The 751-page report from New South Wales, based on 60 days of public hearings that included Crown executives, found that Crown disregarded the welfare of its employees in China by pursuing lucrative highrollers—which ultimately culminated in the arrest of Crown employees in China for gambling-related crimes.

Bank accounts at Crown subsidiaries were used to launder money, and Crown improperly worked with junket operators in Asia to bring gamblers to Australia, the report also found. The regulator began looking into Crown after the questionable business dealings were reported in local media.

Crown previously took steps to address some of the issues raised by the New South Wales report, such as ceasing all ties with junkets and creating a compliance and financial-crimes department. The report said Crown could implement certain changes to improve its suitability, and Crown has said that it is in discussions with the regulator on the matter.

The Blackstone offer provides Crown’s major shareholder, Australian billionaire James Packer, an opportunity to exit from the business amid the regulatory uncertainty. The New South Wales report criticized Mr. Packer, who previously sat on Crown’s board but no longer does so, for wielding too much control over the company. After the report, some Crown board members with ties to Mr. Packer stepped down.

Mr. Packer controls a roughly 37% stake in Crown through his investment firm Consolidated Press Holdings. A CPH spokesman declined to comment on the Blackstone offer.

Aside from the regulatory issues, Crown’s business has taken a big hit from the coronavirus pandemic. International travel restrictions has slowed the flow of high-rollers into its Australian casinos from abroad, and it has been required to close its casinos at various points due to local lockdowns. The company said revenue fell 62% in the six months to December, and it reported a loss in the half of about $93 million.

Crown, which operates a private gaming club in London aside from its Australian casinos, once had a wider international footprint and was seeking to expand further. But it pulled back from its global ambitions after the arrest of its employees in China in late 2016, and sold off a stake in a Macau casino operator and pulled out of a Las Vegas casino project.

U.S. firms have previously expressed interest in Crown. In 2019, Wynn Resorts Ltd. , made an indicative takeover offer that then valued Crown at $7.1 billion, but Wynn called off the discussions after saying Crown had prematurely disclosed their talks.