Crown Resorts, Barangaroo, Sydney

Crown Resorts’ casino at its new Barangaroo property in Sydney is likely to be open on a conditional basis within weeks, the New South Wales regulator said.

The Australian operator opened the new resort in December 2020, but was unable to open the gaming floors after being found to be unsuitable to hold a license in the state following revelations of money laundering and widespread corporate governance lapses in its casinos.

“It is anticipated that the Authority may permit Crown to commence gaming on a conditional basis in the next few weeks,” a spokesperson for the Independent Liquor & Gaming Authority was cited as saying by local media.

“While the Authority has not changed its assessment that Crown is unsuitable to hold a restricted gaming licence until it has addressed the significant issues arising from the Bergin Inquiry, commencement of gaming on a conditional basis will contribute to assisting the Authority to assess Crown’s progress towards suitability.

“At this time, it is not possible to advise when a final determination regarding suitability will be made.”

Crown has replaced its board of directors and overhauling its corporate procedures in the fields of financial crime, risk, compliance and responsible gaming. Reporting its half year results on Feb. 17, the company said that the cost of those teams in Melbourne and Perth was some $30 million higher than it had been in 2019.

“While we do not underestimate current headwinds facing Crown, there is growing confidence we have turned
the corner. All three of our domestic resorts are back open, with a vaccination strategy to combat COVID-19
providing a pathway forward for our staff, the business and the wider community,” CEO Steve McCann said.

“Importantly, we continue to build momentum on our company-wide reforms, accelerating work on our remediation plan and making significant advances across multiple regulatory processes. Not only are we building a stronger business, we are working well with the regulators with a priority to deliver a safe and responsible world-class gaming operation.”

Problems at Crown were first revealed in an investigative documentary report accused the company of being linked to criminals, who were laundering money, as well as liaising with immigration officials to fast-track visas for wealthy individuals.

The report triggered the Bergin Inquiry in New South Wales, followed by two Royal Commission inquiries in Victoria and Western Australia. The Victoria report has concluded and also found the company as unsuitable. It ordered the appointment of a special manager to overseas all operations at Crown.

The company is still waiting for the results in Western Australia, which are expected in early March.

Earlier this month, the group accepted a sweetened A$8.9 billion ($6.3 billion) all-cash offer from U.S. investment firm, Blackstone.

Crown first received an offer from Blackstone on March 22, 2021, at an indicative price of $11.85 per share. This was later revised to $12.35 cash per share in May of the same year, which was rejected by the Crown board.

On January 13, 2022, Crown received a further revised proposal from Blackstone for $13.10 cash per share. Crown said the offer represents a premium of 32 percent to the closing price of Crown shares on November 18, 2021, of $9.90 per share.

The deal may also give Crown’s majority shareholder James Packer an exit from the firm – which could earn him as much as $3.2 billion.

The Barangaroo resort was initially aimed at the growing numbers of wealthy Asians visiting Australia and is only permitted to offer table games with no slots.

Crown Sydney’s gaming space is allowed to expand up to 20,000 square meters, though current floor space utilization is “materially less than 50 percent of what we’re capable of,” executives told analysts in late December.

Analysts at J.P. Morgan have estimated the casino will open with about 160 tables with room to expand. In December, it said that based on its estimate of current table per square meters, using up the rest of available space will add around A$100 million in additional annual table revenue (if demand remains constant).