China scandal hits home for Crown

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Australian gaming giant Crown could face fresh reviews of its casino licences in three states, as the fallout from this week’s criminal convictions in China deepens.

And the convicted employees’ individual licences – a requirement for casino management jobs – are also likely to be scrutinised after all 19 serving and former staff pleaded guilty to gambling-related crime.

Billionaire businessman James Packer’s Crown Resorts holds licences to operate lucrative casinos in Melbourne, Perth and Sydney.

But state gaming regulators could now be obliged to investigate Crown’s recent conduct in China, and this may have serious repercussions for its local operations, including potential restrictions or removal of operating licences.

The arrests came amid a sweeping anti-corruption crackdown in mainland China targeting the illicit flow of capital overseas through underground banks and casinos. Photo: Bloomberg

Crown’s licence to run Australia’s biggest casino, in Melbourne’s Southbank, is subject to a review every five years.

With the next review looming in 2018, the commission will be required to determine whether Crown is a “suitable person to continue to hold the casino licence”.

Following the convictions in the Baoshan District Court on Monday, the Victorian Commission for Gaming and Liquor Regulation issued a statement to say it was “currently considering the outcome of this matter”.

Crown also remained largely tight-lipped, with a spokeswoman saying the company had kept state gaming regulators “fully appraised of developments” throughout the Chinese court proceedings, and “will continue to do so”.

Crown Resorts executive Jason O'Connor will be released in August.

Crown Resorts executive Jason O’Connor will be released in August. Photo: Supplied

 

In Western Australia, where the company runs the Crown Perth casino, the regulator will be seeking details about the charges from Chinese authorities.

“Future action by the Gaming and Wagering Commission will be dependent on the information provided by the Chinese authorities on the charges,” a spokesman said.

A spokesman for Gaming & Liquor NSW said it was “too early to speculate on what action, if any, may be considered”.

Industry sources said any Australian investigation into the details of the criminal offences could be hamstrung by a lack of co-operation by Chinese authorities, diminishing the risk of Crown facing adverse outcomes.

“If something goes wrong in another jurisdiction, say Nevada, then the Victorian regulator could go to the Nevada regulator, a source said, “but do we honestly believe that anyone in China is going to talk to the Victorian regulator?

“In a practical sense it’s going to be impossible for the regulator … so all it can do is go to Crown and get Crown’s version of events.”

A central question for state regulators will be whether Crown and its employees knowingly acted unlawfully in the legal grey area of what constitutes promotions and inducements being offered to lure Chinese high-roller gamblers to Australian casinos. Gambling and the promotion of gambling are outlawed on mainland China.

In light of the guilty pleas by Australian Crown staff, including its head of VIP operations Jason O’Connor, the state regulators will most likely also review whether they meet the requirements of character “reputation” and “integrity” to continue holding special gaming employee licences.

Mr O’Connor, of Melbourne, was sentenced on Monday to 10 months’ jail, including time served, so he is expected to be released in two months. Two other Australians, Jerry Xuan and Jane Pan Dan, were sentenced to nine months including time served. They will be released on July 14.

The Crown employees’ criminal convictions in China have been a troubling time for the gaming giant, and has raised questions about the company’s plans for its upcoming $2 billion Barangaroo casino complex in Sydney, which has been heavily promoted as a destination for wealthy Asian gamblers.

By Nick Toscano and Cameron Houston
sydney Morning Herald

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