State gambling regulators may consider Crown Resorts review

THE New South Wales and Victorian gambling regulators are reportedly deciding whether they should undertake a review of the Crown Resorts venues in their respective states.

Following the official trial of the 17 Crown Resorts employees and two former staff members, the two state gaming regulators revealed they have been observing the case closely.

While the Victorian Commission for Gaming and Liquor Regulation (VCGLR) revealed Crown Resorts has kept the regulator in the loop with regards to the case, it could not say if the Melbourne land-based casino would face a review.

“The VCGLR is currently considering the outcome of this matter,” a spokesperson for the Victorian regulator said.

Crown Resorts is set to open a brand new $2 billion hotel and VIP-only casino in Barangaroo, Sydney, in 2021 but its gambling license may be reviewed.

A spokesman for Liquor and Gaming New South Wales said the regulator has been closely monitoring the case.

“At this stage, it is too early to speculate on what action, if any, may be considered in regard to any relevant issues for the NSW regulatory framework,” he said.

The 19 employees and associates were arrested in October 2016 for promoting gambling on mainland China and 16 have remained detained in a Shanghai detention centre after three junior staff were released in November 2016.

While all 19 faced the three judges on Monday, June 26, 2017, only 16 were fined and the three who had been released were not financially penalised or sentenced to a period of incarceration.

Of the 16, just 11 received prison sentences, which include time served, with three Australians among the group including Crown’s head of international VIP gambling, Jason O’Connor. He was sentenced to 10 months in prison and fined RMB2 million ($AUD390,000).

The other Australians include Jerry Xuan and Jenny Pan, who both received nine months in jail and were fined RMB400,000 ($AUD78,000) and RMB200,000 ($AUD39,000) respectively.

As a result of the entire case, controlling shareholder James Packer will pay $1.7 million in fines.

James Packer’s former business partner talks Melco sale

Prior to the trial, Inside Asian Gaming published an interview with Macau casino mogul and James Packer’s former business partner, Lawrence Ho.

Ho told the publication he did not think the arrests were a “primary factor” behind Crown’s choice to sell its entire 34.3 percent stake in the Macau joint venture, Melco Entertainment.

Macau is the only place in China where casinos are legal.

“I don’t know whether it was a factor for Crown in terms of why they wanted to get out,” Ho said.

Ho then considered a conviction for the group detained in China stating it would “raise issues … for Macau since Macau is part of China.”

While Mr Packer announced plans for a casino in Japan over five years ago, Ho painted a different picture.

The Macau billionaire indicated Crown may not be that interested in an Integrated Resort in Japan where the casino ban was recently lifted.

“Previously, with Crown kind of pulling back and focusing on their domestic assets, even I had questions about their commitment to Japan,” he said.

“Because Japan, for me, really is whatever it takes. We’ll go all in.”

Packer formed a partnership with Ho in 2004 to create the Melco joint venture.

Crown sold half of its remaining shares in Melco for $1.6 billion last year, two months after the arrests, and then the rest in May for around the same amount.

“The Crown guys were instrumental in the beginning,” Ho said.

“I wanted an international partner because I felt that back in 2004 there just wasn’t the expertise in Macau.

“But the last 10 years, it’s really been my team that’s been running it.”

Ho added he was happy to buy Crown out.

“A year ago I felt the market was hitting the bottom in Macau,” he said.

“That’s why we made the manoeuvre to start this transaction.”

And while Ho has been somewhat vocal about his opinion regarding Crown’s marketing tactics in China – in a recent interview Ho alluded the staff detained in the country had no respect for Chinese authorities – he said the pair are “still great friends.”

“At the same time, I think it worked out really well for James, because James and Crown wanted more liquidity and to focus on their Australian domestic assets,” Ho said.

“We’ve been great partners for over 12 years.”