The Crown Resorts Ltd (ASX: CWN) share price is surging this morning after the final report of the royal commission into Crown's suitability to run Crown Melbourne found the company "unfit" but didn't recommend stripping the embattled operator's casino licence.
The 8-month royal commission uncovered what Commissioner Ray Finkelstein described as "disgraceful" conduct. However, the company's recent reforms have inspired hope it could be suitable to run Crown Melbourne in the future.
Commissioner Finkelstein's final report was tabled in the Victorian Parliament this morning. It states:
It was inevitable that Crown Melbourne would be found unsuitable to hold its casino licence. No other finding was open. The only difficult question was what should be done in that circumstance.
At the time of writing, the Crown share price is $10.59, 9.63% higher than its previous close.
Let's take a closer look at Commissioner Finkelstein's recommendations.
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Crown to keep Victorian licence
The Crown share price is soaring after Commissioner Finkelstein recommended the company keep its casino licence under the close watch of a "special manager".
The special manager, which Commissioner Finkelstein suggested will likely be a firm, will keep a close eye on Crown's reforms for the next 2 years.
If, after that period, the manager finds Crown hasn't returned to suitability, the company's Victorian casino licence will be binned.
The Victorian royal commission was investigating if money laundering was still occurring at Crown Melbourne, if the casino had breached other laws, restrictions, or obligations to the state, and how it treats those with gambling addictions.
During the commission, Crown was found to have underpaid around $37 million of casino tax between 2012 and 2021.
Crown was also found to have allowed Chinese patrons to breach Chinese currency laws. It billed $160 million of gambling spending as hotel expenses. The report found doing so contravened both Australian and Chinese laws and likely led to money laundering.
The royal commission also heard from many people who might have been protected from problem gambling if Crown staff had carried out their obligations under Crown Melbourne's Gambling Code.
The report states:
Crown Melbourne's board failed to carry out one of its prime responsibilities; namely, to ensure that the organisation satisfied its legal and regulatory obligations…
Although Crown Melbourne rightly deserves criticism for its past misconduct, and no one connected with the organisation is entitled to much sympathy, what tipped the balance against the cancellation of its licence was that Crown Melbourne has, at great financial cost, embarked on a significant reform program led by people of good will and skill. The program is likely to succeed. If it does, that will be to the benefit of Victoria.
Crown share price snapshot
If today's gains hold, the Crown share price will have taken back the losses it's made since the Bergin Report first questioned the company's suitability to run Australian casinos.
Right now, it's 4.4% higher than it was when the Commissioner Patricia Bergin's report dropped in February.
