UPDATE 1-Clouds gather over Crown as Australian police probe Packer brawl

Wed May 7, 2014 3:36am EDT

* Criminal conviction could hit Packer's casino business

* Nine: Gyngell accepts responsibility for initiating fight

* Fight not to have impact on Packer's Colombo investment -official (Adds comments from Sri Lanka partner, official)

By Maggie Lu Yueyang

SYDNEY, May 7 (Reuters) - Police are investigating a public brawl between James Packer, one of Australia's richest men, and a television executive, which could jeopardise regional expansion plans for Packer's casino business if it leads to a criminal conviction.

The fight on Sunday between Crown Resorts Ltd Executive Chairman Packer and David Gyngell, chief executive of Nine Entertainment Group, left Packer with a black eye and a bruised reputation after photographs of the violence were published around the world.

Police on Wednesday confirmed they had launched an investigation even though the old schoolmates have issued a statement saying they remained friends despite their "ups and downs".

Nine said Gyngell - seen in the photographs looking dishevelled and barefooted as he wrestled with Packer outside the casino mogul's Bondi beach apartment - had accepted responsibility for initiating the fight.

Any resulting criminal convictions could complicate Packer's plans to expand his casino operations in Japan, Sri Lanka and Australia.

Packer's Melbourne-based Crown has won initial approval to build a $1 billion luxury hotel complex with a VIP gaming licence in Sydney, pending the outcome of a probity inquiry into the firm's fitness to operate a casino. It is also bidding for a $1 billion-plus casino project in Brisbane, in addition to its two existing casinos in Melbourne and Perth.

The Commission for Gambling and Liquor regulation in Melbourne is watching the police investigation, a spokesman said. But he said it was "a bit speculative" to say the brawl would have an impact on Packer's casino licence there.

"We are just aware of the police investigation. We are waiting to see what happens," he said.

In Sydney, the Independent Liquor and Gaming Authority said it had no comment on the brawl.

The probity inquiry is looking at whether Packer is a "suitable person" to run Sydney's second casino, including whether he is "of good repute, having regard to character, honesty and integrity".

A Crown spokeswoman said she was unable to comment on the investigation or its potential impact on Packer's business interests.

New South Wales state parliamentarian Alex Greenwich, who opposes the new casino, said he hoped the gaming authority considered "recent events" when making its decision.

Sri Lanka, which approved Crown's plans to build a $400 million resort complex without any explicit permission to operate casinos, said it sees the fight as a personal one.

"We do not have any problem with regard to his investment," an official at the island-nation's Investment Promotion ministry told Reuters on condition of anonymity. "It has been signed and we are working on that accordingly."

Packer's local partner Ravi Wijeratne, the owner of Rank Holdings, with which Crown is expected to establish a joint venture in its Colombo resort, declined to comment on the fighting.

Opposition from politicians and Buddhist leaders fearful of the cultural impact of casinos have already hampered Packer's push to expand into Sri Lanka.

In Japan, Packer is hoping his Macau-based joint venture Melco Crown Entertainment Ltd will be chosen as one of the few foreign firms allowed to enter the potentially massive market, as parliament considers liberalising the industry.

Australian Shareholders' Association spokesman Stephen Mayne told ABC radio that Packer's punch-up had added an extra layer of risk to his operations.

"He's one of the three biggest casino moguls in the world, and the biggest risk management question for casino licensees is probity, and being seen to be a fit and proper person," he said.

"So clearly being involved in a violent street brawl is potentially problematic in terms of ongoing and future casino licensing." (Additional reporting by Shihar Aneez in Colombo)

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