By Mike Cherney
SYDNEY--Australian casino operator Crown Resorts Ltd. engaged in illegal and dishonest behavior but can keep operating its marquee casino in Melbourne for now, a royal commission in Victoria state has found.
Although the commission determined that Crown isn't suitable to hold a casino license, it said immediately canceling Crown's license would have negative economic effects and said it believes that Crown has the will and capacity to reform itself.
The report recommended that Crown be permitted to continue operating the casino under the oversight of a so-called Special Manager for two years while it undertakes reforms.
The Victorian government said it had accepted the royal commission's findings and that it would introduce new legislation to implement some of the commission's recommendations.
The government said the legislation goes further in some areas than what the commission recommended, including providing that Crown's license will be automatically cancelled at the end of the Special Manager oversight period if regulators aren't satisfied with Crown's reforms.
The commission's report and the government's response were tabled in the Victorian parliament on Tuesday.
Write to Mike Cherney at mike.cherney@wsj.com
By Mike Cherney
SYDNEY--Australian casino operator Crown Resorts Ltd. engaged in illegal and dishonest behavior but can keep operating its marquee casino in Melbourne for now, a royal commission in Victoria state has found.
The commission determined that Crown isn't suitable to hold a casino license, but it said immediately canceling Crown's license would have negative economic effects and that it believes Crown has the will and capacity to reform itself.
The report recommended that Crown be permitted to continue operating the casino under the oversight of a so-called Special Manager for two years while it undertakes reforms. The Victorian government said it had accepted the royal commission's findings.
The commission's report and the government's response were tabled in the Victorian parliament on Tuesday. Crown said in a statement that it is currently reviewing the report and the government's response.
"Crown will work cooperatively and constructively with the Victorian government in relation to the findings and recommendations of the report and their response," the company said.
The Melbourne casino, in the middle of the city's downtown, is a big moneymaker for Crown and losing the license to operate it would have been a major blow. Some analysts believed it was unlikely that Crown would be stripped of its license, though the Victoria report was being widely watched because it could set a precedent for what regulators elsewhere in Australia decide to do.
Crown has faced increased scrutiny from regulators after questionable business dealings were reported in the local media. Crown, which counts Australian billionaire James Packer as a major shareholder, is facing yet another inquiry in Western Australia, where it operates a casino in Perth.
Earlier this year, a similar inquiry in New South Wales state determined Crown wasn't suitable to operate a new casino on Sydney's waterfront without significant reforms. The New South Wales report found bank accounts at Crown's subsidiaries were used to launder money and that Crown improperly worked with so-called junket operators in Asia to bring high-rollers to Australia. It also found Crown disregarded the welfare of its employees in China by pursuing lucrative highrollers, which ultimately culminated in the arrest of Crown employees in China for gambling-related crimes.
The Victorian report on Tuesday found that many senior executives involved in misconduct were indifferent to ethical, moral and sometimes legal obligations. The report said there were consistent patterns of non-cooperation with state regulators, tax breaches undertaken with the knowledge of multiple senior staff, and serious breaches of responsible-gaming obligations.
The Victorian government said it would introduce new legislation to implement some of the commission's recommendations. The legislation goes further in some areas, the government said, including providing that Crown's license will be automatically canceled at the end of the Special Manager oversight period if regulators aren't satisfied with Crown's reforms.
Crown has taken some steps to change its culture, including ceasing all ties with junkets and creating a compliance and financial-crimes department. The company has also replaced much of its board and just welcomed a new chief executive.
Write to Mike Cherney at mike.cherney@wsj.com
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