Crown Resorts keeps its Melbourne licence

Despite all the frantic media coverage, in the end sanity prevailed.

In what was only a surprise to anti-gambling ideologues in the media and elsewhere, the Victorian Royal Commission has found Crown Resorts (ASX: CWN) “unsuitable” but for all practical purposes allowed it to keep its Melbourne licence.

To say this was met with gnashing teeth, even tears, within certain elements of the media would be an understatement.

Despite all the moralising and supposedly high-brow concern over money laundering et al, the campaign about Crown Resorts has in reality been mainly about two things.

Firstly, the usual suspects such as Andrew Wilkie and Stephen Mayne were trying to prohibit people from enjoying themselves by trying to have pokies banned or severely limited.

More prominently, though, many of the very same people were quite clearly rooting for Crown and James Packer to suffer a defeat due to their longstanding hatred of the Packer family that extends back decades to father Kerry and grandfather Frank.

This is why the old Fairfax newspapers, now owned by Nine Entertainment (ASX: NEC), such as The Age and the Sydney Morning Herald, were behind the allegations investigated by the Royal Commissions in Victoria and Western Australia, and during the earlier inquiry in New South Wales.

This is also why these very same media organisations refused to discuss similar allegations about competitor Star Entertainment (ASX: SGR) until it was clear that their efforts to get Crown’s Melbourne licence cancelled were destined to fail.

While Crown only has itself to blame given its various stuff-ups in recent years, in my view its actions never justified the cancelling of any of its licences. Instead, the people responsible should have been fired – as they have been – and better procedures and controls should have been implemented, as is currently occurring.

If the big banks can keep their licences after the findings of the Financial Services Royal Commission, then I don’t see why Crown can’t keep its casino licences.

The allegations

Obviously Crown was incompetently run for a while but let’s look at the major allegations that were used by those arguing that Crown should lose its Melbourne licence:

1.     Responsible service of gaming (RSG) – millions of people gamble at Crown’s resorts each year without the company failing to live up to its RSG responsibilities. The suggestion that the few that slipped through the cracks, though tragic, justify the cancelling of the licence is ridiculous. These people are adults and ultimately responsible for their own actions, whatever the lefties at The Age might believe otherwise.

2.     The use of debit and credit cards in Crown’s hotels to get around Chinese regulations – this is easy to dismiss. Why should Australians care about complying with laws imposed by a communist dictatorship when they are not actually located in said communist dystopia? As for potential money laundering here, see below.

3.     Putting its employees at risk in China – the fiasco over 19 of Crown’s employees being arrested and jailed in China for breaching the country’s anti-gambling laws has always seemed suspicious to me. Given every other foreign casino company was doing similar things, it always appeared obvious that for some reason Crown managed to annoy the wrong people in China and its employees were targeted as a result. This of course is not something that former partner Lawrence Ho of Melco Entertainment could talk about, and even Packer himself would stay silent as he knew that his employees would cop it if he pointed out the obvious. This is another reason why point 2 above is totally irrelevant – why comply with Chinese law when justice isn’t blind but depends on whether you are a member of the right faction in China?

4.     Underpayment of Victorian pokie tax – to me this is probably the most absurd allegation of them all. Anyone who has worked in tax knows that two very good tax advisors can have differing views on a particular rule or provision of the law. Obviously Crown is entitled to minimise its tax and fully allowed to reasonably interpret the law accordingly. That multiple QCs came up with differing views on the application of the particular provisions in the Victorian pokie tax law says it all.

5.     Dealing with junkets – the junkets and individuals in question have access to casinos across the world including (at least up until recently) Star Entertainment’s (ASX: SGR) casinos in Sydney and Queensland. Another non-issue.

6.     Money laundering – finally we come to allegations that at least have some merit. Even there, though, why is Crown – or the banks, for that matter – supposed to do the police’s dirty work? Isn’t it up to the police to stop crime rather than requiring private companies to essentially act as arms of the state? Furthermore, that Austrac is investigating both Star Entertainment and Sky City Entertainment(ASX: SKC) – which owns the Adelaide casino – shows that this issue isn’t limited to Crown and instead common throughout the industry. Should all three companies lose their casino licences over this?

While Crown and its employees targeted by the Royal Commission certainly haven’t been saints, finding the company “unsuitable” but ultimately allowing it to keep its Melbourne licence was the only sane decision.

If Crown’s Melbourne licence was cancelled, then the regulators would have to go through the entire process again to ensure any buyer was itself suitable. Just as importantly, the regulators would have to ensure that the systems, processes and relevant people at the business that the acquirer was purchasing were suitable too.

If Crown is well on its way to resolving the issues identified by the Royal Commission and hence again becoming “suitable”, then cancelling the Melbourne casino licence would actually have been counterproductive.

Comments (115)
Lorem ipsum
Lorem ipsum dolor sit amet, consetetur sadipscing elit
Lorem ipsum
Lorem ipsum dolor sit amet, consetetur sadipscing elit Lorem ipsum dolor sit amet, consetetur sadipscing elit

Leave a Reply

Suggested Stories

On top of recent underperformance, the abrupt departure o...

Stonks GuyDec 08, 2021
3 mins read

CEO Mike Henry is creating a simpler, more focussed BHP.

Stonks GuyDec 03, 2021
3 mins read

As well as agreeing to merge with BHP’s oil and gas asset...

Stonks GuyNov 23, 2021
3 mins read

The casino group remains an attractive target, and Blacks...

Stonks GuyNov 19, 2021
3 mins read

Australia’s busiest airport is going private, if the ACCC...

Stonks GuyNov 09, 2021
3 mins read

Cost savings from closing branches and reducing headcount...

Stonks GuyNov 02, 2021
3 mins read