China’s Crackdown on Crown Throws Up Uncertainty, Rival Star SaysBy
Potential impact on revenue not yet clear, CEO Bekier says
China rounded up 18 Crown staff in casino operator crackdown
China’s detention of 18 Crown Resorts Ltd. employees has created some uncertainty and it’s tough to grasp how the crackdown might impact business, Australian rival Star Entertainment Group said.
The potential effect on Star’s revenue isn’t yet clear because of the limited information available on the detentions, Chief Executive Officer Matt Bekier said in his address to shareholders at the company’s annual general meeting in Sydney on Friday.
Star’s revenue from big-spending, top-priority gamblers accounts for less than 30 percent of gross group revenue, and 16 percent of earnings before interest, taxes, depreciation and amortization, it said. Around 80 percent of this revenue comes from so-called Asian junket operators that typically take high rollers overseas and lend them money to play in casinos.
“These are early days in terms of the situation in China,” Chairman John O’Neill said in his address to shareholders. “We will continue to monitor developments closely, while working with staff and Asian-based external agents to understand the situation more fully as it unfolds.”
Shares of Star, the operator of Sydney’s only licensed casino, fell 2.5 percent to A$4.76 at 10:55 a.m. in Sydney, valuing the company at A$3.9 billion ($3 billion).
The roundup two weeks ago of Crown staff across China, including the company’s head of international high-roller operations, sparked concern that the government in Beijing may be cracking down on casino companies that promote gambling abroad. O’Neill said no Star staff have been held or questioned by Chinese authorities and it has no office in mainland China.
Anyone who entices Chinese citizens overseas to bet, or who tries to force them to repay their debts, faces jail. Macau, a special administrative region, is the only Chinese city where casinos are legal.