Chinese authorities have arrested at least 18 employees of Australia’s Crown Resorts, including three top-level Australian sales and marketing executives in what is understood to be the latest crackdown on gambling.
The authorities have not made clear exactly what charges the resort employees have been arrested on, but the company suspects the charges are based around the solicitation of Chinese high-roller gamblers to overseas markets. Employees were known to work for the company’s visa logistics operations, primarily involved in recruiting Chinese gamblers and organizing their travel documents into Australia from China.
Crown Resort’s strategy has always been heavily reliant on Chinese visitors. Once a subsidiary company of the Australia’s richest family, the company liquidized the majority of its other assets which included extensive positions in the Australian media industry. Under Jamie Packer, Crown has switched to solely focus on casinos in Australia and Macau, in particular, but also increasingly across Asia.
The pre-dawn raids sent shock waves across the Australian business community, which is largely unfamiliar with Chinese-style law enforcement. Jeff Sikkema, the husband of one of the arrested Shanghai-based employees, Jiang Ling, told The Sydney Morning Herald that plain-clothes police raided their home at midnight on Thursday. For three hours they demanded the name of her boss before taking her to the police station for further questioning. Sikkema did not hear a word from or about his wife until Sunday when he received a hand delivered detention notice on suspicion of “gambling crimes.”
It is understood the visiting executive Jason O’Connor, who heads up Crown’s VIP International Team as well as the vast majority of Crown’s China based employees, has been arrested on similar charges. A spokesperson for Australia’s Department of Foreign Affairs and Trade (DFAT) said Chinese authorities had three days in which to notify of the detention of Australians according to the terms of a bilateral consular treaty. The Chinese foreign ministry confirmed Australians were detained on suspicion of committing “gambling crimes” in a note to the Australian Financial Review on Sunday. It said the case remained under investigation.
The fallout has been swift. Shares in Australian casino assets have tumbled following the news, with Crown’s own stocks down 13.9 percent, wiping approximately US$1 billion off its market value; while competitors SkyCity Entertainment Group and Star Entertainment Group are down 7.1 percent and 5.4 percent respectively. Hong Kong casino stocks have fallen too, with Sands China down 3.14 percent and Galaxy Entertainment down 3.59 percent; both also operate casinos in the Chinese city of Macau.
This is actually good news for Macau as it may suggest China wants to keep gambling money within China. The former Portuguese territory has had a disastrous few years on the back of Xi Jinping’s anti-graft campaign, which included a clampdown on Macau’s casino operators. It was in fact the Macau crackdown which attracted international operators to enter China in the first place, in an effort lure China’s high net worth individuals to gamble in foreign jurisdictions.
In June 2015, the Chinese Ministry of Public Security started an operation called “Chain Break,” aimed at disrupting foreign casinos’ access to money flows from China. The operation targeted individuals that were scouting for gamblers from mainland China and luring them to overseas markets. The brokerage firm Sanford C Bernstein Ltd issued a note in August last year stating, “Overall, the Chinese government seems to be making a clear statement about its view on gaming activity being offshored to foreign jurisdictions.”
Thirteen South Korean nationals were arrested in October, 2015. They were purportedly employees of foreign casino operators.