The stock of Crown Resorts (ASX:CWN), one of the largest casino operators of Australia, has crashed by 13.90 percent after China confirmed that they have arrested 18 of their staff members in the country. Australia has also confirmed these arrests.
There are growing fears that there might soon be a crackdown on foreign casino operators in China.
Among those to be arrested is a senior executive of the company. Jason O’Connor is the Executive Vice President of their international business. Three of them are Australians, while the others are locals.
Casino Stocks Plunge In Asia
The stocks of other Asian casino operators have also plummeted after the shock arrests, including MGM China, Galaxy Entertainment, and Sands China, all of which has come down by 3 percent in the Hong Kong market. The Star Entertainments stock has dropped by close to 4 percent in Sydney. Wynn Macau came down by 2.9 percent.
Gambling is illegal in mainland China. The country also opposes their citizens going abroad for gambling. However, there are many operators, who market tourism services and resorts where the casinos are located.
The citizens of China are among the most prolific gamblers in the world. Last year too, China had arrested 13 casino managers from South Korea on charges of offering free tours, sexual services, hotels and gambling opportunities to Chinese citizens.
Recently, Beijing clamped down on VIP gamblers in Macau as well. Macau has been the only place in China where casinos are legal.
Tensions Rise Between China and Australia
The foreign ministry of China issued a statement, conceding that they have “detained some Australian nationals for suspected gambling crimes”. However, no further explanation was provided by the authorities. The matter is under investigation at this time. The foreign minister of Australia said consular officials located in Shanghai are working with the detained executives and offering assistance.
Crown Resorts (ASX:CWN) has extended legal help to their arrested staff members as well. The company has however complained that China has not provided any explanation for these arrests, and says that they have not been allowed to speak with the arrested staff members yet.
China is very important to Crown’s business. A third of the revenue the company makes comes from international customers, most of them from mainland China. A lot of Chinese nationals now visit Perth and Melbourne for casino related activities, and many of them are Crown customers.