Crown staff risked everything as Chinese lost millions at casinos

CHINESE high rollers lost around $875 million at Crown Resorts casinos last year, indicating why their employees aggressively targeted the Chinese market.

More details regarding the Crown Resorts staff and associates who were found guilty of promoting gambling in China have emerged.

The papers obtained by the Australian Financial Review confirm the revenue from the Chinese VIP players was worth the risk – China is heavily against casino gambling, including targeting nationals and promoting international casinos.

According to the papers, Chinese VIP players who visited Crown Melbourne and Crown Perth in the last financial year lost more than $870 million.

Crown Resorts’ senior executive, Jason O’Connor, is one of the employees who have been detained in Shanghai since last October. He received a sentence of 10 months, time served included.

According to the written judgment after the trial, his sentence was based on “approving” aggressive sales targets, as well pursuing new VIP clients in mainland China.

The papers also revealed Crown Resorts reportedly handed out $35.8 billion in “rolling chips” to its Chinese VIP players during the 2016/17 financial year.

According to industry experts, players lose on average 2.5 percent of the rolling chips they receive.

Rolling chips cannot be directly exchanged for cash – the number of chips lost equates to the revenue accrued by the casino.

The court said Crown divided mainland China into five different target areas. Shanghai received the most attention with high rollers in the city of Wuhan receiving $15 billion in “rolling chips” – more than double its target.

The court added Crown’s performance details and sales plans, which were obtained by Chinese authorities, revealed the company had “increased its targets in mainland China over recent years”.

Chief executive of Inside Asian Gaming, Andrew Scott commented on the figures released after the trial and said the gambling conglomerate had a “very substantial business” on the mainland.

This business reportedly outperformed set targets by 16 percent during the last financial year.

But Scott noted the impact the arrests had on the performance targets.

“It could be down more than 50 percent as their China VIP business has been decimated,” he said.

Following the arrests, James Packer, the majority stakeholder of Crown, sold his stake in his Macau joint venture, Melco Crown, and decided to pull plans for a Las Vegas casino.

The court ruling also revealed Crown Resorts paid generous bonuses to its staff who went to China, including O’Connor who received $750,000.

The arrests of the 17 Crown Resorts staff and two former employees occurred on October 13 and 14 last year. The group had their accommodation raided and communication devices seized.

The gambling crackdown was no surprise as the activity is illegal on the mainland – not in Macau. In recent years, the government has attempted to tighten restrictions to prevent money from leaving the country.

Three junior staff were released on bail a few weeks after the arrests, while the rest remained behind bars for around seven months without knowing their crimes.

Reports emerged the Crown case was being dealt with at a local level in May and a trial date was set for June 26.

The group pleaded guilty at the trial and then received lighter sentences than expected with the heftiest sentence of 10 months, including time served, handed down to O’Connor and senior vice president for Crown, Alfraed Gomez.

Only 16 of the 19 were fined – resulting in over $1.7 million in fines for Crown on behalf of the defendants – while 11 were sentenced to jail. Those behind bars are expected to be released within the coming months.

New South Wales and Victorian gambling regulators are reviewing the incident and following the case closely to determine whether the casino breaches its license provisions in the respective states – Crown has a license for its new Barangaroo casino in Sydney.