SkyCity shares dive following raids in China
Investors have reacted badly to a crackdown by Chinese authorities on marketing by foreign casinos.
Shares in casino operator SkyCity have dropped sharply in trading today, following reports that Chinese authorities have detained 18 staff employed by its Australian rival, Crown Resorts.
In a statement to the Australian Financial Review yesterday, China’s foreign ministry confirmed the staff were being investigated for “suspected involvement in gambling crimes.”
AFR has reported that the staff, including three Australians, were detained in overnight raids in an apparent crackdown on illegal marketing by overseas casinos.
Chinese authorities are said to have begun the crackdown last year to try to stop overseas casinos being used to launder vast sums from some of its wealthiest citizens.
Under Chinese law, it is illegal to organise more than 10 people to gamble overseas. However, that has not prevented foreign casinos, including SkyCity, from pouring considerable resources into attracting high rollers from China.
Some of the Crown staff are believed to have been involved in “VIP relations” and there are fears that the crackdown could scare off some high rollers from visiting casinos in this part of the world.
There are also fears it could make it harder for casinos in Australasia to collect debts from gamblers on the Chinese mainland.
Earlier this year, SkyCity confirmed it was keen to lure more high roller gamblers from Asia to bolster activity at its Adelaide and Darwin casinos. It also noted that its new ‘grand horizon’ gaming salons in Auckland had been popular with Asian VIP customers.
For the past financial year, the company’s business from international high rollers hit a new record of $12.4 billion, and the company indicated it was keen to boost this in the medium term.
SkyCity shares were down by more than 4% in trading this afternoon, and have dropped by more than 6% over the past week.
They are trading at near $4.44 a share.
Karyn Scherer
Mon, 17 Oct 2016
Mon, 17 Oct 2016
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SkyCity shares dive following raids in China
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