A due diligence review of existing customers at an Australian land-based casino operator saw the number of VIP clients being more than decimated.
VIP Clients Reviewed
Crown Resorts announced it banned from its casinos more than 250 out of around 1,800 local high-rollers, as the high spenders failed to identify the source of their gambling funds or raised other probity issues which could derail the company’s last-ditch efforts to clean up operations and keep its casino licenses in Melbourne, Sydney and Perth.
According to Crown Resorts chief financial officer Allan McGregor, the due diligence review taking place now is far more “significant and comprehensive” than before, noting the new resolve the troubled casino operator has to comply with regulations and follow the rules.
After last year’s inquiry in New South Wales (NSW) revealed evidence of criminal infiltration, money laundering and irresponsible gaming practices, Crown Resorts was found unsuitable to hold casino license for its new AU$2.2 billion ($1.61 billion) casino resort near Sydney, and the flood gates opened.
Awaiting Royal Commissions’ Decisions
Following the NSW casino license suspension, Victoria announced royal commission inquiry into the casino operator, which began by finding significant failings in Crown’s responsible gambling practices that, together with evidence of numerous suspicious activities such as money laundering and problems with tax payments, led to the call for Crown Resorts’ license to be revoked.
The Victoria investigation also showed the deep division at the board level after executive chair Helen Coonan revealed details that some board members were hoping the NSW inquiry would blow away without repercussions, insisting Crown should not take any action. Coonan had to step down earlier this month and was immediately replaced as Crown is reshuffling its board in an attempt to convince regulators it is worthy of its casino licenses. Crown even paid some of its debt to the Victoria government.
Meanwhile, Crown Resorts is continuing to explore opportunities to salvage the business after private equity fund Blackstone saw its amended AU$8.2 billion ($5.99 billion) takeover bid rejected, and local competitor The Star Entertainment Group withdrew its AU$12 billion ($8.76 billion) merger proposal.
On the other hand, Crown’s major shareholder James Packer failed to agree to a deal with private equity fund Oaktree for his 37% stake in the company held via its Consolidated Press Holdings (CPH).
According to incoming chief executive officer Steven McCann, Crown is looking for all possible scenarios related to the outcomes of the royal commissions in Victoria and Western Australia, including suspension or license cancellation and future takeover bids.
Crown posted a full-year statutory net loss of AU$261 million ($191 million), coming down from a profit of AU$79.5 million ($58 million) in the year prior and AU$402 million ($293 million) in the pre-pandemic 2019. Revenue collapsed to AU$1.5 billion ($1.1 billion) from AU$2.2 billion ($1.6 billion) and AU$2.9 billion ($2.1 billion) in 2020 and 2019, respectively.