crown casino staff arrested in china for illegal gambling operations

Crown Employees Arrested in China

This week’s formal arrests of 18 Crown Resorts employees by Chinese Authorities is yet another blow for the Packer owned casino with each new incremental bit of news ringing investors’ alarm bells as they worry about the ramifications of losing a large part – if not all – of the Chinese VIP market.

There is so much unpredictability about what will happen to this lucrative source of gambling customers – to say nothing of the fate of those now arrested – that it’s difficult for the company to provide any meaningful guidance on what it means for earnings this year or next.

The fact that getting information from Chinese authorities is like trying to pry candy from a wrestlemania baby only serves to compound the issue and puts Mr Packer in an even tighter position than before.

Crown Resorts Playing Chinese Whispers

Chinese Whispers costing Crown Resorts billions in share value

However, Crown does know how many Chinese VIP players have signed on since the Chinese raid last month. But it’s not telling.

The Crown share price, which fell 20 per cent in response to the initial arrests, has already factored in an almost total drying up of the Chinese VIP market. That has cost the market value of the company half a billion dollars.

It has a legal team in China dealing with the situation and it will also have a better handle on the staff’s situation and prospects. However, it is understandable that Crown is not heralding its legal tactics at the risk of inflaming the Chinese authorities.

It also knows the activities that its China-based staff were engaged in on the mainland and if they were actively or aggressively marketing to locals. Since the raids, there has been numerous – and often contradictory – theories about why Crown in particular was targeted.

That’s a lot of free games we could have enjoyed!

Crown Guilty of Casino Thuggery?

This week, one of the junker operators – the groups that market and arrange gaming clients to travel to casinos – broke ranks and said Crown was in effect operating outside the bounds.

According to media reports, U Io Hung, the chairman of CCUE VIP Clubs in Macau, claimed Crown had been “too aggressive” in marketing its Australian properties directly to Chinese gamblers.

“To lure Chinese to gamble abroad is already illegal [on the mainland], and they have a large team there with huge capital involved there,” he said. “You can provide your marketing services as a travel agency [on the mainland], and this has been the practice. But Crown did not do it in this fashion.”

He said Crown had made a “big mistake” by being too high-profile and eschewing junkets – which act as middlemen who recommended high-value gamblers – in order to avoid paying commissions.

It’s not the first time such suggestions have been made. Privately industry insiders have claimed Crown had been attempting to bypass the junket operators who took bigger commissions.

“They went over themselves to look for clients… they just wanted revenue,” Mr U told Fairfax Media. “They’ve made a big mistake. They come over with their business cards, they say ‘I’m Crown, I’ll use a private jet to send you over there’, it’s too obvious.”

Or Were They Simply Airing Dirty Laundry

Another often cited theory about the Crown raids is that it was all about money laundersAnd whilst there is no evidence supporting or denying any of these claims the fact they can exist side by side and still fit in with the overall picture says… well it says enough is all we are going say here at

And while all this investor attention is being directed at how Crown properties in Melbourne, Perth and ultimately Sydney will be impacted by last month’s events, it has been diverted from Crown’s other 27.4 per cent investment in Melco Crown Entertainment.

Melco Crown slashed the value of Crown’s holding in Melco Crown and was a major factor in Crown’s decision to announce the separation of Crown’s domestic and foreign operations into two entities.

As it is, the clampdown on foreign online and offline casinos such as Crown Resorts recruiting Chinese nationals seems to have coincided with the start of a revival in the fortunes of the Macau casino businesses, of which Crown Melco is one.

A note on Wednesday from Goldman Sachs noted Melco Crown reached a 12-month high this week as sentiment towards Macau continued to improve.

China Still a Potential Cash Macau

Goldman said “Macau gaming revenue, visitation and non-gaming spend are each beginning to trend upwards [quarter on quarter] and [year on year] as new properties open on Cotai and commence ramp up”.

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