The authorities in China arrested 17 Crown Resort employees in October 2016 on alleged gambling related crimes and caused major casino operators in the region to immediately pull out their staff and cease all marketing and promotional activities. The arrests hurt Crown Resorts in a major way as the company’s share prices plunged and there were concerns in the casino industry as to whether China was going to clamp down on all casino operators.
Now in 2017, a number of major gaming operators such as Galaxy Entertainment, Las Vegas Sands Corp, and MGM Grand have once again resumed their marketing efforts in China according to an article published in the Australian Financial Review (AFR). China does allow casino operators to have sales and marketing teams in the country on the basis that they promote their international resorts and focus on non-gaming activities such as theme parks, tourist attractions, and restaurants.
The authorities do not want casino operators to promote their casinos and gaming facilities which is allegedly what the 17 Crown Resort employees were alleged to be doing. All major gaming operators focus on mainland China and look to attract VIP gamblers to their resorts as they are known to be big spenders. These international casino resorts open multi-million dollar lines of credit for these high-rollers and provide them with a number of preferential services.
AFR reported that a number of sources have confirmed that most major gaming operators have started to hire staff in China and are aggressively marketing their services. Other sources claim that these gaming operators had to resume operations in China because it was a very lucrative financial market and the operators could not continue to lose one of their most important gaming markets.
The Star Entertainment Group which is based in Sydney and the biggest competitor to Crown Resorts in Australia is keeping a close watch on what Macau gaming operators are doing in the region. The Star had a smaller marketing team in China than Crown Resorts and is yet to make a decision whether they should resume their marketing and promotional efforts.
The AFR article stated that some operators have resumed services in China because they believe the crackdown was not due to the marketing activity alone but also due to the fact that the authorities wanted to stop the flow of money from high rollers on the mainland to casinos in Australia, Macau and other parts of the world. Gaming analysts are concerned that the authorities will continue to watch the VIP market, especially if Macau VIP GGR revenues in December surge.
In a statement, analysts from Nomura said earlier this week “In our view, Beijing remains focused on plugging holes in the capital flight bucket, primarily through junkets and, to a lesser degree, UnionPay. While we don’t yet have the December breakdown of VIP versus mass revenues, we believe that the recent growth spurt in Macau VIP revenues to over 20 per cent in November (four times greater than mass growth for the month) is not sustainable and that it could lead to negative policy responses from Beijing if it were to persist”.