 2019.

So complex were the Ho family ties that the actual financial links between father and son were not as obvious as Western observers might think.

Taking into account several factors including Packer’s medical condition at the time, the Bergin inquiry has stopped short of finding the sale was sufficient to lead to a breach of Crown’s licence. Lawrence Ho sold out of his shareholding in Crown early last year, just before the Bergin inquiry got going, citing the financial pressures of COVID-19 on his company.

Separately, the Bergin inquiry also found that Crown exposed its staff in China to the risk of detention in the country, where gambling has been banned for decades and authorities in early 2015 had stated specifically that they didn’t want to see overseas casino companies promoting their wares to citizens within its borders.

Crown, the report says, had “disregarded the welfare of its employees as they were offered huge bonuses to lure Chinese high rollers to gamble at Crown’s Australian casinos”.

As it notes, Crown, which managed to get its staff released from jail in China in 2017, has discontinued its operations in China although the incident remains a stain on its past.

In the end, Packer’s dreams of rivers of gold from Chinese high rollers turned into a nightmare for him. The Barangaroo casino of 2021 will most likely go ahead but with a very different clientele.