Blackstone takeover of Crown Resorts nearly a done deal as WA authorities back merger

Blackstone takeover of Crown Resorts nearly a done deal as WA authorities back merger

Image via Crown Perth on Facebook.

The $8.9 billion merger of Crown Resorts (ASX: CWN) and US investment manager Blackstone has today received the tick of approval from Western Australian gaming regulators, one day after the authority’s counterparts in Victoria and New South Wales gave it the green light.

Crown now just needs approval from the Federal Court for the scheme to become effective, with the final hearing scheduled for 15 June 2022.

The WA independent casino regulator alongside Racing and Gaming Minister Tony Buti today approved the deal that was greenlit by shareholders last month, but Crown will be subject to “tough conditions” that align with recommendations arising from the Perth Casino Royal Commission (PCRC).

“Minister Buti has directed Blackstone that the State expects that the Burswood, Crown and Blackstone entities will conduct themselves in accordance with the highest standard of governance and operations,” Minister Buti said in a statement.

“This includes that the Burswood, Crown and Blackstone entities invest in, and maintain, Crown Perth, and strengthening of Crown's governance through the application of the ASX Corporate Governance Principles and Recommendations.”

In the same vein as the Victorian Gambling and Casino Control Commission (VGCCC) approval, the WA authority has permitted the merger subject to conditions including:

  • Enhanced reporting of anti-money laundering and responsible gambling activities and additional auditing requirements on Crown;
  • Non-interference requirements to prevent Blackstone’s institutional investors from involvement in the day-to-day operations of Perth’s Crown Casino;
  • Obligation to report any investigations by any Australian or overseas regulators; and
  • That Blackstone cannot change its corporate structure and funding arrangements without providing prior notice and relevant approvals. This means Blackstone will not be able to introduce new investors into the structure without approval.

“As the prospective new owner of the Perth Casino, Blackstone will be required to meet a number of stringent conditions. These conditions align with a number of the recommendations stemming from the recent Perth Casino Royal Commission,” Minister Buti said.

“The State Government has already made significant improvements to the regulatory regime and remains committed to establishing an even tougher regulatory and governance framework to ensure whoever owns or runs Perth’s casino is held to account.

“The conditions on Blackstone, combined with upcoming reforms, will ensure appropriate standards are upheld at Perth’s Casino.”

WA Gaming and Wagering Commission chair Lanie Chopping said Blackstone was subject to an “extensive” assessment by the state’s gambling regulator.

“This detailed and complex process undertaken since the application was submitted last year involved the comprehensive independent assessment of relevant Blackstone entities in accordance with the legislative requirements,” Chopping said.

“The Gaming and Wagering Commission’s probity approval has been granted subject to a number of conditions designed to ensure that the Commission has oversight and the capacity to monitor any change in licensee management or ownership."

The independent casino regulator’s approval comes after the PCRC found Crown had failed to minimise gambling-related harm, facilitated money laundering, failed to have an effective anti-money laundering program, and permitted junkets with links to criminals to operate at the casino.

The PCRC report did not make a recommendation to revoke Crown's gambling licence, but detailed remediation activities the company would need to implement to become suitable to hold a licence during a transition phase.

Similarly, the Victorian Royal Commission concluded Crown was unsuitable to hold a casino licence in the state, determining the company engaged in “illegal, dishonest, unethical and exploitative” conduct.

However, Crown’s Victorian operations were permitted to continue due to the company’s contribution to the local economy.

Both these Royal Commissions flowed on from the findings of the 2020-21 NSW Bergin Inquiry, which probed the group's operations in Melbourne and Perth as part of investigations relating to a proposed gaming licence for a casino at Barangaroo in Sydney. 

That investigation also deemed Crown unsuitable to hold a licence, and since then the company’s tower on Darling Harbour has only been open for non-gaming activities and areas such as accommodation, restaurants, bars and entertainment.

The Crown Resorts board now only has one non-executive director, Jane Halton, who was present during the Bergin Inquiry.

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