Crown Resorts Director Says Company Aware Gaming Taxes Short
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Posted on: June 23, 2021, 12:02h.
Last updated on: June 23, 2021, 02:32h.
A Crown Resorts board member who rejoined the Australian casino giant in March says former company officials were well aware that it was underpaying its required taxes on gaming revenue.
Nigel Morrison worked in an executive capacity at Crown Resorts from 1993 to 2000. He rejoined the embattled integrated resort operator in March to serve on its board of directors.
After being deemed unsuitable to hold a casino license in New South Wales for its $1.7 billion Sydney resort complex, a royal commission in Victoria opened a probe into Crown’s operations at its Melbourne property. Morrison told the inquiry this week that board notes from 2012 reveal that the company wasn’t in the dark about not remitting the appropriate gaming taxes to the Victorian Commission for Gambling and Liquor Regulation.
The magnitude was unbelievable,” Morrison said. “It tells you that they had an attitude that, if they didn’t think it was overly important and they could get away with it, they did.”
Estimates vary regarding how much Crown Melbourne failed to pay in appropriate gaming taxes. The inquiry has heard estimates ranging from AUD8 million to AUD272 million (US$6 million to $205 million).
Morrison said Crown officials routinely deducted numerous perks issued to patrons from its gross gaming revenue in an unlawful way to trim its tax obligation.
Crown Resorts Future in Question
The future of Crown Resorts remains unsettled. The company is working with New South Wales in hopes of remedying concerns that rendered the company unsuitable to operate casino gambling.
But with the casino outcome unknown, potential suitors continue to mull an acquisition. Crown has dismissed private equity behemoth Blackstone’s US $6.5 billion offer. Another US-based global asset management firm, Oaktree Capital, has proposed US $2.34 billion to purchase Crown founder James Packer’s 37 percent stake in the organization.
Crown seems most interested in joining forces with longtime rival Star Entertainment. The Australian Financial Review reported this week that Star CEO Matt Bekier met recently with newly minted Crown CEO Steve McCann.
With Crown’s advisor UBS on the call, Bekier is said to have pitched McCann on the substantial cost savings a unification of the two Aussie casino giants would result in. Bekier believes as much as AUD200 million (US$151 million) could be saved in operating expenses annually via a Star-Crown synergy.
Monopoly Concerns
Should Crown Resorts agree to be acquired by the smaller Star Entertainment, the business deal would be subject to federal and state laws regarding monopolies.
On the national level, the primary agency that would review the merger would be the Australian Competition & Consumer Commission.
The agency’s rules include the Competition and Consumer Act, which “prohibits contracts, arrangements, understandings or concerted practices that have the purpose, effect, or likely effect of substantially lessening competition in a market, even if that conduct does not meet the stricter definitions of other anticompetitive conduct, such as cartels.”
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