Australian casino operator Crown Resorts Limited has reportedly agreed to pay slightly over $93.8 million in order to settle a class-action lawsuit brought by a group of its disgruntled shareholders.
According to a report from GGRAsia, the legal action was filed near the end of 2017 by investors who claimed that the Melbourne-headquartered firm had failed to inform them of its controversial marketing activities in China. The source detailed that this followed the previous year’s arrest in Shanghai of people employed by the casino company on charges that they had been illicitly enticing mainland citizens into gambling in Australia and Macau.
The federal lawsuit was reportedly filed by local law firm Maurice Blackburn Lawyers on behalf of shareholders who had invested in Crown Resorts Limited between February 6, 2015 and October 16, 2016. These plaintiffs were purportedly seeking compensation after the arrests in China wiped some $993 million off of the Sydney-listed company’s valuation courtesy of a 14% drop in its share price.
Crown Resorts Limited reportedly used an official filing to declare that it had ‘reached an agreement to settle the shareholder class-action’ lawsuit with the final compensation amount being ‘inclusive of interest and costs’. The operator behind Victoria’s giant Crown Melbourne development as well as the Crown Perth facility in Western Australia purportedly moreover pronounced that the deal has not seen it admit liability and will now be ‘subject to Federal Court approval and other conditions.’
Also the owner of the $1.5 billion Crown Sydney in New South Wales, Crown Resorts Limited reportedly proclaimed that it now expects to ‘recover a significant portion of the settlement amount from its insurers’ despite warning that it cannot ‘be certain about the outcome of negotiations with insurers’.
Reportedly read the filing from Crown Resorts Limited…
“The board of directors for Crown Resorts Limited determined that the agreement to settle the proceeding was a commercial decision made in the best interests of the company and its shareholders.”
In their class-action lawsuit, the irritated shareholders reportedly claimed that Crown Resorts Limited had ‘decided to roll the dice on its Chinese VIP operations against a backdrop of a known Chinese crackdown on illegal gambling-related activities’ and that this decision subsequently ‘back-fired spectacularly’. These actions purportedly resulted in the arrests in October of 2016 of 18 individuals, which included a trio of Australian nationals, on charges that they had committed or been complicit in the ‘gambling crime’ of recruiting high-value individuals to gamble at the operator’s properties in Australia or partner venues in Macau.