In Crown Probe, Australian Regulator Seeks Millions from Melco

The gaming regulator in New South Wales is pursuing legal action against Melco Resorts & Entertainment to recoup millions in legal fees associated with its probe of Crown Resorts, which involved a partnership between Crown’s James Packer and Melco’s Lawrence Ho (l.)

In Crown Probe, Australian Regulator Seeks Millions from Melco

The New South Wales (NSW) Independent Gaming and Liquor Authority (ILGA) has initiated legal action against Melco Resorts & Entertainment to recoup AU$3.7 million (US$2.6 million) in legal costs related to a government inquiry into Crown Resorts. The Bergin Report, released in February 2021, found the Australian gaming giant looked the other way in the face of money laundering and other compliance breaches. Crown was then found unsuitable to operate its AU$2.2 billion Crown Sydney casino.

The inquiry stemmed from a 2019 deal in which Melco acquired a 9.99 percent stake in Crown from its largest shareholder, James Packer. The ILGA questioned if that sale breached a clause in Crown’s license that prohibited it from working with associates of the late Macau casino mogul Stanley Ho, who has often been linked to Chinese organized crime. Packer is an intimate and onetime business partner of Ho’s son, Lawrence, head of Melco.

The report later found the sale of shares did not compromise Crown’s NSW license, but by that time, Melco had already offloaded its stake to the U.S.-based Blackstone Group, which has made several overtures in an attempt to take over Crown.

According to the Australian Financial Review, the ILGA believes it’s entitled to recover at least some of the expenses of the inquiry from the Macau casino operator.

“In light of the findings of the Bergin report, ILGA considered it appropriate for Melco and Crown Resorts Ltd. to provide payment for the costs of the inquiry,” an ILGA spokeswoman said.

The Australian Financial Review quoted a Melco spokesman who said the company had “sought to work with ILGA in a professional, fair and reasonable manner throughout our engagement with them on this issue.

“We have previously requested information from ILGA in an effort to reach an amicable resolution. Despite this request, we have not received the information that is necessary for Melco to adequately assess ILGA’s claim.”

Though Crown was not allowed to open its casino in Sydney, it was granted liquor licenses to run its nongaming facilities. It continues to work with the ILGA on remediation efforts and said in a recent report that it hopes to launch casino operations in early 2022.

Crown was also asked to pay for its share of the trial and was presented with a bill for $12.5 million last May.