The share price of casino operator Crown Resorts Ltd [ASX:CWN] has fallen today following revelations that Crown is unfit to operate its Barangaroo casino.
In the report released yesterday, Commissioner Patricia Bergin gave a scathing assessment of the company and its directors, deeming it unfit to hold a Sydney casino licence.
At time of writing the share price of Crown has fallen by 32 cents or 3.15% to trade at $9.38 per share.
And now with its dirty laundry aired in Sydney, Crown is expected to come under intense scrutiny in Victoria and WA.
This is probably good news for shareholders
Australia universities have faced huge criticism last year over failures to properly diversify their risks, which became blindingly evident as the pandemic exposed their overreliance of international students.
The shakeup within the ranks of Crown can be thought of in much the same way.
In that the casino operator failed to recognise, or at the very least admit, its apparent risks.
For those who aren’t in the know, James Packer’s Barangaroo casino in Sydney may remain closed for months after a report found Crown Resorts was not suitable for operations.
The report found that Crown enabled money laundering through its casinos, partnered with junket operators connected to Asian triad gangs.
And failed to protect staff arrested in China who where there to lure high rollers to its casinos.
Certainly not a good look from a PR perspective.
Today, as recommended in the report, Guy Jalland and Michael Johnston will step down from their roles as directors at Crown.
Both are also key officials at James Packer’s private company Consolidated Press Holdings.
So how is this good news?
Well, unlike what’s happening to Australian universities, Crown has essentially been given a stern wakeup call.
Much better than having revenue torn apart by unmitigated risks.
Could this actually improve Crown?
Commissioner Bergin is of the opinion that the current turmoil could be a positive for the embattled casino:
‘If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person … there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation.’
Though this will be no small task.
The company will in essence need to rebuild its board and management team from the ground up.
But just how long this will take is anyone’s guess.
And for how long Crown will be unable to operate its Sydney casino is ultimately up to the regulator.
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For Money Morning