Crown settles AUS$125m class action lawsuit over China marketing arrests

| By Robert Fletcher
Australian land-based operator Crown Resorts has reached a settlement worth AUS$125.0m (£68.4m/€80.8m/US$94.3m) over an historic class action lawsuit related to marketing activities in China.

Shares in Crown dropped 14% on 17 October 2016 after Crown announced that 19 of its staff in China had been detained for illegally marketing Crown’s gambling services in the country.

The sharp fall in Crown’s share price led law firm Maurice Blackburn to launch the lawsuit against the operator.

The case had been due to head to court today (29 October), but Crown was able to reach an agreement ahead of this date.

The total amount agreed is $125m inclusive of interest and costs and is without admission of liability.

Crown added that it expects to recover a significant portion of the settlement amount from its insurers but cannot at this stage be certain about the outcome of negotiations with insurers, nor the outcome of any necessary formal steps for recovery it may need to take.

“Crown’s board of directors determined that the agreement to settle the proceeding was a commercial decision made in the best interests of Crown and its shareholders,” Crown said.

The settlement remains subject to federal court approval and other conditions.

The legal agreement comes after Crown this week was deemed “unsuitable” to operate a casino in Victoria by the state’s Royal Commission, but will not immediately lose its licence, over concerns the impact this would have on the local economy.

The report was the result of an inquiry by the Royal Commission into Crown’s Casino Operator Licence in Victoria, concluding that failings at the operator meant it is not suitable to hold such a permit in the state.

This inquiry itself followed the Bergin Report in New South Wales, which also found Crown “unsuitable” to operate. A further inquiry is taking place in Western Australia.

The Commission said that Crown engaged in conduct that was “illegal, dishonest, unethical and exploitative”, adding that the scale of the wrongdoing was so widespread and egregious that “no other finding was open”.

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