NSW Government Seeks to Change Crown Resorts Agreement
The government of New South Wales is working on legislation that will close up any loopholes regarding Crown Resorts as issues remain.
Whenever the government is against you, things are not looking good. In New South Wales, the government has realized that its current agreement with Crown Resorts might have a few issues. Because of recent allegations against the casino operator, one legislator has decided to push for changes so that Crown Resorts does not have any loopholes to provide the company with billions in dollars in damages paid for by the government due to current legislation language.
Closing Any Gaps
An agreement was first signed with Crown Resorts and the New South Wales government back in 2014. Over the years, the operator has been accused of several things, from money laundering to rigging its gaming machines. Now, the value of the company and its ability to maintain a gaming license is in question.
Some feel that the company should be stripped of licensing and no longer be allowed to offer services. For the Crown Resorts, losing its license would be bad, but they have an exit strategy that would work in their favor. Based on the language of the current agreement, the company could claim billions in damages, money that would have to be paid by the government.
There is a clause in the agreement that the government most likely thought was never be used. However, with varying circumstances at play, it seems that the casino operator might be closer to deciding to use this clause. Lawmakers are now considering how to stop the Crown from obtaining damages.
In the original agreement, the operator received a clause that will see compensation provided up to 10.5x the value of any operating segment that is changed by the government. This multiplier could potentially see the company walk about with millions or even billions from the government if the clause came in to play.
MP Justin Fields has considered this clause and wants to make sure the assets of the government are covered. A bill has been submitted that will remove the agreement, one that was signed by former NSW Premier Mike Baird. The goal is that the government will then gain protections if the casino company loses its gaming license.
Any change is expected to take place by February, with an on-going inquiry currently taking place into the activities of the company. According to Field, the new bill would close the indemnification clause. The current agreement suggests that if action were taken against the Crown, they could start a compensation claim.
Crown Resorts is currently at risk of losing its license to operate a casino in Barangaroo due to organized crime and money laundering issues. Fields says that it is ‘outrageous’ that they would have to pay the casino due to a clause in the agreement after the company is found unsuitable for licensing.
It is unclear as to if the bill will make it any headway. Even if the measure is approved in legislature, it is not believed that Crown Resorts will accept the changes. A fight is sure to ensure between the government and Crown Resorts, whether the change in the agreement is approved or if the company loses its license and tries to claim losses.
On top of all this, the largest shareholder of Crown Resorts, James Packer, is also in hot water. He has faced scrutiny and called out for questionable actions, which may lead to his time as a majority shareholder being over soon.
Packer is accused of using his share of the company to run the company, of which he holds 36%, even though he removed himself from the chair position. The attorney for Packer says he provided ‘advice’ but has not used his position in a controlling manner.