Crown Resorts Passes First Remediation Test, Taps Wynn Executive as New CEO

Posted on: July 7, 2022, 07:28h. 

Last updated on: July 7, 2022, 12:08h.

After Victoria, Australia, determined that Crown Resorts was not suitable to hold a casino license, it gave it a second chance. The state put it on probation for two years and, six months in, Crown has passed its first test with flying colors.

Crown Melbourne
The sign outside Crown Resorts’ Crown Melbourne casino. The casino operator continues to improve its operations as it remains on probation. (Image: The Guardian)

Victoria is closely monitoring activity at Crown Melbourne in Sydney to determine if the casino operator is beginning to act responsibly. Stephen O’Bryan QC, who is overseeing the company’s operations for the state, provided his first update this week. In it, he indicated that Crown is showing signs of improvement.

O’Bryan will issue four reports over the next year and a half, completing Crown’s 2-year probation period at the end of next year. He and his team are responsible for exploring different facets of the operator’s activity to ensure that it no longer has a role in money laundering or tax evasion.

Crown on the Mend

The supervision in Victoria is similar to measures New South Wales (NSW) and Western Australia (WA) implemented for the same reason. WA, the last state to investigate Crown, put the operator on probation like Victoria. In NSW, however, Crown temporarily lost its casino license. It only received it back last month after a year-and-a-half suspension.

O’Bryan said in his report that Crown is implementing measures to positively reform its day-to-day operations. Among the primary focuses are the prevention of financial crime and increased responsible gambling initiatives.

The next report will arrive in December. It will focus on the same priorities and responsibilities, but will also determine whether those initiatives are still in place. In addition, O’Bryan expects to provide more details on how Crown is interacting with employees and customers, and whether it shows improved integrity across all of its operations.

This process will be repeated every six months until the end of 2023. Then, a few months later, O’Bryan will deliver a final report. It will outline whether he believes Crown has righted the ship, or if it’s still sinking.

However, O’Bryan’s oversight is only one issue Crown is contending with in Victoria. The state is initiating a new probe that could cost the company as much as AU$100 million (US$68.25 million).

McCann Stepping Down as CEO

Steve McCann is going to give up his position as CEO of Crown Resorts and Crown Melbourne. He came in following the beginning of the scandal that rocked the company, and timed his exit perfectly.

On his resume and in the history books, McCann will always be the man who led Crown through one of its darkest times. He’ll also be remembered for helping finalize The Blackstone Group’s $6.6-billion acquisition of the company.

McCann isn’t leaving empty-handed, either. For a little more than a year’s work, he’s going to walk away with an additional AU$9 million (US$6.13 million) in his pocket.

Taking the CEO’s place will be Ciarán Carruthers. He is currently the COO of Wynn Macau, but will begin leading Crown in September. Additional CEO appointments are coming for both Crown Melbourne and Crown Perth.

Carruthers is the second high-ranking executive to announce his departure from Wynn Macau in just this first week of July. Ian Coughlin, the company’s president, is relinquishing his position as of February of next year.

Crown Resorts Loses Rating

Following Blackstone’s acquisition of Crown, Fitch Ratings doesn’t show a lot of optimism for its credit rating. As a result, it downgraded its issuer default rating of the company to BB- after previously maintaining the level at BBB.

Fitch explained that the downgrade was a result of the “deterioration of Crown’s financial profile” as a result of the acquisition. In addition, the latter’s “more aggressive capital structure” that funded the purchase is cause for concern.

The ratings company acknowledged that it cannot provide more substantiative details. This is, in part, because Crown is delisting from the Australian Securities Exchange. As a result, Blackstone will operate the company as a private entity, limiting available information.