Why the Crown (ASX:CWN) share price is tumbling lower today

The Crown (ASX:CWN) share price is tumbling lower today after being found unsuitable to operate its Sydney casino. Here's what happened…

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Crown Resorts Ltd (ASX: CWN) share price has returned from its trading halt this morning and is tumbling lower.

At one stage, the casino and resorts operator's shares dropped as much as 9% to $9.25.

The Crown share price has since recovered the majority of these declines and is currently down 3% to $9.82.

Why is the Crown share price under pressure?

Investors have been selling Crown shares following the release of the Commissioner's report of the inquiry into the suitability of Crown Resorts holding the licence for Sydney's Barangaroo casino. 

According to the release, Commissioner Patricia Bergin does not believe Crown is suitable to operate its new Sydney casino. Nor does the Commissioner feel Crown Resorts is suitable to be a close associate of the licensee.

Commissioner Bergin explained: "Any applicant for a casino licence with the attributes of Crown's stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organised crime groups would not be confident of a positive outcome."

"It is obvious that such attributes would render an applicant quite unsuitable to hold a casino licence in New South Wales. 23 These facts and the stark realities expressed so baldly may also suggest that it is obvious that the Licensee is not suitable to continue to give effect to the Barangaroo Licence and that Crown is not suitable to be a close associate of the Licensee," she added.

However, the Commissioner has hopes that Crown could transform itself. This could be saving the Crown share price from a steeper drop today.

She commented: "If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation."

Directors resign

Two directors that came under fire during the inquiry were Guy Jalland and Michael Johnston.

The commissioner suggested that "if Mr Jalland and/or Mr Johnston remain as directors it will be necessary to have some additional protections from them because of their failures."

That won't be necessary, with both directors handing in their resignations today.

What's next?

The final decision now lies with the Independent Liquor and Gaming Authority (ILGA). Though, it is widely accepted that the Authority will follow the recommendations of the Commissioner's report.

In the meantime, the company advised that it is currently considering the Inquiry Report.

Crown also advised that will work with the New South Wales ILGA "in relation to the findings and recommendations of the Inquiry Report as contemplated by the regulatory agreements between Crown, ILGA and the State of New South Wales."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Amcor, Boss Energy, Brickworks, and Mineral Resources shares are tumbling today

These shares are starting the week in the red. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why AGL, Imugene, Star, and Woolworths shares are dropping today

These shares are dropping on Thursday. Let's see why investors are selling them.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Fallers

Why Corporate Travel Management, JB Hi-Fi, Mineral Resources, and Syrah shares are rising

These shares are having a strong session. Why are investors buying their shares?

Read more »

A guys points his fingers down.
Share Fallers

Why Brainchip, Cettire, Star, and Woolworths shares are being sold off today

These shares are having a difficult time on hump day. But why?

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Black Cat, BlueScope, Cettire, and Coronado shares are falling today

These shares are missing out on the good times on Tuesday. But why?

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Share Fallers

Why Adriatic Metals, Metcash, Paladin Energy, and Westgold shares are tumbling today

These shares are starting the week in the red. But why?

Read more »