Crown Resorts Junks Junkets as Sydney License Hangs in Balance
Posted on: September 28, 2020, 02:54h.
Last updated on: September 28, 2020, 03:42h.
Australia’s Crown Resorts has suspended all its business with junket operators until June 30, 2021 while it “undertakes a comprehensive review of its processes.”
Junket-fueled VIP business accounts for around seven percent of revenues said the company, whose shares fell by almost 4 percent in early trading Monday.
And these have recently become a source of embarrassment for Crown. Reports in Australian media have accused the casino giant of turning a blind eye to criminal elements among the junkets’ ranks.
Junkets are money-lending middlemen tasked with bringing Chinese high-rollers and others to VIP gaming rooms.
‘Debacle Level Reached’
The move comes just days after Crown was chided for its lax anti-money-laundering controls by former Supreme Court judge Patricia Bergin, who is chairing an inquiry into the suitability of the company to hold a license in New South Wales.
Last week Bergin expressed dismay at the testimony of Crown’s CEO and former CFO Ken Barton.
Barton admitted that he only learned that the Macau-based junket Suncity once operated a cash desk at the Crown Melbourne when he watched a TV documentary about it last October.
Australian broadcaster Channel Nine aired security footage that showed that suspicious transactions involving large amounts of cash were taking place at the desk. Barton’s ignorance of the matter was “just extraordinarily troubling,” Bergin said.
“The irresistible conclusion is that nothing works,” said Bergin. “This went on for years. This went on from ’13, ’14, ’15, ’16 through to ’19 and nobody — and now Mr. Barton is seeing things for the first time in this inquiry. This, in effect, has really reached the debacle level. It is very, very troubling,” she added.
Jewel in the Crown
For Crown Resorts, the stakes are high. The company is currently putting the finishing touches to its $2.2 billion Crown Sydney, a casino that has been long in the making. To open its doors finally minus a gaming license would be a disaster.
The Sydney property is conceived exclusively as a VIP destination. It features all table games and no slots, with a 75-floor tower that will include 82 luxury apartments and a six-star hotel.
But Crown’s VIP segment has shrunk since 2016, when it was forced to change its VIP strategy in China after employees were imprisoned for marketing gambling there. Coupled with the financial uncertainty of the coronavirus, and now the disruption to junket services, some question whether the Sydney idea is still viable.
In a statement Friday, Crown insisted that the property was still on track to open “on or around 14 December this year,” and refused to countenance that its license was in jeopardy. Gaming operations will be at “full capacity” on its opening night, the company insisted.
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