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Regulatory approvals have proven one of the last stumbling blocks for US investment manager Blackstone's $8.9 billion takeover of Crown Resorts (ASX: CWN), but today two of three state-based agencies have given the deal the thumbs up.
Approval from the Victorian Gambling and Casino Control Commission (VGCCC) comes within weeks of handing down an $80 million fine to Crown for allowing high rollers at its Melbourne casino to evade anti-money laundering rules and China’s currency controls.
Crown also advised the market today it had received approval from the New South Wales Independent Gaming and Liquor Authority (ILGA), which means it now only has to wait on regulators in Western Australia, in addition to Federal Court of Australia approval for the scheme of implementation that received a green light from shareholders last month.
The VGCCC has approved the Blackstone Group as a suitable associate of Melbourne’s casino operator and its takeover of Crown as a major change in the state of the casino operator’s affairs, following "comprehensive probity investigations" into the group and its affiliates.
The determination comes with several conditions that have all been agreed upon by Crown and Blackstone, including the following:
- Strengthening of Crown's governance through the mandatory application of the ASX Corporate Governance Principles and recommendations, including that Crown Melbourne have a majority independent board of directors;
- Enhanced reporting of anti-money laundering and responsible gambling activities and additional auditing requirements on Crown;
- New role requirements for Crown Melbourne’s CEO and key executives and non-interference requirements;
- Improved information sharing with law enforcement agencies that Blackstone cannot change its corporate structure and funding arrangements without VGCCC approval, meaning Blackstone will not be able to introduce new investors into the structure without VGCCC approval; and
- That Blackstone invests in, and maintains Crown Melbourne as the flagship casino in Australia.
All conditions are legally enforceable by the VGCCC.
“In reaching this decision, our specialist team put in many months of work investigating the suitability of the Blackstone Group to become an associate of the Melbourne casino operator,” VGCCC chairperson Fran Thorn explained.
"Our approval comes with stringent conditions which balance delivering stronger controls on the casino and ensuring it continues to be the flagship casino in Australia. We will take action should any of these conditions not be met by either Blackstone or Crown."
Many of the conditions imposed align with recommendations from last year’s Royal Commission into the casino operator and licence, which Crown Melbourne will still have to address.
Crown Melbourne will still have to operate under the appointed special manager, and undergo the Commission’s suitability assessment in 2024 in order to retain its licence.
In October last year the Victorian Royal Commission concluded Crown was unsuitable to hold a casino licence in the state after engaging in "illegal, dishonest, unethical and exploitative" conduct, but the operation was allowed to keep going in light of Crown Melbourne's contribution to the economy.
A similar scene played out in March in Western Australia, where the Perth Casino Royal Commission (PCRC) found the company 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.
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 ostentatious 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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