Crown Resorts still in dark on staff arrests in China

Casino operator Crown Resorts Ltd said in a statement on Monday it “is yet to be provided with details of why” a group of 18 employees had been detained by mainland China authorities. Several Australian media outlets have reported the detentions were for alleged gambling-related offences connected to marketing activities involving Crown Resorts properties.

“In relation to media reports on the weekend, Crown Resorts believes that Crown Resorts’ executive vice president VIP international, Jason O’Connor, is one of 18 Crown Resorts employees that have been detained by Chinese authorities,” the company said in a statement filed with the Australian Securities Exchange.

“To date, Crown Resorts has not been able to speak with its employees and is working closely with the [Australian] Department of Foreign Affairs and Trade to urgently make contact with and ascertain the welfare of its employees,” the firm added.

“Crown is endeavouring to provide support to the families of its employees in China and Australia,” it additionally noted.

The Australian Financial Review said the 18 executives were detained in a series of raids across four Chinese cities on Thursday night and Friday morning.

Australia’s ABC reported on Monday morning that it was expected the Australian government would hear officially from Chinese authorities later that day about the situation of the detained employees.

Multiple Australian media outlets reported that – were those detained to be accused and found guilty of soliciting Chinese high rollers to gamble in overseas casinos – they could each face a jail sentence of up to 10 years.

The ABC said China’s Ministry of Foreign Affairs had stated only that three people – including a senior marketing executive from Crown Resorts’ Melbourne casino – had been detained for “gambling crimes”.

Australia’s public broadcaster additionally reported on Monday that at least one of the Australians was understood to have been held in Shanghai, describing the city as “the focal point of the investigation”.

Many of the Australian news reports made reference to enforcement action previously taken in mainland China against agents representing South Korean casinos.

In August 2015, China News Service reported that mainland China’s Ministry of Public Security had started an operation called “Chain Break”, said to be aimed at disrupting foreign casinos’ access to money flows from China and those casinos’ links to individuals that scout for gamblers from China.

Brokerage Sanford C. Bernstein Ltd said in a June 2015 note – quoting Chinese media – that 14 South Korean direct marketers in mainland China had been arrested by Beijing police for allegedly promoting South Korean casinos to Chinese citizens.

In a note on Monday, Sanford Bernstein said it was unlikely that the detentions of Crown Resorts staff in mainland China would have any impact on Macau-based casino operator Melco Crown Entertainment Ltd.

Analysts Vitaly Umansky, Zhen Gong and Yang Xie said: “While Crown Resorts is an approximately 27-percent shareholder of Melco Crown, we do not have any reason to believe that the legal activities in China in any way are related to any operations of Melco Crown.”

They added: “The current action against Crown Resorts should not be taken as a negative indication against Macau casino operations… Over the medium-term, we believe that Macau and China authorities will exert pressure on junket operations that aim to lure gamblers into the regional markets.”