Crown Resorts says China staff arrests forced hand on Macau exit


crown-resorts-packer-china-arrestsAustralian casino operator Crown Resorts’ decision to scrap its international ambitions was largely forced by China’s detention of Crown staffers for promoting illegal gambling, according to the company’s largest shareholder.

Crown held its annual general meeting in Melbourne on Thursday, at which company chairman James Packer said the October 2016 detentions of 16 Crown staffers – including head of international VIP services Jason O’Connor – “forced the Crown directors’ hand in a large degree in relation to Macau.”

Earlier this year, Crown sold off the last of its stake in the Melco Crown Entertainment joint venture, which operated casinos in Macau and Manila, as part of the company’s new strategy of focusing on its domestic resorts. Crown began its selloff just two months after its staff members were arrested in China, and Packer said Thursday that the decision was made because Crown “takes the welfare of its employees very, very seriously.”

Packer (pictured) also admitted that Crown’s strategy of pursuing resort casino projects in global jurisdictions such as Las Vegas “didn’t succeed.” Crown recently downplayed expectations that the company would make a serious push to obtain one of the coveted Japanese casino licenses.

Crown’s VIP revenue took a serious hit following the arrests but the numbers have reportedly improved slightly since O’Connor was released from his Chinese prison cell in August.

On Thursday, Crown’s executive chairman John Alexander said that while VIP turnover across Crown’s properties was down 17% between July 1 and October 22, Crown Melbourne’s VIP turnover had “exceeded expectations” despite the same period last year occurring before the October 2016 staff arrests.

Both Packer and Alexander also weighed in on Senator Andrew Wilkie’s recent tabling in parliament of allegations of video poker machine tampering, money laundering and other antics at Crown Melbourne. Packer called Wilkie’s whistleblower claims “a lie” while Alexander claimed to be “angered and disappointed” at Crown being “unfairly smeared” by Wilkie.

Crown’s main domestic rival, The Star Entertainment Group, held its own AGM in Sydney on Thursday, at which chairman John O’Neill said his company’s VIP gambling decline had “abated to an extent” in recent months.

The Star CEO Matt Bekier added that group revenue was up 4% year-on-year in the July 1 to October 22 period, and that VIP turnover volume was “in-line with the prior period.”

Bekier noted new Australia China Business Council statistics that indicate the number of Chinese tourists to Australia is expected to rise from its current figure of 1m per year to 3.3m per year by 2026, and these increasingly well-heeled tourists’ spending is expected to jump by 50% to $13b per year by 2020.

Bekier acknowledged that tourism is “a fiercely-competitive industry” but said The Star’s strategy of “providing a compelling high-end tourism proposition for VIP and premium mass customers” from China and other Asia-Pacific markets was showing “good traction.”