SYDNEY, Oct 14 (Reuters) - Australian casino company Crown
Resorts Ltd may be declared unfit for its main gambling
licence when an inquiry reports its findings on Friday, but is
expected to be allowed to stay open with conditions because of
its outsized economic role.
Investors have largely factored in wide-ranging adverse
findings from an inquiry mandated by the state of Victoria, home
to its Melbourne casino which accounts for three-quarters of its
The inquiry, known as a Royal Commission, has heard detailed
accounts of Crown enabling money laundering and failing to act
on regulatory concerns and is the second such probe after one in
neighbouring New South Wales state heard similar accounts.
That earlier inquiry led to a suspension of Crown's Sydney
gambling licence before its A$2.1 billion skyscraper resort was
opened in December 2020. It continues to operate with
restaurants, bars and a hotel, but no gambling.
The Melbourne casino could, however, retain gambling in some
way albeit with supervision, investors say.
They note it is one of the state's biggest employers with
11,500 staff and the government would be loathe to dent tourism
further at a time when the country is preparing to reopen
borders after two years of COVID-19 restrictions.
"The expectation is that they will be deemed unfit, that's
what most of the market is telling you," said John Ayoub, a
portfolio manager at Wilson Asset Management which has Crown
shares. "The unknown is: what does that mean?"
"There is a balance between (addressing wrongdoing and) jobs
and tax revenues that the casinos do generate. Tourism's going
to be a big way we can get ourselves out of the state debt holes
that they're in. It's critical infrastructure," he added.
Crown declined to comment.
Over both inquiries, which included billionaire James Packer
- Crown's biggest shareholder with a 37% stake - livestreaming
evidence from his yacht, executives acknowledged misleading the
public by claiming in full-page newspaper ads that it had no
association with tour operators with criminal ties.
They also said they were repairing regulator relationships
and cutting ties with tour operators. After losing its CEO,
chairman, most of its board and many senior staff over the
inquiries, the company argues that it is under new management.
At the latest inquiry, Crown's lawyer accepted an
"unsuitability" finding was possible, but urged against
recommending a breakup or unconditional delicensing of the
Crown has had three M&A approaches since the Sydney inquiry.
It rejected an offer from U.S. private equity firm Blackstone
that valued the company at $6.2 billion and its favoured
buyer, rival Star Entertainment Group Ltd, has since
walked away. Talks for Oaktree Capital to fund a change of
control have also collapsed.
This week media reports accused Star of failing to act on
money laundering risks and that has reduced the chances of Crown
being ordered shut, said Angus Gluskie, managing director of
White Funds Management which has Crown shares.
Regulators will "need to make constructive recommendations.
They can't suspend the whole industry," he said.
Crown's shares have tumbled 27% since media reports alleged
wrongdoing in 2019, valuing the company at A$6.3 billion ($4.7
($1 = 1.3541 Australian dollars)
(Reporting by Byron Kaye; Editing by Edwina Gibbs)