Blackstone’s Crown Resorts Bid to Face Regulatory Scrutiny

NSW’s gambling regulator boss, Philip Crawford, has said that Blackstone will face extensive regulatory scrutiny in its bid for Crown Resorts.

Blackstone to Face Regulatory Scrutiny 

Blackstone’s $8 billion takeover bid for Crown Resorts should be coming to a successful close as the investor seems hell-bent on making this one work. Yet, challenges abound. The newest one comes from the New South Wales gambling watchdog, which has issued a fair warning to Blackstone, cautioning that any relationship with a junket operator would be put under a microscope.

Junket operators were the reason why Crown Resorts got into trouble in the first place. Some good news has already come from both the United States and Europe, where Blackstone stood regulatory scrutiny and proved its intents for buying Crown Resorts. Yet, NSW Independent Liquor and Gaming Authority (ILGA) has said that it will run its own extensive due diligence before giving the green-light.

Philip Crawford, ILGA chief executive, said that Blackstone should expect an exhaustive process ahead. The regulator, Crawford explained, was in no rush to complete this either and would prioritize the objectivity of information over anything else. Speaking to the Financial Review, an Australian publication, Crawford said that he could not cite an end date as to why the process would be finalized.

According to the publication, Blackstone’s Cosmopolitan in Las Vegas may have some ties with a junket operator for VIP high rollers. However, we have found no substantial evidence to suggest as much. The Blackstone takeover bid’s success will most likely coincide with the end of Crown’s suitability report. 

Beware the Junket Model 

Crawford confirmed that any ties to junket operators in Europe and the United States would be examined by ILGA and added that the “junket model had no favor here anymore.” Crown Resorts troubles began when regulators found out that the company had been running many prohibited activities in cahoots with alleged crime syndicates.

According to official findings, Crown was tied to money laundering through casino junket operators and was, as a result, found unsuitable to hold its Sydney license. Blackstone, though, is all about changing this.

However, Crown Resorts shareholders aren’t too sure if Blackstone isn’t actually looking to underplay the casino giant’s actual value. Going as far back as last week, shares for Crown Resorts rose to AU$11.97 on the news that Blackstone is attempting to buy the company. Today, Crown Resorts Ltd. (CWN) trades at AU$11.80.

This is mostly tied to speculation that a competing offer may emerge. Although Crown is mired in the present dispute and not looking at an easy few years ahead, the company is still the regional behemoth with immeasurable potential.

The bid now puts pressure on James Packer, whose family has owned Crown Resorts for decades. Will Packer sell a part, or his entire 37% stake in the company? This remains to be seen.

Leave a Reply

Your email address will not be published. Required fields are marked *