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Highlights
- Crown Melbourne to pay a hefty fine of AU$80 million on China UnionPay process investigation.
- Crown casino had allowed gambling using illegal money out of China.
- CWN shares dip in red as Crown acknowledges 'historic failings'.
An AU$80 million fine is what Crown Resorts Limited (ASX:CWN) has been penalised with, by the Victorian Gambling and Casino Control Commission (VGCCC) investigation of the China UnionPay process. The VGCCC has imposed the fine on Crown Melbourne Limited, which has to pay it in 28 days from the decision date (27 May 2022). Moreover, the VGCCC is also considering further disciplinary proceedings against Crown for other findings of the Royal Commission. While Crown is already liable to pay VGCCC's cost for this disciplinary action, the further proceedings may attract a fine of up to AU$100 million each.
How are CWN shares reacting on ASX?
Based on the ASX release related to the weighty penalty charged, CWN share price has dropped about 0.348% today (31 May). CWN shares traded at AU$12.865 apiece at around 10:39 AM AEST. CWN share price has appreciated by around 16% in the last six months. However, weighed by legal risks, it has lost some shine in the past five trade days. Crown shares still trade on ASX with a market capitalisation of AU$8.74 billion.
What was the investigation on Crown about?
Image Source- © Stevanovicigor | Megapixl.com
Crown Resorts Limited was investigated for allowing foreign patrons, from 2012 to 2016, to use credit/debit cards to access funds to gamble at its Melbourne Casino. Crown reportedly made over AU$32 million by allowing customers to use credit or debit cards to access funds to gamble at the Melbourne Casino.
Under the Casino Control Act 1991, Crown was prohibited from providing money in a transaction involving Chinese funds. However, the illegal card use facilitated illegal access to nearly AU$164 million for Crown customers.
The Royal Commission into the Casino Operator and Licence found that the China Union Pay process was illegal even under Section 124(1) of the Casino Control Act. Under this, Crown was required to keep accurate accounting records to ensure effective supervision of money handling in the Melbourne Casino for taxation and other financial obligations.
Crown management’s reaction on the AU$80 million fine
Crown Melbourne admitted that the dealings were illegal and ‘completely unacceptable’. Crown also accepted its historic failings. While the China UnionPay process was ceased in 2016, on becoming aware of it, Crown's management board had also immediately commissioned an independent investigation. The findings from the internal investigation were also shared with the Victorian Royal Commission, the predecessor to the VGCCC and other regulators. Now, Crown has also acknowledged VGCCC’s fine as appropriate. In response while taking the disciplinary action, the VGCCC did regard Crown’s cooperation and contrition.
What does VGCCC say?
The investigation aimed to avoid gambling derived from criminal funds and to minimise gambling harm. Notably, it is the first time the VGCCC has used the recently amended stronger enforcement powers in the Casino Control Act. The amendment has reportedly increased the maximum allowable fine from AU$1 million to AU$100 million now, and Crown has been charged with an AU$80 million worth of penalty.
According to Fran Thorn, VGCCC chair, while Crown deserved some credit for cooperation, the AU$80 million fine is 'appropriate and necessary' looking at the seriousness of illegal conduct.
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