China’s VIP gamblers have always been on the radar of global casino operators as these high-rollers are known for spending hundreds of thousands of dollars at the casino tables. Casino operators from Australia, the United States and neighboring Asian countries such as South Korea, the Philippines and Vietnam tend to roll out the red carpet to these VIP gamblers from Mainland China by offering them a number of perks including free air tickets and accommodation.
Operational Chain Break
Beijing has tried to prevent these casino operators from luring these VIP gamblers to foreign casinos by launching ‘Operational Chain Break’ a couple of years ago but casino operators came up with new guerilla marketing strategies to stay within the law but still target VIP gamblers from the Mainland. Most casino operators tended to rely on a marketing strategy that promoted non-gaming entertainment venues and activities via a tour package in Mainland China but their main goal was to get Chinese nationals over to their casinos.
The Chinese government did not have any laws against operators who were promoting non-gaming facilities but strictly forbid any form of gambling whether brick & mortar or online gambling from being advertised. Australia’s Crown Resorts violated these laws towards the end of 2016 and allegedly promoted its gambling venues across Australia in a bid to recruit high-rollers. This resulted in the arrest of 18 Crown Resort employees including Jason O’Connor who served as the Vice President of International VIP operations. O’Connor is still in a Chinese jail and the case has not yet gone to court.
Foreign Casino Operators On Notice
Guo Shengkun, the minister of Public Security in China announced this week that the government would continue with ‘Operational Chain Break’ and warned casino operators as well as individuals involved in promoting casino resorts in Mainland China, that they would be prosecuted to the fullest. The minister also stated that the authorities would seriously investigate any firms or individuals who were involved in investing in overseas casinos.
This news will not go down well for global casino operators especially in places like Australia, Saipan Island and South Korea as their casinos tend to rely heavily on Mainland Chinese VIP gamblers. Crown Resorts experienced a significant decline in their share prices and overall revenue after their 18 employees were arrested and it forced the company to make a decision to concentrate on its Australian business and reduced its business interests outside of Australia.
Australian Casino Operators Might Need A New Plan
Crown’s rival, Star Entertainment did not want to take any chances in China and as a result decided to de-register its subsidiary in China and stop all promotional activities. Star Entertainment is building two new casinos resorts in Brisbane and Sydney in collaboration with Hong Kong based partners. The company’s Hong Kong based partners have a huge list of VIP clientele spread across the Mainland and Star Entertainment was counting on this VIP market segment to visit its new casinos. Now that China has made its intentions clear, Star Entertainment and its partners might have to think of another strategy going forward.
Earlier this week, Australian legislators decided not to back an extradition treaty with China that would have allowed the Chinese government to bring back fugitives from Australia to face trial in China. Australian legislators decided to vote in favor of the extradition treaty citing concerns over human rights violations in China. The authorities in China have asked for better cooperation from foreign countries as they continue to effort to crackdown on illegal gambling activities in China and cross-border gambling.
Crackdown To Target Financial Platforms
Shengkun spoke at a recent meeting in Beijing and called on the public to immediately report any suspicious activities related to the promotion or marketing of any form of gambling in the country. The public will be rewarded by the government for their assistance. Shengkun also stated that the authorities will be looking at online payment platforms and underground banks that assist with cross border transactions to fund gambling operators and activities.
China’s decision to be strict in investigating and prosecuting foreign casino operators who advertise their gambling services will definitely hurt their casino revenue. However, it looks like that Macau’s casinos could be the biggest beneficiary of this policy as VIP gamblers might start going back to Macau.