A lesson from Down Under: The withering impact of an ongoing money-laundering probe By John L. Smith, CDC Gaming Reports June 9, 2021 at 6:08 pm The Australian casino industry is ablaze amid a widening investigation into money laundering that is now spreading to casinos in the country’s five largest cities. The heat is on casino operators Crown Resorts, Star Entertainment, and SkyCity Entertainment Group, along with National Australia Bank. And it only appears to be getting worse now that Australia’s chief money-laundering investigators are expanding their probe, according to the BBC and other press outlets. The fallout from this scandal provides a valuable lesson for other corporate casino operators, especially those in the United States at a time when it’s emerging from coronavirus pandemic restrictions. The Australian investigation is a reminder that even the giants of the industry are susceptible to investigative scrutiny. Such is the case with the penetrating money-laundering inquiry of Crown Resorts, the country’s largest gaming and entertainment group. Today, Crown Melbourne and Crown Perth find themselves in the center of the money-laundering scandal. The tale of James Packer’s tumble from the top of the company has been well told. Crown, you’ll recall, spent years setting its sights on a Las Vegas Strip location, managing to come up short despite a big investment in the incomplete Fontainebleau in 2008, then the purchase of the New Frontier site in 2014, with big plans for a $6 billion megaresort project called Alon. In 2019, Packer agreed to sell approximately half of his nearly 40 percent of Crown. Two years later, the Australian company is battling for survival on its own turf after an official investigation determined it had been facilitating money laundering and “exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships” with people connected to organized crime. As BBC reports, “For years, Crown has been dogged by allegations of illegal activity occurring at its casinos, including widespread money laundering and junkets for Chinese high-roller gamblers linked to organized crime groups.” In the wake of the ongoing scandal, it might make some skeptics wonder about the origination of the funds Crown used to embark on its Strip shopping spree. Other companies involved in the investigation are suspected of catering to similarly risky customers and elements in what has collapsed into an awful mess. In February, matters got even worse for Crown after a Supreme Court justice determined the company was unsuitable to operate in New South Wales state, home of Crown’s $1.7 billion Crown Sydney project, which it touts as redefining “bespoke luxury in the heart of the harbour.” Juxtapose all that luxury with all this scandal. Crown Resorts Chief Executive Ken Barton was bounced from the penthouse of the company and cleaning house at the board level was strongly suggested. But maybe Barton should consider himself lucky. Crown Resorts Asian marketing personnel were jailed by Chinese authorities less patient with the company’s business model. That’s the double-edged sword of the insanely lucrative Asian gaming market. Just about the time casino operators appear to have figured a way to capture it despite all the state controls, many times they end up holding hands with bad actors, suspicious characters, and outright organized crime. Amid the money-laundering investigation, in May Crown Sydney and The Star agreed to operate on a cashless basis. Let that soak in for a moment. Casino giants not trusted to handle cash customers. Top shareholder tarred forever. CEO thrown to the sharks. Company personnel jailed. And we haven’t even learned whether it will wash all the way to the Strip, where Crown once appeared to have such a promising future. As I say, there’s a lesson here for other operators – even those who might imagine themselves too sophisticated for such a regulatory pistol-whipping. With corporate casinos under genuine pressure to get off the canvas and start punching as the COVID-19 nightmare lifts, the increased competition might make cutting corners with customers tempting. The Australia quagmire is a reminder that, in the long run, some customer risks might not be worth it.