Crown Resorts (ASX:CWN) to delay opening gaming operations at Crown Sydney

  • November 19, 2020 01:29 PM AEDT
  • Hina Chowdhary
    Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

Crown Resorts (ASX:CWN) to delay opening gaming operations at Crown Sydney

Summary

  • ILGA has barred Crown Resorts to commence gaming operations in its Casinos in December 2020.
  • The ILGA’s decision to hold the license was in response to an alleged money laundering case that happened with junket operators in two of the bank accounts of the company.
  • Commissioner Patricia Bergin is leading the inquiry and is expected to submit her final report by February 2021.
  • Crown has decided to permanently cease dealing with all junket operators except those who are registered or approved.

On 19 November 2020, Crown Resorts Limited (ASX:CWN) has announced that the management has decided to not to open the gaming operations yet at Crown Sydney in December 2020. The decision came in response after the New South Wales Independent Liquor and Gaming Authority’s (ILGA) deferred the company’s consideration regarding a number of applications which were necessary for the commencement of gaming operations.

However, the company is still in the consultation with ILGA to open its casinos without commencing the gaming operations for the time being.

ILGA’s discomfort in granting the license

ILGA is an independent regulatory authority and a statutory decision-maker, responsible for lawful functioning, licensing and registration of casinos, liquor, pubs etc.

The Chair of ILGA, Philip Crawford said the regulator was “uncomfortable” in granting the license to Crown. He also expressed his disappointment regarding Crown Resorts as they have not proactively delayed the opening of their Sydney Casino.

The ILGSA’s decision to hold the license came after months of enquiry that was being conducted on the company regarding “a money laundering case”, after which its operations were suspended with all junket operators until 30 June 2021.

Crown Resorts’ money laundering case

The company has fallen victim to an alleged money laundering case due to junket operators across its Melbourne and Perth casinos. The company’s own lawyers have also released a statement stating the ‘likeliness” of transactions concerning money laundering might have happened in two of the bank accounts of the company.

The company had accepted there were funds deposited into the Riverbank and Southbank accounts that were found to be “Cuckoo Smurfing”. It is indicative of a form of money laundering which involves breaking up of large transactions to avoid the scrutiny.

Currently, Commissioner Patricia Bergin is leading the inquiry and is expected to submit her final report concluding whether the company is fit for the license or not, by February 2021.

The company in its recent statement has taken a bold step towards this sensitive matter and decided to permanently cease dealing with all junket operators, after consulting with regulators in New South Wales, Western Australia and Victoria.

However, Crown Resorts would recommence its operations, dealing with licensed junket operators or otherwise approved or sanctioned by all gaming regulators in the States in which Crown operates.

Stock Performance

Prior to today’s announcement, the stock was put under a trading halt by the ASX on request of the company. Subsequent to the announcement, the stock has resumed trading on the exchange, effective from today.

Currently, the Crown shares are trading at A$9.47 mid-day, down by 1.76%. The shares opened at A$9.21, with a gap down of around 4.4% and fell further to the low of A$9.08 in the initial trading hours but have shown some recovery during the day.

CWN share price is almost moving in a range for the last three months and has delivered a negative 4%, while the YTD return stands at negative 21.8%.

 

 


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