By Fortune Editors and Reuters
October 18, 2017

Australia’s Crown Resorts Ltd, the world’s biggest listed casino operator and a wannabe competitor to the likes of Steve Wynn overseas, could be in big trouble.

The company was accused of tampering with its poker machines Wednesday when an Australian lawmaker presented a video of whistleblowers to parliament. The news sent the company’s stock sliding.

Crown has denied the allegations, but gambling authorities in the state of Victoria, where its flagship casino is located, to said they would launch an investigation.

Independent lower house member and anti-gambling campaigner Andrew Wilkie used parliamentary privilege, which lets lawmakers make sensitive allegations without legal repercussions, to make the video public.

The accusations present a fresh headache for Crown, which is nearly half-owned by billionaire James Packer, after the arrest of more than a dozen employees in China caused it to retreat from an ambitious global expansion plan.

On the recording, unidentified people whose faces were heavily pixelated accuse Crown’s casino in Melbourne of fixing poker machines by removing built-in controls designed to regulate gambling rates.

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They also allege that Crown encouraged customers to disguise their identities to avoid detection by anti-money-laundering agency AUSTRAC, and that the casino failed to stop drug use and domestic violence on its premises.

“If the allegations are true, it does suggest that there is a systemic problem rather than a rogue individual,” Wilkie told a news conference.

He added that he had verified the identities pf the people on the video as former employees of Crown but declined to say how the video came to be made. A former intelligence official, Wilkie has long campaigned for a crackdown on slot machines.

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Crown said in a statement that it rejected the allegations and that Wilkie should “immediately provide to the relevant authorities all information relating to the matters alleged”.

Shares in Crown fell 4 percent on Wednesday to give the biggest listed casino operator outside China a market value of A$7.7 billion ($6 billion).

“Some kind of investigation into this, that has some powers to compel evidence, is really what will be needed to get to the bottom of this,” said Francis Markham, a researcher at Australian National University who specialises in poker machines.

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The Victorian Commission for Gambling and Liquor Regulation, which oversees Crown’s Melbourne casino, said in a statement it took claims “of this type extremely seriously and they will be thoroughly investigated”.

The state agency added it was currently conducting a routine review of Crown’s casino licence – one that it conducted every five years.

An AUSTRAC spokesman said the agency “takes all allegations of anti-money laundering and counter-terrorism financing non-compliance seriously and will be examining these allegations further”.

After the arrests of employees in China on suspicion of selling casino holidays in violation of that country’s gambling ban, Crown quit the island of Macau and Las Vegas to focus on Australia. It recently received final government approval to expand beyond the cities of Melbourne and Perth and build a A$2 billion resort on the Sydney waterfront.

The company’s renewed focus on Australia has offered an appealing strategy for shareholders but it has stoked criticism from anti-gambling campaigners worried that Australia has less than one percent of the world’s population but more than a fifth of its slot machines.

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