Chinese authorities have launched a criminal investigation into staff at Crown Resorts and confirmed they have detained a number of Australians for gambling-related offences.
Crown believes 18 of its staff, including three Australians, are being held, as other foreign casino operators, including Star Entertainment, scramble to safeguard their China-based staff.
“Australians are under criminal detention … for suspected involvement in gambling crimes,” China’s Foreign Ministry said in an emailed statement to The Australian Financial Review on Sunday.
“At this stage the case is under further investigation.”
The Crown staff were detained in a series of overnight raids on Thursday and Friday in an apparent crackdown on illegal marketing by offshore casinos.
Australian consular officials in China are expected to receive official notification about the detentions on Monday morning and be allowed to visit the Crown staff by mid-week.
It is believed one of the detained men, Jason O’Connor, the head of VIP International at Crown, is being held at the main detention centre in Shanghai.
The Crown staff may have been targeted as part of “Operation Chain Break”, launched by Chinese authorities last year in an effort to stop the illicit flow of funds into foreign casinos.
“For me the biggest question is why did they target Crown?” said Andrew Scott, the chief executive of Inside Asian Gaming, an industry publication based in Macau.
“It’s quite standard to do this type of marketing activity in China.”
Another source said foreign casinos had an “army” of marketing people in China.
The Financial Review has been told police raided the houses of Crown employees in Shanghai, Beijing, Guangzhou and Chengdu and some of those targeted were involved in “VIP relations”.
It is understood two Crown staff were out of the country at the time and therefore avoided being placed in police custody.
The move against Crown has reverberated through the industry as other foreign operators scramble to ensure the safety of their employees.
The Financial Review has been told The Star has at least a dozen marketing staff on the mainland, mostly Chinese nationals, and has ramped up its promotion activities in recent months.
“The Star in Sydney has recently overtaken Crown in Melbourne in its share of the international VIP market in Australia,” Mr Scott said. “This is something that has never happened before.”
Questions are also being raised about the ability of Crown and Star to continue to attract high rollers to Australia.
“For Crown, VIPs might be more wary about going there right now as it is on the radar of Chinese authorities,” one industry insider said.
For Crown, the decimation of its operations in China could also affect its ability to collect debts from large gamblers on the mainland, who often bet on credit, according to another industry source.
“This has a huge implication for collections,” said the source, who indicated outstanding debts often ran to tens of millions of dollars at any one time.
“Who is Crown going to get to collect these debts … no one I suspect.”
In a statement on Sunday, Crown said it was in close contact and providing support to the families of the employees involved.
“Crown believes that Jason O’Connor, the head of Crown’s VIP International team, is one of 18 Crown employees being questioned by Chinese authorities,” it said.
The Department of Foreign Affairs and Trade said: “We are aware of reports of the possible detention of a number of Crown International Group employees across China overnight on 13-14 October, including three Australians.
“Chinese authorities have three days in which to notify of the detention of Australians, according to the terms of a bilateral consular treaty.
The ASX-listed Crown operates casinos in Melbourne and Perth and is due to open a Sydney high rollers venue in 2021.
The detention of the Crown employees was first reported by the Financial Review on Friday night.
Casinos are not allowed to advertise in mainland China, but operators such as Crown are allowed to promote tourism and the resorts where casinos are located.
Under Chinese law, organising more than 10 people to gamble overseas is considered illegal.
This article was originally published by The Australian Financial Review. Read the original here or follow the AFR on Facebook.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.