Regulators in Crown Resorts’ home state of Victoria will conduct a review of the Australian casino giant’s operations two years ahead of schedule.
The move comes in response to a damning investigation in New South Wales that revealed that foreign gambling junkets routinely used the VIP rooms of the company’s flagship Crown Melbourne to launder cash.
The Victorian Commission for Gambling and Liquor Regulation is required by state law to assess Crown’s suitability for licensure at least every five years. The last review was in 2018. The next is slated for 2022.
However, the state has decided to bring that forward, prompted, it said, by the “concerning” revelations in NSW.
Crown was permitted to open Crown Sydney, its much-anticipated luxury resort at Darling Harbour, on December 28, but without its centerpiece high-roller casino, and the future of Crown’s license at the A$2.2 billion property is in limbo while a special investigative commission appointed by the NSW Independent Liquor and Gaming Authority prepares its final report.
The report, the culmination of months of investigation into the AML violations and other serious lapses of corporate governance and due diligence at Crown𑁋including a history of questionable insider dealings by controlling shareholder James Packer𑁋is due for release in February.
A trio of legal advisors to the probe has already concluded that Crown and Packer are unsuitable to operate in NSW after it was learned that upper management was complicit, whether actively, through neglect, or both, in money laundering at Crown Melbourne by junkets with reputed criminal ties in China and Hong Kong. It was revealed also that Crown Melbourne operated straw bank accounts for this purpose.
Junkets are the essential middlemen across the Asia-Pacific region for casinos like Crown Melbourne’s that cater to China’s seemingly inexhaustible supply of high rollers. In a country where the marketing of gambling and the soliciting of gamblers are forbidden by law junkets run the networks that recruit players and provide them with transportation to casino destinations like Macau, Singapore, the Philippines and Australia and furnish them with accommodations and various perks in partnership with their casino clients. Most important, they fund the markers China’s high rollers require to evade the country’s strict currency controls. Equally important, they collect on the loans, a vital function in a nation where gambling debts are not recognized by law.
While they flourish across the region𑁋and particularly in Macau, whose growth into the largest pre-pandemic casino market in the world they’ve largely driven𑁋law enforcement in the West and in Australia have long identified them with organized crime.
“We’re making sure Crown Melbourne conducts its business in a transparent and appropriate manner,” Victoria’s Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne said in announcing the state’s stepped-up review.
She added, “This review is needed given the evidence we’ve seen come out of the NSW inquiry.”
As in New South Wales, a dedicated commissioner will be appointed to run the review, whose findings will be reported to Horne later this year.
The state said it would not hesitate to take “any appropriate and necessary action at the conclusion of the investigation.”
Crown, pressed by the NSW investigators, acknowledged that it failed to property vet the junkets it partnered with, and in a scramble to try to save the Sydney license announced late last year that it was ceasing all junket operations pending a review conducted in partnership with the ILGA.
The company has since said it will now accept funds only from its customers’ personal bank accounts and will refuse any transfers from trusts or business accounts. Cash deposits made to Crown’s bank accounts will no longer be released to patrons, who will be required to provide a receipt before funds can be credited to their private accounts. Players also will be required to provide their names and Crown rewards numbers when sending funds to Crown. International transfers will need to include the details of the banks or financial entities involved.
“Any other description or narration on the transfer must either state that the purpose of the transfer is for gaming or gambling, or to repay a debt,” the company said in a late December letter to players. “Crown will not release any funds where it considers that the description or narration is misleading.”
Should Crown be able to keep the Sydney license, which some analysts say may now be suspended for some time given the seriousness of the ILGA’s findings, it remains to be seen what remedies the company will need to take and whether Packer will be required to divest all or part of his 36 percent of the company.
The billionaire, who resigned as executive chairman of Crown more than two years ago, holds no official position with company and rarely visits his native Australia, has been trying to sell the company. A sale of 20 percent of the shares to Macau casino operator Melco Resorts was nixed after the ILGA raised concerns. Melco ultimately bought 10 percent which it flipped to U.S. private equity giant Blackstone. Wynn Resorts, which also operates in Macau, had been in talks about an acquisition, but Wynn said recently those conversations had been terminated.
