Did Crown Resorts Ltd. owner James Packer run afoul of gaming regulations in New South Wales when he sold 19.9 percent of the company to his former partner, Lawrence Ho, chairman and CEO of Melco Resorts & Entertainment?
That’s the question being posed by NSW’s gaming regulator. On September 5, the New South Wales Independent Liquor and Gaming Authority (ILGA) published “terms of reference” for a previously-announced investigation of the sale. Meanwhile, Ho’s company has delayed the acquisition of a second tranche of shares of Crown, postponing the completion of the deal as the inquiry unfolds.
In May, Melco announced that it would pay US$1.2 billion to acquire the stake, sold by CPH Crown Holdings Pty Ltd., which controlled by Packer. The billionaire son of Australian media magnate Kerry Packer has stepped away from his empire following a well-publicized episode of depression; speculation has it that Ho’s acquisition could be the first move in an outright buy of Crown Resorts.
Under the original agreement, the closing of the first tranche of 67,675,000 shares—almost a 10 percent stake—of Crown Resorts occurred on June 6. The closing of the second tranche was scheduled to occur on or before September 30.
In a news release, Melco Resorts said it would stand down “to allow more time for the relevant Australian regulatory processes to be completed.”
Melco told GGRAsia it would participate “in any probity review process and cooperate with any inquiry” needed in relation to its investment in Crown Resorts.
The inquiry, led by former judge Patricia Bergin, will also look at whether Melco Resorts, Ho, and Ho’s representatives are of “good repute, having regard to character, honesty and integrity”; “have any business association with any person, body or association who is not of good repute”; and “are otherwise not suitable to be associated” with the wholly-owned unit of Crown Resorts that holds the gaming license. Lawrence Ho has gone out of his way to distance himself from his father, Stanley Ho, a legendary Macau gaming figure who reportedly was involved with organized crime.
Crown has faced its own allegations of criminal activities including money laundering and doing business with junkets linked to criminal activities. Crown Resorts has denied the claims.
Among other things, the NSW regulator said the probe would decide whether Crown should be allowed to retain its license to operate a casino in Sydney. Its luxury development, Crown Sydney at Barangaroo, would be its third Australian casino resort. The company said earlier this month that the project is on schedule for completion in the first half of 2021. Crown also runs gaming resorts in Melbourne, Victoria and Perth, Western Australia.
According to the Guardian newspaper, if Bergin finds Crown or its NSW subsidiary unfit to hold the Barangaroo license, she is to decide “what, if any, changes would be required to render those persons suitable.”
In related news, Justin Field, the independent MP is asking why Chow Tai Fook, a company linked with Stanley Ho, has been allowed to invest in Crown rival the Star Entertainment Group, The Age reports.
Chow Tai Fook is a joint venture partner with Star on its $3 billion Queen’s Wharf Casino complex, as well as the $500 million Ritz Carlton development in Sydney. The company is controlled by Henry Cheung, whose family holds a 9.6 percent stake in SJM, founded by Stanley Ho. The company also has a 5 percent stake in Star, and has previously indicated it would look to substantially increase its stake in the future.
“There is scope within the Bergin Inquiry’s terms to consider these Star business relationships and the ‘extant and emerging risks for gaming’ generally and to recommend changes needed to address these risks. I hope they will be considered,” Field said.
A Star Entertainment Group spokesman said Chow Tai Fook has “completed extensive probity reviews and received regulator approval in Queensland.”
A spokesman for ILGA said that it had not received any application as of yet for Chow Tai Fook to increase its holding in Star to above 10 percent.
Doing so would trigger “stringent probity, legal and financial checks,” he said.
