By Mike Cherney
SYDNEY--Shares in Crown Resorts fell Friday morning as investors reacted to a new inquiry by New South Wales authorities into the sale of a stake in the Australian casino operator to a Hong Kong-based counterpart.
Crown shares were down nearly 1.9% to about A$11.34 in early trade, compared with the broader Australian market which was about 0.1% higher.
Crown notified investors of the investigation by the NSW Independent Liquor & Gaming Authority late Thursday. The authority is looking into a deal in which Melco Resorts & Entertainment Ltd. (MLCO), led by Lawrence Ho, agreed to purchase a nearly 20% stake in Crown from billionaire James Packer's investment company.
Crown is building a casino-and-resort complex on Sydney's waterfront that is slated to open in 2021. A 2014 agreement between Crown and the NSW government prohibited any associates of Macau gambling tycoon Stanley Ho--Lawrence Ho's father--from acquiring any interest in Crown, according to a Deutsche Bank research note.
The NSW authority said Thursday that it is concerned with "ensuring the management and operation of a casino remain free from criminal influence or exploitation, that gaming in a casino is conducted honestly, and controlling the potential of a casino to cause harm to the public interest and to individuals and families."
Crown said it will cooperate with the NSW inquiry, which is the latest such probe to focus on the company.
Last month, Australian federal government officials had said they would examine allegations that some of Crown's business partners have links to organized crime. That followed media reports alleging that Crown has a hotline to immigration officials to fast-track the entry of wealthy Chinese gamblers, and that some of the companies it uses to attract the gamblers allegedly have ties to Chinese criminal organizations.
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