Australian Crown Resorts Employees Arrested in ChinaOctober 17, 2016 2:47 pm
Last month, a newspaper report revealed how Australia’s casino industry was benefitting from an uptick in Asian traffic following China’s anti-corruption campaign, with visitors doubling between 2015 and 2016, and Asian high-rollers representing a staggering 95% of the casinos’ VIP segment.
Amongst the beneficiaries was undoubtedly Crown Resorts Limited, one of Australia’s biggest gaming and entertainment companies with the multi-billion dollar business owning Melbourne’s Crown Casino in the south-east of the country, as well as Crown Perth in the west. However, on Friday the company’s share price fell sharply, with the decline continuing today after 18 members of its staff in China were arrested for “gambling crimes”, and on suspicion of enticing Chinese citizens to travel and gamble overseas.
As a result, share in Crown Resorts Ltd are currently trading down 13.9% at $11.15, and the company faces further future uncertainty as it is now forced to reassess its ‘international business’ model which had been targeting Chinese gamblers. Elaborating on the situation, Raymond Chan, managing director of Morgans stockbroker, alluded to the “new layer of regulatory risk” now facing Crown, with Citi analyst Rohan Sundram also now having reduced his price target for the company, stating:
“As a result, we have lowered our near-term VIP growth outlook for Crown and now forecast an 8 per cent year-on-year decline in VIP revenue 2017, from a previous forecast of a 3.5 per cent increase.”
In the meantime, the list of arrested employees includes Crown Resort’s Executive General Manager of international VIP services Jason O’Connor, who headed a program to bring overseas ‘high rollers’ to the Crown Casino. Commenting on the widespread arrests, a statement from the Australian department of foreign affairs said:
“Chinese authorities have three days in which to notify of the detention of Australians according to the terms of a bilateral consular treaty. Consular officials will seek to offer appropriate consular assistance to the detained Australians.”