The Canadian province of British Columbia will conduct a formal inquiry into money laundering activity following recent revelations of funny money flowing throwing BC casinos.
On Wednesday, BC Premier John Horgan publicly announced that BC Supreme Court Justice Austin Cullen would lead an inquiry into rampant money laundering activity in the province’s gaming industry, but Cullen will also examine other corporate sectors, including real estate, luxury goods and financial services.
BC’s gaming industry was the subject of a scathing report released last year by former RCMP deputy commissioner Peter German, who recommended the province establish a truly independent regulatory entity to deter people from carrying hockey bags full of $20 bills into casinos. Last week, German released two new reports into other BC business sectors with equally damning conclusions.
BC Attorney General David Eby said the province was “done with asking nicely” for cooperation by individuals and entities at the heart of the money laundering activity. Eby said Cullen had been granted “significant” powers to compel witnesses to provide evidence. The federal government’s organized crime watchdogs will cooperate with BC’s inquiry, which will release an interim report within 18 months and a final report by May 2021.
Much of the casino controversy swirled around the River Rock Casino Resort in Richmond, a suburb of Vancouver. While the provincial government controls the casinos, it farms out day-to-day management to private firms. In River Rock’s case, that’s Great Canadian Gaming Corp (GCG), which has steadfastly denied any wrongdoing throughout this nearly two-year brouhaha.
Regardless, given the negative impact that the new anti-money laundering rules are reportedly having on BC casinos’ turnover, GCG investors probably aren’t thrilled by the news that the industry will now undergo more invasive scrutiny.
Earlier this month, the BC-based GCG reported that its revenues hit C$312m (US$232.2m) in the first quarter of 2019, a 35% improvement over the same period last year. Adjusted earnings rose 26% to C$111.6m but net earnings slipped 8% to C$41.8m.
The Q1 figures were impacted by a 12% fall in table drop at GCG’s BC casinos. GCG CEO Rod Baker told Bloomberg that VIP play was “still down” following last year’s introduction of the new AML rules, with River Rock’s action “a little more stable” than the Hard Rock Vancouver, where VIP play was “frankly much less broadly dispersed.”
GCG operates 26 gaming venues across four Canadian provinces, while the three casinos it operated in Washington State through its Great American Gaming Corporation were sold last month to Maverick Gaming LLC for $56m. Baker said the sale would allow the company “to focus on its core growth markets” in Canada.