Nothing illustrates the precariousness of a Macao casino concession like the mass arrest of Crown Resorts casino executives earlier this week, a development that sent gaming stocks into a slough of despond. Eighteen Crown employees, including international-VIP-gaming viceroy Jason O’Connor were detained by Chinese authorities for “gambling crimes.” Some were rounded up at midnight, as the arrests were made in dramatic fashion, All you have to do is whisper the word ‘corruption’ in connection with Macao and Beijing goes to DefCon 4. Crown employee Jeff Sikemma‘s wife was taken into custody, along with her phone, laptop and iPad, with police only saying coldly, “Don’t worry. If we need to get ahold of you, we’ll contact you.”
Sanford Bernstein analyst Vitaly Umansky interpreted the move as tit for tat, telling Reuters “The Chinese government seems to be making a clear statement on gaming activity being offshore,” largely to Australia and often to Crown-owned properties. Take 
that, James Packer! Gaming analyst Jonathan Galaviz seconded Umansky’s view. Bank of America speculated, in a research note, that the crackdown could “be related to the Chinese government’s wider focus on controlling capital outflows from the country and its anticorruption campaign.” First, Beijing kneecapped VIP players’ access to Macao. Now they’re targeting their overseas markets of preference, a sobering thought for concessionaires Wynn Resorts, Las Vegas Sands, Melco Entertainment and MGM Resorts International, all of which market to runaway VIPs in international jurisdictions.
Crown’s “gambling crimes,” at best guess were to market gaming in mainland China, where it’s illegal and competitors stress resort attractions. “Whatever, they got it wrong,” Newpage Consulting analyst David Green told Reuters. Galaviz wrote, “We hold the view that major casino gaming firms are underinvesting in government relations in Asia and that the impact of government actions will continue to be highly correlated to industry performance. What may be legally acceptable marketing in one Asian country could be a crime in another.” Organize a junket of more than 10 Chinese whales to Wynn Las Vegas and you’ve just bought a one-way ticket to the calaboose.
What’s scariest of all? Casino consultant Sudhir Kale told the Wall Street Journal, “every know and then the government chooses to make an example out of somebody.” Who’s next?
* In a cart-before-horse move, Penn National Gaming waited until after the belated opening of Hollywood Casino Jamul to adopt an end-to-end management-systems package from Scientific Games. Penn was conducting “an extensive competitive systems selection process” when it should have been getting Jamul up to speed. It’s a sweet deal for Scientific, which gets to have 32% of the machines on Jamul’s slot floor. The casino-floor-management system is already in place at Tropicana Las Vegas, Penn’s outpost on the Strip.
