China cracked down on James Packer’s Crown Resorts detaining 18 employees working for the billionaire’s mainland team. The Australian gaming magnate, who owns casinos in Macau and the Philippines, as well as in his home country, is estimated to have lost A$500 million ($380 million) in value as the company’s stock plunged following news of the arrests.
Among those detained are three top Australian executives including the Head of Crown’s VIP international team, Jason O’Connor. Australia’s ABC television network reported that the Crown employees are being held for soliciting Chinese high rollers to gamble in overseas casinos.
The news is another blow to casinos and resort developers in the region hoping to lure VIP clients from China to help fill their coffers. The action against the Crown staff comes as China’s continues to crack down on gambling by government executives as well as clamping down on uncontrolled outbound cashflows — two concerns that have put overseas casinoso firmly in the crosshairs.
Crown Hurting In Macau, Now Being Hit Back Home
The Xi government’s anti-corruption drive already led to a mass reduction in betting big in Macau, with gambling revenue in the former Portuguese colony declining for two years straight before rising 1.1 percent in August. That slide coincided with Wynn Macau opening a new $4 billion resort. Parisian Macao, owned and operated by Sheldon Adelson’s Sands China, also welcomed guests for the first time recently.
In the long term, the situation is unlikely to improve in the gambling haven just one hour from Hong Kong with Praveen Choudhary, an analyst at Morgan Stanley in Hong Kong, pointing to an underwhelming performance at Crown’s recently opened Studio City as an example of just how difficult it can be in Macau at the moment.
And while Crown’s three resorts in the special administrative region have been struggling, it has been doing much better back at home where foreign visitors, including a significant number of Chinese guests, are flocking to properties in Perth and Melbourne with a third resort currently under construction in Sydney.
Industry estimates obtained by the Sydney Morning Herald revealed between one quarter and one-third of Crown’s earnings comes from international VIPs.
Packer and Greenland Lost Out on Brisbane Bid
The arrests of Crown staff come after the Aussie casino operator last year lost out on a joint bid with Shanghai’s Greenland Group to build a $2.3 billion casino-centred resort in Brisbane, Australia. Local authorities are said to have scotched the Sino-Aussie offer over concerns that the state-owned Chinese group, which was said to be taking an 80 percent equity stake, was using the casino complex primarily as a way to sell condos to mainland buyers. The deal was ultimately led by a Hong Kong group that included the Far East Consortium and Chow Tai Fook.
Working together with a consortium led by CSCEC, China’s largest construction company, Crown has since won approval to develop a $1.5 billion casino complex on Australia’s Gold Coast.
Arrest Of Korean Casino Employees Fails to Dim Jeju Appeal
The arrest of Crown Resort’s employees comes nearly a year to the day after 13 South Korean casino managers and several Chinese agents were detained and accused of luring people from China to gamble in South Korea.
The detained casino workers were all accused of trying to attract Chinese guests with offers of free tours, complementary hotel stays and sexual services.
Despite the arrests, mainland firms are still keen on casinos on Korea’s Jeju resort island. Shanghai-based Greenland Group is teaming with Lotte Tour for a resort and gaming complex on the holiday destination. The casino, which will only admit foreigners, will be built by another Chinese entity, China State Construction Engineering Corporation (CSCEC).
Meanwhile, Macrolink Real Estate teamed up with a South Korean partner to acquire RMB 340 million (US$56 million) in land on Jeju with plans to build their own gambling destination.
Mainland Firms Search Far and Wide For New Casino Locations
Beyond Korea, other mainland developers have been betting on the gaming industry in exotic locations during the past few years with most of these establishments looking to target high-rolling VIP clients to populate their baccarat and poker tables once open.
Plans for a resort and casino on the site of a former Athens airport is being backed by Shanghai-based Fosun, Greek partner Lamda Development and Abu Dhabi’s Eagle Hills. Last month, the government finally ratified the project after objecting to tthe plan since it was announced in 2014.
In 2015, a little-known Macau, Shanghai and Singapore-based investment firm Alter City Group reportedly teamed up with CSCEC, the mainland’s biggest builder, to propose a 300,000 square metre integrated resort on an island just south of Saipan that would feature a casino.