The Crown Resorts Ltd (ASX: CWN) share price has returned from its trading halt this morning and is tumbling lower.
At one stage, the casino and resorts operator’s shares dropped as much as 9% to $9.25.
The Crown share price has since recovered the majority of these declines and is currently down 3% to $9.82.
Why is the Crown share price under pressure?
Investors have been selling Crown shares following the release of the Commissioner’s report of the inquiry into the suitability of Crown Resorts holding the licence for Sydney’s Barangaroo casino.
According to the release, Commissioner Patricia Bergin does not believe Crown is suitable to operate its new Sydney casino. Nor does the Commissioner feel Crown Resorts is suitable to be a close associate of the licensee.
Commissioner Bergin explained: “Any applicant for a casino licence with the attributes of Crown’s stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organised crime groups would not be confident of a positive outcome.”
“It is obvious that such attributes would render an applicant quite unsuitable to hold a casino licence in New South Wales. 23 These facts and the stark realities expressed so baldly may also suggest that it is obvious that the Licensee is not suitable to continue to give effect to the Barangaroo Licence and that Crown is not suitable to be a close associate of the Licensee,” she added.
However, the Commissioner has hopes that Crown could transform itself. This could be saving the Crown share price from a steeper drop today.
She commented: “If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation.”
Two directors that came under fire during the inquiry were Guy Jalland and Michael Johnston.
The commissioner suggested that “if Mr Jalland and/or Mr Johnston remain as directors it will be necessary to have some additional protections from them because of their failures.”
That won’t be necessary, with both directors handing in their resignations today.
The final decision now lies with the Independent Liquor and Gaming Authority (ILGA). Though, it is widely accepted that the Authority will follow the recommendations of the Commissioner’s report.
In the meantime, the company advised that it is currently considering the Inquiry Report.
Crown also advised that will work with the New South Wales ILGA “in relation to the findings and recommendations of the Inquiry Report as contemplated by the regulatory agreements between Crown, ILGA and the State of New South Wales.”