And who shall wear the Crown? By Ken Adams, CDC Gaming Reports February 15, 2021 at 7:00 pm Australian gaming company, Crown Resorts, has had a very difficult time of late. Its troubles probably began in 2016. In October of that year, 19 employees were arrested in China for illegally recruiting gamblers. The press coverage was unfavorable for Crown and James Packer, the company’s largest stockholder, and it probably had an impact on subsequent events. In March 2018, Packer resigned from the board of Crown, but still owned 47 percent of the shares. In April 2019, Wynn Resorts said it was no longer interested in acquiring Crown Resorts. Shutterstock/ Crown Casino in Sydney, Australia In July 2019, Nine Entertainment’s TV program “60 Minutes” broadcast a segment called “Crown Unmasked.” It alleged that Crown engaged in “money laundering, breached gambling laws and partnered with junket operators with links to drug traffickers, human traffickers, and organized-crime groups.” That report, and coverage by The Age and Sydney Morning Herald, pushed Crown into the limelight – very harsh limelight. It forced regulators to openly question the policies, tactics, and strategies of Crown, as well as the behavior of its board of directors and management. In August 2019, an investigation was announced. The investigation was chaired by a former New South Wales Supreme Court justice, Patricia Bergin. Chairman Bergin appears to have taken her job seriously. Formal hearings began in January 2020. Immediately, Crown replaced its chairman of the board and its CEO. The testimony by company executives was damaging, but none more so than Packer’s. In October, James Packer testified by video. He admitted to poor choices and even some inappropriate behavior in his leadership of Crown but blamed his bipolar condition. Packer also said he was shocked and upset by the corporate culture that was revealed by the investigation. Packer does not want the blame and he apparently no longer wants anything to do with Crown. In December, Packer’s yacht floating in the Caribbean was parked next to the yacht of Sheldon Adelson. It is not known for certain what the two titans discussed, but it is thought Packer was trying to sell his stake in Crown to Adelson. Sheldon Adelson’s health prevented any further discussions and Adelson died a month later. Whether Las Vegas Sands, Wynn Resorts or any other company is interested in acquiring Packer’s stock or all of Crown Resorts is not known. At least in part, anyone interested in acquiring Crown or its assets probably wants to wait for the outcome of the investigation. The report by NSW Independent Liquor & Gaming Authority (ILGA) was released on Feb. 9. It was not favorable for Crown. It held that Crown was not suitable to hold a gaming license for its newly constructed Barangaroo tower casino and listed 19 conditions that needed to be met before, in the ILGA’s opinion, it could be found suitable for a casino license. The Barangaroo project is expensive, 2.2 billion Australian dollars. But the casino may not be important to the project in the grand scheme of things. The hotel and restaurants do not require a casino license and have already opened. Besides those amenities, 82 “apartments” are for sale; the entry-level units begin at A$9.5 million. Some financial analysts are already declaring the project a success and dismissing the casino license as irrelevant at this point. However, when Packer pitched to project to New South Wales’ Premier Barry O’Farrell in 2012, he made the argument that without a casino, it was not feasible to build a five-star hotel. Whichever is true, it will be several years before it can be pronounced a success or failure and the pandemic will only complicate the process. For Crown Resorts, the license is a very big deal. The Barangaroo tower was to be the crown jewel in Crown’s crown. It was built to attract international travelers, particularly wealthy Chinese gamblers, and it was meant to raise Crown to the level of 5-star resorts. Besides that, Crown is a casino company, not a property manager. And of course, the investigation in New South Wales is bound to have an impact on other Crown casinos in Australia and probably in England. Crown is certainly under pressure to comply with all the conditions of the report. Three board members have resigned, one of whom was named in the report. However, also named in the report were the company’s CEO and chairperson of the board of directors. Both have promised to cooperate and have endorsed the findings and recommendations but are resisting pressure to resign. Predicting the fate of Crown at this point is near impossible. At a minimum, the company will probably need to replace the majority, if not all, of its board of directors and its CEO, CFO, and any other executive directly involved in promoting the VIP segment of Crown’s business. There will be no more wombat hunts, suitcases full of cash or private jets that land and take off in the middle of the night. The new management team will have to wear a halo to go with their crowns. The easiest solution might be to grind up the crown and make something else out of the parts. Wynn, Las Vegas Sands, MGM and others looking for growth opportunities may find Crown’s assets attractive. However, the name has become tainted and whoever looks to pick up the company or some of its assets probably will not want to wear that crown.