Inside Asian Gaming

inside asian gaming November 2016 4 China sets the record straight with Crown resorts arrests www.asgam.com I f China’s anti-graft campaign turned the local gaming industry on its head, the arrests of 18 Crown Resorts staff in mainland China on 14 October has sent shockwaves around the world. 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 the gaming hub of Macau, in Crown Resorts’ home country of Australia or on the other side of the world in Las Vegas. So what does it all mean? For now, the gaming world is very much in a state of “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 the movements of its executives in and out of the country for the past year. The company was even warned to reel back its mainland marketing efforts, according to reports – a directive it seemingly ignored. But whether the operation was indeed Crown-specific or a broader warning to foreign operators looking to lure Chinese VIPs their way, it certainly seems some are listening with Matt Bekier, CEO of Crown’s Australian rival Star Entertainment, cancelling a planned trip to Macau in late October. Better to be 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 – Paradise Group and Grand Korea Leisure – arrested for allegedly trying to lure Chinese players to their properties. Sixteen months later they remain in custody. Only a few months earlier police raided the APPT Nanjing Millions – 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 application materials to the Jiangsu Provincial Chess Sports Association in the lead-up to the event. One of the problems with the APPT Nanjing Millions was its sheer scale, with around 2,300 players taking part over four days before police stepped in. The event’s re-buy format and the fact that cash games were said to be running at the same time also attracted unwanted attention. Ironically, a handful of much smaller poker tournaments have been 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 Crown Resorts, it could simply be a case of foreign operators having to change the way they do business in China. There is no doubt these operators face a unique situation in regards to how they market 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 knows Macau, knows the properties and understands the split between its gaming and non- gaming activities. Macau’s concessionaires regularly advertise their non-gaming offerings on the mainland. The dynamic for foreign operators is different, so while Crown Resorts has every right to market its properties in China, there is a line that shouldn’t be crossed. The big question now is how close to this line Crown Resorts sailed. In the short term there will be no avoiding the hit Crown Resorts will take to its VIP business. Other operators in the region will likely feel some of that pain too. But it doesn’t mean the VIP “bubble has burst”, as declared by some outlets in recent weeks. Rather, it could provide some welcome clarity for the industry as a whole, setting down better defined markers for foreign operators and creating some sensitivity around China’s expectations. Or so we hope. In the meantime, the waiting game continues. Ben Blaschke We crave your feedback. Please email your comments to [email protected] . Editorial