australians taught nassau otb?Major Sydney Casino Opening Overshadowed by Investigations Inquiries into Crown Resorts’ ties with VIP gamblers and allegations of corporate wrongdoing add to woes created by pandemic Crown Resorts is behind a $1.6 billion casino-resort development, with a petal-shaped skyscraper, on the harbor in Sydney. PHOTO: BRENT LEWIN/BLOOMBERG NEWS By Rachel Pannett and Philip Wen Nov. 4, 2020 5:30 am ET SHARE TEXT Listen to this article7 minutes 00:00 / 07:05 1x SYDNEY—The petal-shaped skyscraper shimmering on the edge of the harbor not far from the Sydney Opera House is the centerpiece of the city’s most ambitious attempt at urban regeneration since the Olympics in 2000. Just weeks from its December opening, however, the Australian company behind the $1.6 billion casino-resort development is embroiled in two inquiries, into alleged money laundering and its corporate conduct. Gambling authorities are examining Crown Resorts Ltd. CWN +2.80% ’s suitability to hold a license for the Sydney casino, and the company is cooperating with a separate probe by the country’s financial regulator, which has the power to impose fines and other penalties. High-Roller Ride A Chinese crackdown, coronavirus and twoinquiries threaten Crown Resorts' VIPgambling. Crown Resorts revenue Source: the company Note: Fiscal years end June 30. A$1=US$0.71 .billion VIP gambling Other FY2013 '14 '15 '16 '17 '18 '19 '20 0 1 2 3 A$4 Crown denies any deliberate wrongdoing. The company said at its annual meeting last month that it will create a new compliance and financial-crimes department that will report directly to the board. Crown has suspended its activities with junket operators, who bring in VIP gamblers, the main factor in the initiation of the investigations. Crown Sydney was pitched by the billionaire businessman James Packer as an exclusive gambling destination that would lift the city’s after-hours appeal to Asian high rollers. The project was meant to rival Marina Bay in Singapore, where major companies have established offices next to a Sands casino-resort. Mr. Packer’s original proposal said VIP gambling was essential to making the project commercially viable. VIP and other gambling revenue, however, has already taken a hit from international border closures and coronavirus restrictions. Crown’s main casino in Melbourne has been closed for months because of a strict shutdown in the city to stamp out a second wave of infections. The company plans to go ahead with the Sydney opening in December, though analysts expect the VIP business to remain subdued because of the travel restrictions and the recession-hit local economy. To appease regulators, Mr. Packer may lose his grasp over a gambling empire the 53-year-old media scion built to carve out a legacy for himself after the death of his media tycoon father. He told regulators that Crown could introduce shareholder caps—possibly reducing his own 36.8% stake further—as a way to improve governance. Among evidence presented to an inquiry by state gambling officials was an internal audit that found roughly 5.6 million Australian dollars, equivalent to $4 million, in cash in a private room at Crown’s Melbourne casino in 2018. The casino has a $70,000 cash limit in the room, which was used by Macau-based casino-junket operator Suncity Group Ltd. Crown continued to do business with the junket operator, company directors told the inquiry, after being warned by Australia’s financial-crimes agency that its Macau-based boss was a politically exposed person with a “substantial criminal history.” Suncity didn’t respond to requests for comment. To appease regulators, billionaire businessman James Packer, left, may lose his grasp over the gambling empire he built. PHOTO: MAL FAIRCLOUGH/AGENCE FRANCE-PRESSE/GETTY IMAGES Crown’s chairwoman, Helen Coonan, said the company’s inaction “may have been ineptitude or a lack of attention,” when asked during the inquiry whether Crown had ignored signs of possible money laundering. Counsel acting for the inquiry also accused Crown management of ignoring signs that its staff were at risk in China. Sixteen employees were jailed following a Chinese police investigation that tracked 69 big-spending Chinese gamblers from 2015 to 2016 who were allegedly coaxed to Crown’s Australia resorts with free airline tickets, visas and hotel accommodations and who gambled tens of millions of Australian dollars in return. The current and former employees, including Crown’s head of international VIP operations, pleaded guilty and drew prison sentences of nine or 10 months. Former and current Crown executives gave evidence during the inquiry that was used to allege that Crown was operating for years out of an unmarked office in the Chinese city of Guangzhou in an attempt to make its activities less visible to authorities during Beijing’s crackdown on foreign casinos. In 2015, Crown Resorts’ logos were removed from the tails of private jets, according to a counsel assisting the inquiry, to disguise that the jets were being used to transport Chinese high-rollers to Australia. The development’s casino operator is embroiled in inquiries into alleged money laundering and its corporate conduct. Crown denies any deliberate wrongdoing. PHOTO: BRENT LEWIN/BLOOMBERG NEWS Ms. Coonan said she wasn’t aware of these activities at the time. She agreed with counsel that issues dealing with China’s crackdown on foreign casinos should have been escalated to management, rather than dealt with on the ground. Over three days, the inquiry probed Mr. Packer’s temperament and the culture he oversaw at the casino company. Mr. Packer has retreated from public view in recent years, citing mental-health concerns. Giving evidence via satellite videolink from his superyacht, Mr. Packer began his testimony saying medication he was taking for bipolar disorder could affect his memory and blamed his struggles with mental health for threatening emails he sent to a business associate in 2015. He said the Crown board “has a lot to think about in terms of who does what job” and agreed with the inquiry commissioner when she said “some very serious changes have to be made.” Crown last month said it had terminated two agreements that had allowed confidential information to be shared with Mr. Packer after he had stepped down from the board in 2018. Emails showing Mr. Packer sought financial information while in the process of selling down his once-majority stake in 2019 to Melco Resorts & Entertainment, MLCO -2.20% controlled by Macau gambling mogul Lawrence Ho, were presented to the inquiry. The company plans to go ahead with the Sydney opening in December. PHOTO: LOREN ELLIOTT/REUTERS The Sydney casino inquiry is due to report its findings by February. In his summary on Wednesday, a counsel assisting the inquiry said he believed the evidence presented demonstrated the company isn’t suitable to hold the Sydney license. The gambling regulator in neighboring Victoria state, which oversees Crown’s Melbourne casino, said it was watching the Sydney inquiry closely and would “take appropriate action should new information or evidence” emerge. Australia’s financial-crimes agency has announced a separate investigation into potential breaches of money-laundering laws. Crown has said it would respond to all information requests and fully cooperate with the investigation. Crown declined to comment on emailed questions from The Wall Street Journal. Crown’s share price is down 30% since the start of the year through Wednesday. Its shares have underperformed the Australian market by close to 20 percentage points in 2020 and are trading at one time invested capital, a possible record low for an Australian casino company, according to UBS Group analysts. Fitch Ratings expects Crown’s total revenue to decline around 30% in the 2021 financial year because of coronavirus-related restrictions and border closures and not recover to pre-pandemic levels until the 2023 financial year. Write to Rachel Pannett at rachel.pannett@wsj.com and Philip Wen at philip.wen@wsj.com Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Appeared in the November 5, 2020, print edition as 'Probes Shadow Opening of Mega-Casino.'