Melco Resorts to Pay For Crown’s Failings in New South Wales

Posted on: February 7, 2022, 09:11h. 

Last updated on: February 7, 2022, 12:20h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Crown Resorts had to pay to cover the costs of the New South Wales (NSW) investigation into its operations. Now, Melco Resorts and Entertainment is going to have to pay as well.

Lawrence Ho
Lawrence Ho, seen during an interview with Macau Business. The Melco Resorts and Entertainment CEO is locked in a battle with New South Wales over the price of the latter’s investigation into Crown Resorts. (Image: Macau Business)

After the Independent Liquor and Gaming Authority (ILGA) found Crown Resorts unsuitable for a gaming license in NSW, it added insult to injury.

It hit the casino operator with a bill for AU$12.5 million (US$8.88 million) to cover the costs. The ILGA also handed Melco Resorts a bill for AU$3.7 million (US $2.63 million). However, it still hasn’t taken care of the debt.

The Australian Financial Review reports that the ILGA doesn’t want to keep waiting for its payment. It is suing Melco over the outstanding bill, sending its lawsuit to Australia’s Supreme Court.

Bergin Inquiry Comes at Considerable Cost

The Bergin inquiry took 18 months to complete before finding Crown guilty of egregious lapses of judgment. The operator, once seemingly impervious to regulatory scrutiny, suddenly found itself charged with gross money-laundering violations, machine tampering, and more.

The NSW investigation involved numerous lawyers, analysts and more, which drove the state’s costs high. When it was determined that Crown was at fault, the ILGA determined it should pay for the investigation.

Melco played a crucial role in the state’s investigation. Regulators determined that Crown continued to deal with the company even though it had been cast out by the ILGA.

The late Stanley Ho was once an investor in Crown’s operations, as well as a substantial owner of Melco. His son is Lawrence Ho, the CEO of Melco. The gaming regulator had banned the elder Ho from acquiring a stake in Crown operations, with the stipulation included when Crown was given its NSW license.

However, this didn’t prevent Crown founder and former boss James Packer from working a deal with Stanley Ho in 2019. He sold the blacklisted individual 10% of his holdings, a move he conveniently “forgot” when he was testifying during the Bergin inquiry.

NSW Gives Crown a Pass

Stanley Ho was persona non grata for his alleged ties to organized crime in Australia and across Asia. Just the mention of his connection to criminal gangs was enough for NSW to act.

However, the Bergin inquiry ultimately gave Crown a free pass on the deal between Packer and Ho. Officials concluded that the deal was so secretive that Crown’s board was oblivious to what was happening.

Most of that board, like Packer, is no longer with the company. As it continues to overcome similar challenges in Victoria and Western Australia, the Crown has taken steps to appease regulators. It worked in Victoria, where the company is now on probation for two years. The results of the Western Australia investigation are due in the next few weeks.

Melco Not Running from Obligations

Melco asserts that the ILGA is to blame for the delay in paying the bill. It has reportedly tried to work with the regulator to understand a breakdown of the charges, but hasn’t been satisfied with the results.

We have previously requested information from ILGA in an effort to reach an amicable resolution. Despite this request, we have not received the information that is necessary for Melco to adequately assess ILGA’s claim,” said a Melco spokesperson.

Perhaps the ILGA doesn’t feel it needs to explain how it reached the figure it has requested. The Supreme Court will determine what happens next, with both sides meeting in court this Friday, Feb. 11.