It’s illegal to bet on sports in China, or indeed do any other form of gambling and even the promotion of such activity is now the focus of the authorities, something shareholders believe they should have been told by Crown Resorts before it sent a team there, but was the company really breaching it’s legal obligations in keeping this obvious and manifest risk a secret or were they just trying to make shareholders as much money as possible?
- Did Crown Resorts sail too close to the wind promoting gambling in China?
- Do shareholders have a right to sue for a business decision that went awry?
- Will the Chinese authorities ever relax their stance on gambling?
- Where will high rollers go when Macau is finally squeezed out of existence?
That Xi Jinping and the Chinese authorities were cracking down on gambling in China, and all its related activities was no secret. We’d already seen the strangling of Macau with restrictions on visitor numbers, a wholesale destruction of the junket market and the somewhat irksome smoking ban, as well as a whole host of big names within the party itself brought to justice for crimes committed, we were told, to finance their gambling habits. Indeed far from being a secret, China advertised their stance.
However Crown Resorts, seeing opportunity as Macau drew much of the fire and all of the ire, pressed forward despite Chinese gambling laws being some of the most strict in the world, sending a team to the country to lure the now very wary high rolling citizenry to visit its far more anonymous and distant resorts in Australia and across the pacific region. With gambling in China ever more problematic it would seem a sensible attempt to expand a traveling market, the authorities disagreed and jailed them.
10 Months In Jail For Promoting Gambling In China
- Owner – James Packer
- 2016 Jason O’Connor Arrested
- Jailed in China for 10 months
- 14% Share price drop
Having an executive vice president of your VIP International division slung in jail for ten months by the authorities for attempting to promote gambling in China does nothing for the image of the company and indeed this year the financial position of the firm has hit stormy seas as revenues have dipped. So much so that the company is now being sued by its own shareholders, represented by Maurice Blackburn Lawyers (specialists in such cases) for not fully explaining the risks in China ahead of time.
“Shareholders,” said Andrew Watson head of Class Actions, “should have been appraised of the risks that Crown was taking in China and the threat they posed to the company’s revenue streams. Chinese authorities could not have made the risks of marketing gambling any plainer to Crown or other casino operators, yet Crown ignored these warnings.” Which is true, but shareholders in Crown should perhaps themselves have been aware of the authorities attitude to gambling in China themselves.
Class Action Suit To Be Defended Vigorously By Crown
Any shareholder looking to exploit rich Chinese gambling news headlines wouldn’t damage the company should perhaps get out of the investment game, there was always going to be blow back. The exit from Macau, the delay on their Las Vegas plans, the return to its Aussie roots, were all to be expected. Of course none of these shareholders would have complained had the company’s actions pulled in a host of new high rollers looking to gamble their fortunes away at Crown properties, would they?
“Crown will vigorously defend the proceeding.” said the gambling giant in response as it’s share price dropped a scant 1.14% on the news of the case being brought against it for “breaching their legal obligations to make timely and accurate disclosures to the market”. In hindsight it’s easy to say that Crown should have focused on Barangaroo and not been gambling in China with teams of marketeers, but at the time it was just overly sharp practice and this case is sour grapes from gamblers who lost.