Hong Kong businessman Lawrence Ho purchasing a 19.9% stake in Australian casino operator Crown Resorts could mean trouble for the company’s A$2.2 billion Sydney integrated resort project, local news outlets report
The Government of New South Wales has instructed the state’s gambling regulator to review the license issued to businessman James Packer for his Crown Sydney integrated resort currently under development in Barangaroo, Sydney.
Mr. Packer’s private investment vehicle – Consolidated Press Holdings – announced on Thursday that it has sold half of its Crown Resorts stock to Hong Kong businessman Lawrence Ho’s Melco Resorts & Entertainment. The two companies previously ran a joint venture that operated casino resorts in Macau.
But under the VIP Gaming Management Agreement signed in 2014 between Crown Resorts and New South Wales, the company is required to refrain from having any business dealings with Stanley Ho or Ho associates. Stanley Ho, who once held the monopoly over casino gambling in Macau, is the father of Lawrence Ho.
The founder of one of Asia’s largest gambling empires has long been the subject of persistent allegations that he had ties with organized crime, particularly with Chinese triads. Mr. Stanley Ho has maintained that those allegations were untrue.
Ho-Related Restrictions
As mentioned earlier, Crown Resorts pursues entry into Sydney’s casino market with a luxury integrated resort that will aim to attract Asian high rollers to its gaming floor. The gaming operator was granted a restricted gaming license by the NSW Independent Liquor and Gaming Authority in 2014 for its Crown Sydney project.
Under the terms of the license, Crown Resorts is required to ensure that it prevents “Stanley Huang Sun Ho or Stanley Ho Associate from acquiring any direct, indirect or beneficial interest in Crown, a Subsidiary of Crown, Melco Crown, or a Subsidiary of Melco Crown.” Melco Crown was the name of the joint venture formed between Crown Resorts and Melco in the early 2000s.
A spokesperson for the gaming regulator said on Thursday that it will “now review all relevant issues when considering the required approvals and new probity checks for Melco Resorts’ shareholding acquisition in Crown Resorts.” In other words, the NSW Independent Liquor and Gaming Authority will investigate whether the transaction breaches the terms of Crown Resorts’ license in New South Wales.
No Regulatory Approval Needed
In a statement announcing the purchase of Crown Resorts stock, Melco said on Thursday that it did not need regulatory approvals to complete the transaction, but has nevertheless applied for approval from regulators in the states of Victoria, Western Australia, New South Wales, and other relevant territories.
However, an approval from New South Wales regulators might prove to be a challenge. Crown Resorts has previously pointed out that Lawrence Ho’s business endeavors were independent of his father’s and that he previously passed regulatory screenings without any issues.
Crown Resorts and Melco formed their joint venture in 2004 and operated together Melco Crown until 2017 when Mr. Packer’s company sold its stake to Melco and exited Macau’s gaming market. Its departure was prompted by the arrest of 18 staff members in Mainland China for promoting too aggressively Crown Resorts’ Australian operations.
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