Crown Resorts Halts Junkets Till June '21 in Wake of SCANDAL

Beleaguered Australian brick-and-mortar casino operator Crown Resorts has announced that it will be halting all junket-related business dealings until June 30, 2021. The announcement from Crown came on Friday, Sept. 25. Junket providers are third parties that contract with casino execs to lure VIP whales to gaming establishments where they're expected to lose a bundle. Crown has interacted with these junket companies in the past in possibly illegal ways.

A Preemptive Move

Though Crown claims that it has established this new junket policy “as part of Crown's review of its compliance and governance processes,” it didn't take this step solely due to a commitment on its part to transparency and corporate ethics. Rather, outside pressure played a significant role in convincing the casino company to walk away from the junket industry at least for a little while.

Crown is seeking a gambling license to do business in New South Wales, which has led the New South Wales Independent Liquor and Gaming Authority to commence an inquiry into how suitable the company is for licensure. It's likely that Crown's attempts to put some distance between itself and frequently disreputable junket firms is a bid to enhance its public image until it obtains the license it covets.

Crown Has an Omelette's Worth of Egg on Its Face

It's certainly true that Crown's image could use a face lift. The company has made quite a few missteps during the New South Wales hearings into the appropriateness of granting the organisation a gambling license.

On Sept. 23, Crown CEO Ken Barton gave testimony before the Liquor and Gaming Authority. He was asked about a “cash desk” that the Suncity junket had installed at the Crown Melbourne casino in the city of Melbourne. At this desk, which was active for years, foreign high-rollers were able to make transactions involving large amounts of cash, bypassing the anti-money laundering controls in place at the cashier cage and other traditional casino facilities. Barton claimed to have not known anything about this until he saw footage – in a documentary that aired in October 2019 – of $100 and $50 bills being transferred across this desk.

Crown CEO Ken Barton

Patricia Bergin, the former Supreme Court judge who's chairing the inquiry, was less than pleased with what Ken Barton had to say. She remarked:

This went on for years. This went on from '13, '14, '15, '16 through to '19…and now Mr. Barton is seeing things for the first time...This, in effect, has really reached the debacle level. This is very, very troubling.

Other alleged misdeeds committed by Crown that have come to light during the inquiry include:

• CEO Barton sharing insider financial information with the corporation's largest shareholder, James Packer, while Packer was contemplating selling his shares to Melco Resorts
• Transfer from Crown of more than $500K to a drug dealer who was a friend of a junket operator
• Maintaining business relationships with gangsters who sometimes threatened Crown employees with physical violence
• Setting up bank accounts for the use of VIP players without adequate AML supervision

Crown's Indiscretions Previously in the Media

This latest round of revelations about Crown Resorts' questionable business tactics isn't the first. Indeed, a documentary released in August 2019, entitled “Crown Unmasked,” contained details of other discreditable practices engaged in by the organisation. This documentary was a collaborative effort by 60 Minutes Australia, the Sydney Morning Herald, and The Age.

Among the crimes that Crown was accused of was liaising with contacts in Australian consulates in China to expedite the approval of visas for big Chinese casino whales to visit Australian gambling centres. There were also whispers that Crown may have dealt with human traffickers to cater to the sexual appetites of these same high-rollers.

It's not merely Australian laws that Crown was believed to have broken. Management rather followed an international approach. In 2017, 18 Crown execs pleaded guilty in a Chinese court to gambling crimes, mostly dealing with promoting gambling. 16 of them were sentenced to prison terms.

Crown's Future Plans in Sydney at Stake

Crown Resorts is seeking a license from New South Wales so that it will be able to open a hotel resort in Barangaroo in Sydney. Construction of the $2.2 billion site is almost completed, and the casino is expected to open in mid-December 2020. A failure to obtain a license would mean that this entire investment would have been wasted.

