JP Morgan analysts Donald Carducci and Abhinay Jeggannagari say it is unlikely that Crown Resorts will have its NSW casino license revoked at the conclusion of a regulatory inquiry into its suitability to hold a casino license, although a temporary suspension is on the cards.
According to a Tuesday note, there will almost certainly be financial ramifications for Crown, which last week suspended all junket play until 30 June 2021 following evidence given by its CEO Ken Barton admitting the company had little knowledge of cash deposits and transfers taking place inside Crown Melbourne junket rooms.
The inquiry, being conducted by the NSW Independent Liquor and Gaming Authority, is due to hand down its suitability findings by 1 February 2021 – less than two months after Crown opens its AU$2.2 billion high roller casino, Crown Sydney.
Despite a series of explosive headlines over the past week resulting from the inquiry, Carducci and Jeggannagari stated in Tuesday’s note, “We do not believe anything beyond a temporary suspension will eventuate, as the company has stated it will undertake a comprehensive review of processes related to junket operators and create a Head of Compliance and Financial Crimes role.
“Given the 2014 Financial Deed Terms (and potential impacts to its Victoria and Western Australia licenses), the removal of an NSW license seems highly unlikely, in our view.”
The analysts note that there are multiple potential outcomes from the inquiry and it is unlikely that no action against Crown will be taken. Other options include a requirement that Crown takes direct action to address internal compliance issues – something that is already underway – or new conditions being applied to the company’s NSW casino license.
As previously reported by Inside Asian Gaming, such conditions could see Crown entitled to compensation of at least AU$200 million and potentially much, much more unless the license is terminated outright.
Carducci and Jeggannagari noted that the opening date of Crown Sydney, currently pegged for 14 December, could be impacted by the inquiry.
