Crown Resorts (ASX:CWN) share price slips on doubts over its licences

The entertainment company’s shares are in the red today amid another inquiry into its operations.

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A Victorian royal commission into Crown Resorts Ltd (ASX: CWN) is said to have heard the company’s issues with money laundering are likely worse than previously thought.

The Crown Resorts share price was gaining earlier today but has since slipped into the red, trading at $12.87, down 0.23% at the time of writing.

A report published today by The Australian said the royal commission may have hinted that Victoria will potentially follow NSW’s example by placing the future of Crown Melbourne in the hands of regulators.

Further, it reported counsel assisting the commission Meg O’Sullivan suggested to the commission that Crown “misled” the NSW Bergin inquiry about the “depth of an external review of company bank accounts”.

Royal commission recap

The Bergin inquiry was released in February of this year. It found Crown was unsuitable to run Crown Sydney due to its casino turning a blind eye to money laundering and company links to criminal syndicates. Many of the Bergin inquiry’s findings related to happenings at Crown Melbourne.

The Victorian royal commission, headed by Ray Finkelstein QC, will now decide if Crown is suitable to run its Melbourne casino. Finkelstein gave his opening statement to the commission yesterday.

Doubt over Crown licences

Today, The Australian reported that O’Sullivan told the commission money laundering at Crown’s casinos was likely to have been more common than previously thought, casting doubts on the entertainment company’s future suitability to hold a Victorian casino license.

In his opening statement to the royal commission, Finkelstein said Crown Melbourne believed it was suitable to run the Southbank casino as the company had committed to a “substantial reform program”.

Finkelstein told the commission the reform program seemed to be an overhaul of its risk management and the governance of Crown companies. He said:

The outcome of this inquiry may well depend on the effectiveness of that program. This is not to suggest, however, that other areas will not be looked at carefully. They will.

O’Sullivan was quoted by The Australian as having later told the commission:

It’s open to conclude that Crown’s first steps on its reform pathway are simply a knee-jerk reaction to the revelations of the Bergin inquiry.

According to The Australian, O’Sullivan told the commission it was unlikely Crown had removed money laundering from its business yet, particularly as some of Crown’s bank accounts appeared still to be engaged in money laundering ­as of February this year.

Royal commission’s focus

Finkelstein’s opening statement clarified that the royal commission won’t dig into the findings of the Bergin inquiry. Instead, the commission will focus on 4 new subjects:

  • Whether money laundering is still happening at Melbourne Casino.
  • If Crown Melbourne has gone against any other legislation or regulations restricting its casino operations.
  • If Crown Melbourne has broken any of its obligations under agreements with the state.
  • And finally, the process by which the company deals with gambling addictions.

Speaking to the commission, Finkelstein said:

I believe that avoiding a second inquiry into the same subject matter but instead, adopting where appropriate, the views of Commissioner Bergin is not unfair, either to the Crown companies or to Mr Packer.

According to Finkelstein, he has written two letters to Crown Melbourne. The first asking if the company accepts the findings of the Bergin inquiry ­– including the finding the company was unsuitable to run Crown Sydney. The second asked if has breached any of its statute, regulation, or contractual obligations.  

Finkelstein told the commission he has only received a response to his first letter. He said Crown’s response was “equivocal”, stating the company didn’t deliberately engage in the conduct publicised in the Bergin inquiry but accepted it was reasonable the company was found unfit to run Crown Sydney.

Crown Resorts share price snapshot

Despite spending much of this year in the news headlines, the Crown Resorts share price is performing well on the ASX.

Currently, the Crown Resorts share price is up 31% year to date. It’s also gained 34% over the last 12 months.

The entertainment company has a market capitalisation of around $8 billion, with approximately 677 million shares outstanding.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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