Crown Sees Significant Fallout from Scandal

In the weeks since the Sydney Morning Herald, the Age, and 60 Minutes revealed the findings of their six-month investigation into Crown Resorts, little has been done to assuage the fears of stockholders and regulators regarding ties to organized crime. The fallout has been swift, significant, and ongoing.

Politicians Express Concern

The initial investigation was of a journalistic nature, but the results had far-reaching consequences.

The three media outlets that spent months looking into Crown Resorts and its ties to organized crime organizations via junkets and a brothel revealed more than a few casual coincidences. What they found were numerous ties to the Company crime syndicate and its drug trafficking and money laundering, possible ties to a brothel with a history of sex trafficking, and a willingness of Crown to put its employees in harm’s way for the sake of attracting high-stakes gamblers to its Australian properties.

Within days, lawmakers were lining up to call for governmental investigations into Crown’s activities.

Independent lawmaker Andrew Wilkie requested a parliamentary committee to hold public hearings into the allegations. Several other lawmakers called for a national anti-corruption body in light of two Australian ministers now being under scrutiny for fast-tracking immigration clearances for some of the high-stakes gamblers courted by Crown.

Former Australian Prime Minister Kevin Rudd weighed in recently as well and expressed pleasure that further investigations are underway.

Rudd long felt that Labor leaders, specifically Mark Arbib and Karl Bitar, were at least partially responsible for removing him from his prime ministership and left government to work for Crown. Stephen Conroy, also formerly with the Labor party, left to work for Responsible Wagering for Australia, an organization Rudd described as a “front” for gambling expansion funded by Crown’s James Packer.

“Delighted” was the word used by Rudd to describe his overall feelings about the upcoming investigation by the Australian Criminal Intelligence Commission into Crown. “Let me be very blunt about this,” said Rudd, “I am very happy.”

Investigations Upon Investigations

One of the most prominent investigations to be launched as result of the media exposé came from the Victorian Commission for Gambling and Liquor Regulation.

Its original statement about the Crown allegations noted it would “consider the well-publicized events regarding Crown’s international commission-based business and its international sales team in China.”

But as the weeks have passed, the seriousness of the charges has prompted some action. Though the regulator is not revoking Crown’s license at this point, a new license for its project in Victoria is not being issued yet and will not be issued in 2019.

Experts have said that it is nearly impossible for a company like Crown to lose its gaming license entirely, but the results of the Victoria investigation may name individuals within the company that will need to be fired before licenses can be issued or renewed. There may also have to be changes to Crown’s business model, specifically with regard to junkets.

The Gaming and Wagering Commission of Western Australia is reviewing the news and its licensing of Crown Perth since the revelation of the scandal. An investigation is ongoing with that regulator.

In addition, financial crimes agency Austrac is “actively addressing the significant risks of money laundering through casinos, particularly through casino junkets.”

In addition, the Australian Commission for Law Enforcement Integrity has taken the new allegations seriously, as have other government agencies. The finally tally of regulators and oversight agencies to investigate Crown Resorts is yet to be determined.

Crown and Melco Feel Financial Results

Several months ago, James Packer sold half of his stake in Crown Resorts to Lawrence Ho. The $1.76 billion deal with Melco Resorts was controversial at the time because of long-held beliefs that Ho’s father, Stanley Ho, had ties to organized crime syndicates.

Stock in both companies took somewhat of a dip in the weeks following the deal, but they mostly recovered. However, the new revelations and investigations into Crown have impacted stock in both companies in the weeks since the news came to light.

Upon the revelations by the media at the end of July, Crown’s stock dropped from $12.67 down to $11.69 in a matter of a few days. Since then, the price has continued to drop and closed on August 15 at $11.15. The overall drop has been more than 10% thus far.

As for Melco, the same time period saw its stock go from $23.97 down to $22.47, but then it sunk deeper to $19.56. As of August 15, it was down to $19.225.

In the weeks and months to come, more investigations will reveal their outcomes, and prices could level off or sink further, depending on the results.

 

Rose Varrelli

Rose Varrelli has always been passionate about online casinos, as she's been a player at a variety of places for years. Rose turned her personal knowledge and insight into a writing career. She aims to provide readers with the most up to date, informative news in the world of online casinos!

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