China’s Crown Arrests Hits Australian & New Zealand Gaming Sector

Crown Resorts, ChinaAustralian casino operator Star Entertainment Group’s CEO Matt Bekier cancelled a scheduled trip last week to Hong Kong and Macau in the wake of the arrest of 18 employees of rival Crown Resorts Ltd in Mainland China.

The employees, three of whom are Australian nationals have been accused of gambling crimes.

Those arrested include a senior Crown executive, Jason O’Connor who is the executive vice president of VIP International. He is in charge of promoting Crown casino resorts to wealthy Chinese players.

A company spokesperson for Star said that Bekier was cancelling his visit in order to address concerns of investors and partners prompted by the arrests. He will be addressing the company’s annual general meeting to be held later this week. Bekier visits Hong Kong on a quarterly basis to visit business partners Far East Consortium International Ltd and Chow Tai Fook .

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The arrests has been seen as a crackdown by the Chinese government on gambling and has triggered widespread concern in Australia’s gambling industry over its impact on VIP gambling which is largely dependent on wealthy Chinese tourists.

In Oct. 2015, around 13 managers working for South Korean casinos along with Chinese agents were arrested for targeting and enticing high rollers from China to visit South Korea. Chinese president, Xi Jinping, ordered a clampdown that year on advertising for gambling services in mainland China.

In a statement, Sacha Krien, a senior media and gaming analyst with the global equity broker CLSA said,

So it could signal a broader crackdown on foreign casinos marketing in China. The Korean example can probably be differentiated but no doubt the impact was severe, with VIP revenues down materially and share prices still down 40-50%.

Crown has clarified that so far no charges have been filed. But it has been unable to contact to date any of the 18 arrested employees. The arrests were made as a part of several late-night raids in China. The company has stated in a filing to Australian Stock Exchange that it is yet to be informed of the reason for the arrests.

Crown’s shares fell by over 18 percent after the detainments were announced. Star’s shares are also down, dropping by around 12 percent. Share price of New Zealand casino company Skycity Entertainment Group Ltd went down by 19 percent after it issued a profit warning that its revenue might be hit by the arrests.

According media reports, several overseas casino groups have pulled out their staff from China after the arrests.


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