Crown Resorts has received a welcome tick of approval after local gaming regulator, the Victorian Commission for Gambling and Liquor Regulation (VCGLR), found the company and its subsidiary Crown Melbourne “remains a suitable person to hold a casino license” in its Sixth Review of the Melbourne Casino Operator and Licence.
But there could still be further ramifications arising from the arrests of 19 Crown Resorts employees in mainland China in October 2016 with the VCGLR stating that its investigation into the incident is ongoing and therefore wasn’t taken into account as part of its periodic review.
Following a turbulent 24-month period for Crown Resorts – which included the China arrests, a subsequent split from former Macau partner Melco Resorts, the scrapping of its planned Alon project in Las Vegas and allegations by MP Andrew Wilkie in federal parliament of illegal conduct by the operator at flagship property Crown Melbourne – the Sixth Review of the Melbourne Casino Operator and Licence was generally complimentary of Crown’s performance.
In its finding for the period from 1 July 2013 to 30 June 2018, the VCGLR said, “The business of the Melbourne Casino is generally conducted in compliance with obligations under laws and the Transaction Documents and the casino operator is generally compliant with its regulatory obligations.
“Crown Melbourne and its ASX listed parent company Crown Resorts Limited are financially sound. The Melbourne Casino is operationally robust. The Melbourne Casino Complex is, as required, a high quality ‘international class’ casino complex. Finally, Crown’s executives and management are well experienced in the industry and in functions complementary to the operation of casinos.”
Particularly pleasing for Crown were the VCGLR’s findings regarding the accusations made by federal MP Wilkie under parliamentary privilege in October, which included allegations of slot machine tampering, allowing drug use on premises, covering up domestic violence, letting staff gamble on premises and failing to report some transactions of over AU$10,000 as required by law. The VCGLR found instead that Wilkie’s accusations were either not supported by evidence following audits of all slot machines at Crown Melbourne, or were “misinformed.”
The VCGLR did, however, acknowledge three instances where Crown failed to pay sufficient attention to regulatory requirements and suffered disciplinary punishments as a result. They involved the unauthorized decommissioning of pre-commitment facilities on fully automated table games; a failure to properly document play from overseas junkets; and a recent gaming machine trial whereby Crown modified some slot machines without the required approvals.
“These matters could have been avoided if sufficient attention to the requirements of the regulatory regime had been paid,” the Commission said.
More importantly, the VCGLR made it clear that its investigation into the China arrests, which saw 16 Crown Resorts staff jailed in Shanghai for between nine and 10 months each, was ongoing due to delays stemming from a class action launched against the company by shareholders last December. The class action alleges a failure by Crown Resorts to comply with its continuous disclosure obligations while engaging in misleading and deceptive conduct in relation to its business operations in China.
The VCGLR, which launched its own investigation into the China arrests in July 2017, said it conducted it final witness interview on 10 May 2018 but that further documents had since been disclosed to court by Crown’s solicitors against the class action. As such, “the VCGLR has not taken into account, in forming the opinions required by section 25 of the Casino Control Act, anything of what has been learned to date in respect of the detention of the 19 Crown staff in China.
“The VCGLR will continue with its investigation and, at the appropriate time, will assess whether the events in China give cause for regulatory action.”
Among the recommendations included in the VCGLR’s report are for the development by Crown Resorts of a new governance framework to improve decision making between its various boards and committees and the strengthening of responsible gambling measures via data analytics and enhanced facial recognition technology.
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