I guess it’s no surprise that a business where its chief profit centre is a casino could be a potential lawbreaker, so when Blackstone bought Crown Resorts last year from its shareholders, the US company always knew a fine was coming. However, did they think it could be a record gambling company kick in the pants?

One of the big crimes of this business was money laundering, so AUSTRAC was always going to come with a penalty. The new owner must have done the potential numbers of just how big this fine could be when it paid $8.9 billion for Crown. This price included $3.3 billion for the major shareholder, James Packer.

As the AFR put it: “Crown Resorts could end up paying one of the largest financial penalties in corporate gambling history after agreeing to a $450 million fine for breaches of anti-money laundering and counter-terrorism laws.”

Why? Well, the fine must be approved by the Federal Court and you can bet your life that Blackstone will have some high-priced lawyers arguing for a smaller slug, though I guess the fine could be raised.

What’s interesting for the ‘normal’ person to understand is that in November, when we learnt Crown posted a $945 million loss for the financial year ending in June, the then-private Crown had allowed $617 million for its potential payout for the old owners’ crimes and misdemeanours.

So that means this $450 million penalty could be seen as good news by the new owner, if losing $450 million can ever be seen in a positive light!

But it looks like the new owners have seen the light, with the new CEO Ciarán Carruthers telling the AFR that the historical failings of the casino giant were unacceptable.  “I apologise for the failings of the past,” he said. “The Crown of today is committed to harm minimisation and becoming the world leader in the delivery of safe gambling and entertainment.”

The company has accepted that the due diligence on gamblers, who could have been involved in money laundering, was also unacceptable.

The Federal Court will decide just how big the fine will be over July 10-11, but it’s unlikely that it could ever top our biggest record fine that Westpac copped for failed money laundering systems. That was a whopping $1.3 billion in 2020. By the way, CBA was hit with a $700 million fine for similar mistakes in 2018.

This latest fine adds to the $120 million fine Crown was hit with in November last year for not doing enough to discourage problem gamblers. And then there was the $80 million fine from the Victorian Gambling and Casino Commission for allowing gamblers to use debit and credit cards to bankroll further gambling.

Maybe that $617 million fine might prove to be a guess short of the mark with total fines so far totalling up to $650 million compared to Blackstone’s $617 million put aside for penalties.

Of course, Crown is no longer listed, so this pain is a private one, but what does the size of this fine mean for the publicly listed Star Entertainment Group? Well, yesterday its share price rose 1 cent to $1.18, which might suggest that the size of the fine for Blackstone was less than analysts were expecting. But a 0.85% rise yesterday pales into insignificance against the overall share price fall over the past 12 months, which was a huge 56.91% slump!

Betting on gambling stocks in a new more caring and sharing world has proven to be riskier than going to a casino, as the chart below shows.

Star Entertainment Group (SGR)