Australian casino operator Crown Resorts Ltd said on Friday it settled, for the sum of AUD125 million (US$94.1 million), a class-action lawsuit that alleged the gaming firm failed to inform shareholders of a marketing campaign in China that led to a sharp fall in the group’s share price when some of the firm’s staff were detained in China in 2016.
In its filing to the Australian Securities Exchange, Crown Resorts said it “has reached an agreement to settle the shareholder class action commenced against it on 4 December 2017 in the Federal Court of Australia.” The case was filed by Maurice Blackburn Lawyers.
“The total settlement amount is AUD125 million inclusive of interest and costs. The settlement of the proceeding, which is without admission of liability, is subject to Federal Court approval and other conditions,” the company added.
The lawsuit alleged that Crown Resorts 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 gamble backfired spectacularly.”
A number of Crown Resorts workers were detained in China in October 2016, and later formally arrested and accused of “gambling crimes” in relation to alleged recruitment of Chinese high-value gamblers for the firm’s Australian venues. Some of those arrested later received jail terms from a Shanghai court.
In Friday’s statement, Crown Resorts said it expected to “recover a significant portion of the settlement amount from its insurers,” but added that it could not “be certain about the outcome of negotiations with insurers.”
It added: “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.”
The Australian casino firm has been grilled at home because of its “dishonest and unethical” conduct, as described by local authorities. Crown Resorts has been found unsuitable to operate a casino in Melbourne, in the state of Victoria, and given two years to reform itself, according to a report released earlier this week.
In February, the company had been found unsuitable to be permitted to open a casino in Sydney, New South Wales, and a decision on its gaming licence there is still pending.
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