Crown Resorts' (ASX: CWN) casinos will go cashless and all junket operations will be banned after the company reached an agreement with the NSW Independent Liquor & Gaming Authority (ILGA) today.
The agreement was reached following discussions between the regulator and Crown Resorts about issues identified in the scathing Bergin Report concerning the future management and operation of Crown's Sydney casino.
That report led the ILGA to conclude Crown was not suitable to be given a licence for its casino in the $2.2 billion Barangaroo Tower in Sydney, culminating in a mass exodus of the company's board and the resignation of its CEO.
In separate discussions, The Star Entertainment Group (ASX: SGR) has also agreed to cease all international junket operations and work with the ILGA in moving towards cashless gaming, using a card linked to identity and a recognised financial institution.
Star recently announced a $12 billion proposal to merge with Crown, seeing it join US group Oaktree Capital Management and existing minority shareholder Blackstone in a bidding war for the casino and resort operator.
ILGA chair Philip Crawford said Crown was making significant progress in addressing the concerns raised in the Bergin Report.
"Crown, through its Executive Chair Helen Coonan, is addressing many of the issues which caused Commissioner Bergin to find that it was unsuitable to hold a casino licence in NSW," Crawford said.
"The Authority has also entered into an agreement with CPH to address issues around its influence and control over the management of Crown."
Crawford said an Independent Monitor is being appointed to report back to the Authority on several of Crown's structural changes, with particular focus on its corporate governance, anti-money laundering measures and culture.
"The Authority will await the report from the Independent Monitor, and the result of the financial accounts audit, before making a final decision on suitability," he said.
"Any changes to Crown's ownership structure, including takeover or merger proposals, require the Authority to consider a range of issues including undertaking full probity assessments of any new entrants, how a merged entity would operate, and the extent to which any existing agreements with Crown would need to be reviewed.
"Any concerns around monopolies would be a matter for the Australian Competition and Consumer Commission."
As part of the agreement with the ILGA, Crown has agreed to:
- pay a proportion of the costs of the Bergin Inquiry,
- immediately commence payment of the Casino Supervisory Levy,
- not operate any international junket operations,
- make all gaming in its casinos cashless with card technology linked to identity and a recognised financial institution, and
- phase out indoor smoking at its Australian resorts by December 2022.
Further, in order to show the ILGA it is suitable to hold a casino licence in NSW Crown said:
- It has undergone significant board renewal
- All senior executives, against whom concerns were raised by Bergin, have left,
- All senior executive positions are being filled by candidates with relevant expertise and experience, and
- Independent audits are well under way on several aspects of Crown's operations.
The news comes two days after Star Entertainment proposed a $12 billion merger with Crown Resorts.
Star Entertainment has offered 2.68 of its own shares for every Crown share, and a cash alternative of $12.50 per Crown share for up to 25 per cent of the company's issued capital.
In its proposal, Star estimates the merger would result in indicative cost synergies of between $150 million and $200 million per annum.
That announcement came on the same day Crown announced current LendLease (ASX: LLC) CEO Steve McCann would be its new CEO from June, filling the void left by the departure of Ken Barton.
Shares in CWN are down 0.31 per cent to $12.76 per share at 10.39am AEST.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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