Scientific Game

Bad Publicity

Two days after a news report drew attention to it, Chinese authorities shut down a “cashless” casino bar in Hainan

Monday, 18 March 2013 12:33
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Photo courtesy Reuters

Mangrove Tree Resort World on Sanya Bay, home of the controversial Jester Bar, opened late last year, with further construction still in progress.

Zhang Baoquan must be cursing Reuters.

Last month, the news agency reported on a “casino bar” on China’s southern Hainan island, owned by the mainland Chinese art, film and real estate mogul.

The 17th February Reuters report claimed the Jester Bar, part of the newly opened 173-acre Mangrove Tree Resort World on Sanya Bay, “marks the Chinese government’s first tacit approval of a gaming concept outside of Macau.”

Jester contained 50 gaming tables and was open only to hotel guests, with plans to admit local residents when the resort is fully completed next year, at which point the total development would feature 4,000 rooms, a convention center accommodating 6,000 people and facilities including a water park.

According to the Reuters article: “Inside Jester, which models itself on Macau’s casino halls with garish chandeliers and a giant roulette wheel ceiling, players buy tickets costing 500 yuan (US$80) each. Bets range from 20-2,000 yuan in the mass area, while the high-limits area is set at 2,000-100,000 yuan. Big whale punters will be able to bet over 100,000 yuan once the VIP room opens on the second floor.

“When players win, they receive ‘Mangrove’ points that can be used to buy products available in the casino such as an iPad or a Rimowa suitcase. Once luxury brands open outlets within the resort, customers will be able to spend their points in those stores. Art work from Zhang’s Beijing art gallery is also available for purchase.”

Mr Zhang added that retail stores, including Prada and Louis Vuitton, would be part of a network of 20 luxury outlets at the resort next year.

Reuters quoted Mr Zhang as claiming, “Our casino bar is the first in the country. The government is monitoring, it’s a test.” Furthermore, Mr Zhang said, “The local governments are very supportive.”

But the authorities shut down Jester two days following the Reuters report. Chen Guangfa, the deputy director of the Sanya Culture and Sports Bureau, stated: “We are investigating it, and so far, it looks like they have violated their operating regulations.”

Ms Chen added: “When we approved it, the regulations and the certificate said its operations would be entertainment in nature, but inside the bar there are some games, and they’ve gone beyond the scope of the regulations, so we closed it down.”

Meanwhile, authorities in Sanya reiterated they had never allowed any form of gambling, and are currently conducting a probe in order to determine whether the activities at the Jester Bar constituted gambling.

The question then is whether the local authorities had originally actually condoned the so-called “cashless” gambling at Jester, as Mr Zhang claimed, but then shut it down after Reuters threw the spotlight on it? Or had Mr Zhang—ranked by Forbes as one of China’s 300 richest people in 2012 with assets of US$600 million—gone public in the international media with a false claim as part of a gambit to gain legitimacy for Jester’s mode of operation?

Mr Zhang’s credentials and connections are impeccable. He started off as a carpenter in his hometown of Zhenjiang in eastern Jiangsu province and rose to become president of a Beijing-based conglomerate, Antaeus, which enjoys the financial backing of China Development Bank. The state-owned lender provided 70% of the financing for the Mangrove Tree expansion.

Reuters has him as a well-known patron of the arts and prominent film investor, married to Wang Qiuyang, a mountaineer whose father, Wang Chengbin, is a retired high-ranking officer in the PLA.

If Mr Zhang wasn’t making a high-stakes bluff, the alternative is that he did have some sort of official sanction for Jester. But the Reuters article, by drawing attention to the special dispensation he was enjoying, led to a reversal in the local authorities’ stance.

The real answer will likely never be revealed. The only thing for certain is that when it comes to gaming, contrary to the old adage, there is such a thing as bad publicity.

And the tone of the story probably didn’t help. The opening paragraph warned that developments like the Jester Bar “could potentially siphon business from the world’s largest gaming hub in Macau an hour’s flight away”. Given the Chinese government’s commitment to safeguarding the prosperity of its two special administrative regions—Hong Kong and Macau—the suggestion that it was allowing an activity that was potentially deleterious to the mainstay of the latter’s economy would not have gone down well.

The article also did not consider the possibility that operations like Jester could actually benefit Macau by getting more mainland Chinese involved in casino-style gambling, with Macau still the only place in the country where they can legally play for cash.

zhang baoquan
Zhang Baoquan maintains that local authorities were “supportive” of his play-for-fun casino.

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