Over the weekend, it was made known that 18 employees of Crown Resorts Ltd were detained by the authorities of China. Included in the detentions were three Australians accused of  trying and lure gamblers in China to their gaming venues. Crown Resorts, owned by James Packer, reported that the employees had not been spoken to, including Jason O’Connor, the head of international VIP gambling. Reportedly, the individuals were detained due to ‘gambling crimes’ and no further explanation was given.

Due to the detainment, the shares of Crown fell by 14% which is the largest decline for a single day in the history of the company. Rival Australian company Star Entertainment Group Ltd also saw their shares fall, only by 6%, due to concerns of the impact that the move by China will be on the ability of both companies to attract gamblers of China to their new developments located in Australia.

Bernstein of Hong Kong Analyst, Vitaly Umansky, commented on the detainment, stating that it seemed to be a repeat of the crackdown by China on efforts of casino marketing by South Korea from earlier this year. The move was more about keeping gambling of the Chinese under domestic control rather than trying to stop the actual gambling. Umansky stated that the government of China seems to be making their intentions clear about their view on gaming activity being offshored to foreign jurisdictions while Macau is not targeted in the same manner.

Crown Resorts has a 27% stake in the Macau venue Melco Crown Entertainment Ltd. The company does not operate directly in China but does rely on the gamblers in the area to visit their operations in Australia. Due to the news, shares of Melco Crown fell as much as 5.6% along with Sands China and Wynn Macau Ltd.

The reasoning of the detention of the 18 individuals remains unclear but analysts are suggesting that Crown did not read the enforcement climate of marketing for its venues on the mainland clearly, where gambling is ruled illegal except for the regulated state-sanctioned lotteries. Within the past two years, other gaming operators have decided to limit their marketing in China and focus more on promoting accommodations, restaurants, and entertainment.

According to a Bloomberg report, Crown Resorts was warned by authorities of China to stop their efforts to attract high rollers from the mainland in 2015. The news site was able to speak with an individual who is familiar with the detention of the 18 employees. Reportedly, even after the warning, the authorities saw senior executives of Crown made short trips to China instead of spending extensive periods of time in the country. Changes were also made to focus on the actual resorts of Crown instead of casino gaming when it came to marketing in the area. The individual stated that the authorities did not feel the actions of Crown officials were a material change to the activities usually conducted by the company.

Packer, who rarely makes public statements, commented yesterday that he is deeply concerned for the employees being held in China and the company’s number one priority is to be able to make contact and ensure that everyone is safe.

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