Hong Kong-based casino group Melco Resorts & Entertainment is being taken to court by the New South Wales gaming regulator. The operator could pay millions of dollars over its role in the inquiry led by Commissioner Patricia Bergin into Australian gaming giant Crown Resorts, reports the Australian Financial Review.
The NSW Independent Liquor and Gaming Authority (ILGA) has sued Melco in the Supreme Court, in an effort to force the business to cover costs for the 18 month-long inquiry. Several top-shelf lawyers were recruited for assistance throughout the process. ILGA’s action against Melco is listed for a hearing on February 11.
“In light of the findings of the Bergin report, ILGA considered it appropriate for Melco and Crown Resorts Limited to provide payment for the costs of the inquiry,” an ILGA spokeswoman said, according to the cited news source. “ILGA reached an agreement with Crown in May 2021. As an agreement has not been reached with Melco, ILGA initiated proceedings.”
The Australian Financial Review report explains the ILGA is allegedly after $3.7 million (US$2.6 million) from Melco, a figure significantly lower than the $12.5 million Crown had to pay due to the inquiry. A Melco spokesman said the casino group had sought to work with the regulator “in a professional, fair and reasonable manner” throughout the issue.
The inquiry, which delved into the dealings of Crown, ultimately declared the operator unsuitable to hold a license for its Sydney casino. The probe found a series of failures in corporate governance, including money laundering at the company’s casinos.
Melco, a former joint venture partner of Crown, agreed to buy a 20% stake in the Australian company in 2019. While the sale was set to be conducted in two tranches, Melco abandoned its plans to buy a second tranche in February 2020, and subsequently sold its 9.99% percent stake to Blackstone Group in April.
Crown's Sydney casino.
The Bergin inquiry investigated the links between Crown and Stanley Ho, the father of Melco CEO Lawrence Ho, who was banned by the ILGA from acquiring any beneficial stake in the Australian operator due to his alleged ties to organized crime. This prohibition was among license conditions for the Sydney casino license.
However, when Crown sold a 9.99% shareholding to Melco in 2019, Ho had a stake in Melco’s parent company via a discretionary trust. Despite this, Commissioner Bergin found Crown did not breach the conditions of its license because officials were not aware of Ho’s interest, but the ILGA is still asking Melco to pay the pursuing costs.
Following its license suspension, Crown Resorts is now seeking to offer gambling at the Sydney resort this year, which opened in December 2020 without gaming. The operator is working with regulators to address governance failures, which has been confirmed by the ILGA.