IAG NOVEMBER 2016 web - page 4

China sets the record straightwithCrown resortsarrests
fChina’santi-graft campaign turned the local gaming industryon
its head, the arrests of 18 CrownResorts staff inmainlandChina
on 14October has sent shockwaves around theworld.
Rarely has a single event promised to have such a significant
impact on the global gaming industry. After all, it is the Chinese high
roller that international casinos crave above all else – be they nearby in
thegaminghubofMacau, inCrownResorts’ home countryof Australia
or on theother sideof theworld in LasVegas.
Sowhat does it all mean? For now, the gamingworld is verymuch
in a stateof “wait and see.”
According to reports, Macau’s six concessionaires have been
quick to distance themselves from both the arrests of Crown Resorts
employees and the alleged activities that led to them. This is, they
say, about Crown and Crown only with Chinese authorities said to
have been tracking themovements of its executives in and out of the
country for the past year. The company was evenwarned to reel back
its mainland marketing efforts, according to reports – a directive it
seemingly ignored.
But whether the operationwas indeed Crown-specific or a broader
warning to foreign operators looking to lure Chinese VIPs their way, it
certainly seems some are listening withMatt Bekier, CEO of Crown’s
Australian rival Star Entertainment, cancelling a planned trip toMacau
in lateOctober. Better tobe safe than sorry.
At the very least, China has made a powerful point. In June 2015,
authorities implemented a similar operation that saw 13 executives
from South Korea’s two biggest foreigner-only casino operators –
ParadiseGroup andGrandKorea Leisure – arrested for allegedly trying
to lure Chinese players to their properties. Sixteen months later they
remain in custody.
Only a fewmonths earlier police raided theAPPTNanjingMillions
– a widely advertised poker tournament backed by online poker giant
PokerStars. Its Beijing-based co-organizers, Jian Yang and Li Su, were
later charged with opening a gambling house and submitting false
applicationmaterials to the JiangsuProvincialChessSportsAssociation
in the lead-up to the event.
One of the problemswith theAPPTNanjingMillionswas its sheer
scale,witharound2,300players takingpart over fourdaysbeforepolice
stepped in. Theevent’s re-buy format and the fact that cashgameswere
said tobe running at the same time also attractedunwanted attention.
Ironically, ahandful ofmuch smaller poker tournamentshavebeen
run in the 18 months since without incident, suggesting that it isn’t
so much what they were doing but how they were doing it that irked
Chinese authorities. If a similar view has been taken of CrownResorts,
it could simply be a caseof foreignoperators having to change theway
they dobusiness inChina.
There isnodoubt theseoperators faceauniquesituation in regards
to how theymarket their properties in the sense that the core product
of their business is the one thing they are not allowed to promote.
Operators overcome this by promoting their non-gaming attractions
instead. But the lines are easily blurred.
This isn’t such a big deal for Macau. China knowsMacau, knows
the properties and understands the split between its gaming and non-
gaming activities. Macau’s concessionaires regularly advertise their
non-gamingofferings on themainland.
The dynamic for foreign operators is different, so while Crown
Resorts has every right tomarket its properties inChina, there is a line
that shouldn’t be crossed. The big question now is how close to this
lineCrownResorts sailed.
In the short term there will be no avoiding the hit Crown Resorts
will take to itsVIPbusiness.Other operators in the regionwill likely feel
some of that pain too. But it doesn’tmean theVIP “bubble has burst”,
as declaredby someoutlets in recent weeks.
Rather, it could provide somewelcome clarity for the industry as a
whole, setting down better definedmarkers for foreign operators and
creating some sensitivity aroundChina’s expectations.Or sowehope.
In themeantime, thewaitinggame continues.
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