Crown Sydney Is Expected to Open Later This Year

The Sydney location is expected to be principally a destination for wealthy VIPs from China. Plans call for a six-star hotel, an extensive array of table games, and no slots. If future developments mean that Crown cannot attract a sufficient number of high-rollers from abroad, then this resort might turn out to be an expensive liability.

Junket Ban May Be Window Dressing

By severing its relationships with junket operators, Crown is signalling that it's willing to give up some revenue in order to ensure that it's not involved, even indirectly, in criminal behaviour. However, the actual impact of this decision on its bottom line may be quite small.

It's true that, as Crown said in its Sept. 25 statement, VIP play “contributed approximately 7% of Crown’s Normalised EBITDA over the last five years.” However, over the past eight months, there have been virtually no junket visitors originating from China because of coronavirus fears. Therefore, Crown is not really giving up much at this time by refusing this tiny trickle of casino traffic.

There's every reason to believe that the current travel restrictions will be maintained well into next year, and so Crown's self-imposed ban on doing business with junkets may not affect its operations in any noticeable way prior to the June 30, 2021 expiration of this self-exclusion. By that time, Crown may have already secured its NSW gambling license, and then it might conveniently decide to end the prohibition on junkets.

Misplaced Priorities in Aussie Government

While we welcome the belated inquiry into Crown's business arrangements, we can only conclude that the principal focus of the Australian Government when it comes to gambling has been misplaced. There has been an exaggerated level of concern with online gaming, which has been blamed for everything from facilitating money laundering to encouraging problem and underaged gambling.

This all began with the Interactive Gambling Amendment Bill (IGAB), which effectively prohibited internet casino and poker enterprises from doing business in the country. Meanwhile, lottery vendors and sportsbooks were permitted to continue to offer their services in the country over the internet as long as they're properly licensed.

It's hard to see how these two forms of authorised wagering are more wholesome and less pernicious than the types of betting that were proscribed. It's worth noting that licensed bookmaker Betfair Australia is owned by Crown Resorts.

ACMA Flexing Its Muscles

Unlike some anti-online gambling legislation in other parts of the world, which is widely ignored or circumvented, the IGAB grants strong enforcement powers to the Australian Communications and Media Authority (ACMA). The ACMA has not been shy in taking advantage of the powers delegated to it.

The ACMA Is Going After International Internet Gaming Sites

This agency sends cease-and-desist letters to companies that it feels are breaking Australian law, communicates with other regulatory bodies the world over to coordinate strategies for combating illegal gambling, and is authorised to bring civil suits against these operations if all other remedies fail. The possible fines that can be levied against unlicensed offshore poker and casino firms run into the millions of dollars per day. The Australian government can also file criminal charges against the management of these enterprises.

The latest tool in the ACMA's arsenal is IP blocking. By issuing directives to ISPs, the ACMA can prohibit Australian users from seeing the websites of the organisations targeted. The blacklist of off-limits URLs started off short, but it has been lengthening considerably as the ACMA continually adds more names to its naughty list.

ACMA's Success

With the arsenal of tactics at its disposal, the ACMA has achieved considerable success in driving offshore gaming sites away from the Australian market. Among the real money wagering providers who have abandoned the Land Down Under are PokerStars, 888, Pinnacle, the Chico Poker Network, and Intertops. According to the ACMA, more than 100 of these services have exited the Australian market since the IGAB was passed in 2017.

Many Poker and Casino Businesses Have Been “Convinced” to Flee Australia

Internet Gaming Still Available

Despite the heavy-handed enforcement spearheaded by the ACMA, there are still offshore poker and casino destinations available to Australians. They provide alternatives for those who don't wish to frequent shady and dishonest live gambling concerns, like Crown Resorts.

It's important to be aware that none of the penalties attached to Interactive Gambling Amendment Bill affect individual players. Those running the games and managing the sites are at some legal risk, but you, as an ordinary user, are not in any legal danger.

To learn more about reputable places to play online, check out this guide to online poker in Australia.