Blackstone faces regulatory hurdles if Crown takeover proceeds
New regulations imposed on Crown Resorts’ flagship Melbourne property could cause headaches for potential new bosses from Blackstone.
The Sydney Morning Herald reports that if the Victorian government acts on findings from its damning royal commission into Crown Resorts, Blackstone could be forced to operate the casino independently of any parent company.
The New York-based Blackstone is finalising due diligence on an $8.9 billion takeover of the ASX-listed Crown, with the casino group’s board saying it will support a sale if the private equity outfit puts forward a binding offer.
But it remains unclear how Blackstone would operate Crown Melbourne if Victoria implements all the findings from last year’s royal commission into the company.
Commissioner Ray Finkelstein, QC, found in October that Crown, which also owns properties in Perth and Sydney, was unfit to run its Melbourne casino after he uncovered a “disgraceful” litany of legal and ethical breaches and gave it two years to reform itself.
https://twitter.com/newsgang2/status/1483520340521324544?s=20
Government set to incorporate all royal commission recommendations
The Andrews government has said it supports all of Commissioner Finkelstein’s 33 recommendations “in principle” and passed a first tranche of legislation acting on nine recommendations last year.
That included installing former public sector corruption watchdog Stephen O’Bryan as a “special manager” who will monitor the group and decide after two years whether Crown’s licence should be cancelled.
A second tranche of legislation set to be introduced this year acting on the remaining recommendations could be more troublesome for Blackstone.
That includes that a majority of Crown Melbourne’s board should be “independent directors, including independent of any ultimate or intermediate holding company”.
Commissioner Finkelstein also called for the state’s casino laws to be amended to mandate that Crown Melbourne is run by Victorian-based executives who “do not report to, or take instructions from”, anyone outside the Melbourne casino, including a parent company.
Special Manager for Crown and other reforms to eventuate irrespective of casino ownership
An Andrews government spokeswoman said that the Special Manager and other reforms passed last year will “continue to operate regardless of any potential change in ownership or management of the casino licensee”.
“We’re taking action right now to hold Crown to account and are working on further reform this year to address all the findings of the royal commission,” she said.
Ian Dunn, who chaired the Victorian Commission for Gambling and Liquor Regulation from 2004 until 2009 said as a US-based company, Blackstone would face some significant regulatory hurdles.
“What we started off with in Victoria was a Victorian casino, a casino which was to be regulated in Victoria and which operated in Victoria,” Mr Dunn said.
“Blackstone, if they owned the thing, you’d think they’d be entitled to run the board. But that’s completely inconsistent with Finkelstein’s recommendations.
“That’s the sort of issue that arises in my opinion.”
The obligation for Crown Melbourne to be run locally and independently was always part of Crown’s commercial agreement with Victoria’s gambling regulator, to ensure the casino was run with maximum benefit to the state’s economy and so that it could be effectively regulated.
But Crown ignored this, the royal commission found, by running the property through the ASX-listed parent company Crown Resorts, with executives often based in Perth or Sydney.
Victoria’s gaming minister would have the power to vary that obligation, Commissioner Finkelstein’s recommendation said.
Blackstone declined to comment.
Any sale of Crown to Blackstone also requires the approval of the Victorian Gambling and Casino Control Commission, NSW’s Independent Liquor & Gaming Authority and WA’s Gaming and Wagering Commission.
