The arrest of 18 employees of the James Packer-controlled Crown Resorts in China is unlikely to change the appetite of foreign casino operators for doing business in that country, an expert on Asian business law says.
As billionaire Mr Packer said he was “deeply concerned” for the detained employees – three of whom are Australian – on Tuesday, investment analysts downgraded the likely impact of the raids on the future of the lucrative Chinese high-roller business.
And Dr Alice de Jonge, a senior lecturer in Asian business law at the Monash Business School, said even though the charges against the detained workers are still unknown, the future of the gambling business in China was unlikely to change.
“I don’t think it will change very much at all because the casino operators will still want to be there and they still want access to that market,” Dr de Jonge said.
“It’s a very big and very wealthy market. This isn’t going to be enough to drive them away.”
The Crown employees, who include executive vice-president of VIP International operations, Jason O’Connor, are being held on suspicion of alleged gambling crimes including marketing of casinos to large groups in China, according to reports from Fairfax Media and the ABC.
Gambling on the mainland of China is illegal except for official lotteries, and the organising or luring of people to gamble – even at casinos overseas – is also prohibited.
Investors dumped Crown stock on Monday on fears the Chinese government is clamping down on gambling but Deutsche Bank analysts Mark Wilson and Anthony El-Khoury upgraded Crown to a Buy on Tuesday.
“We believe the market is now pricing in a 70 per cent reduction in VIP turnover and a 100 per cent decline in Chinese VIP turnover, which we view as excessive,” they said.
Shares Crown plunged by almost 14 per cent on Monday but on Tuesday lifted 1.7 per cent, to $11.34.
Detainees in China can be held for 28 days without charge.
The Department of Foreign Affairs and Trade (DFAT) has now received official notification that the three Australians are being held in Shanghai following the detentions during raids across China on October 13 and 14.
Consular officials are arranging to visit the Australians to offer help, and they have legal representation provided by their employer.
Mr Packer, who holds 48.2 per cent of Crown shares, confirmed that the Crown board was updated on Monday night by DFAT but gave no further information.
“I am respectful that these detentions have occurred in another country and are, therefore, subject to their sovereign rules and investigative processes, he said.
Crown’s board is likely to face questions on the detentions from shareholders at Crown’s annual general meeting in Perth on Thursday.
NSW Premier Bruce Baird on Tuesday declined to speculate on how the detention of the Crown employees and the possible impact on visits of Chinese high-roller gamblers to Australia might affect Crown’s development of a $2 billion luxury hotel and VIP-only casino at Barangaroo in Sydney.