Casino operators restart marketing ops

Casino operators have been slowly ramping back up marketing activity in China after pulling out last year in fear of further repercussions from Crown’s crackdown.

In October, 18 employees of Crown were arrested for allegedly marketing its casinos and VIP rooms to Chinese nationals, prompting other casino operators to pull out their marketing teams in China.

Since then, only one employee – Jenny Jiang, an administrative worker for Crown has been freed on bail, the rest face at least another three months in custody while authorities finalize their case.

However, according to the Australian Financial Review quoting unnamed sources, operators such as Las Vegas Sands Corp, MGM Grand and Galaxy Entertainment are now relaxing their earlier decisions to cease marketing activity in China.

Australia-listed Star Entertainment is still monitoring the situation, but will not likely make a move within the next few months, said AFR.

“The move by the Macau casino operators is a sign they are confident the Crown situation does not represent a blanket clampdown on casino marketing activity in China. Many are also recruiting new staff in the region. One view is that companies such as MGM may also have less to fear than operators in Australia because Beijing would prefer capital going to Macau than to a third country where it has no control,” said the news outlet.

However, a recent surge in VIP revenue in Macau in December may prompt more regulatory intervention by China, says AFR.

The Chinese government recently announced it would step up scrutiny on individual foreign currency purchases and strengthen punishment for illegal money outflows.

Macau’s casino operators tumbled 3 percent on Tuesday after the announcement.

“In our view, Beijing remains focused on plugging holes in the capital flight bucket, primarily through junkets and, to a lesser degree, UnionPay,” said analysts from Nomura, quoted by AFR.

“While we don’t yet have the December breakdown of VIP versus mass revenues, we believe that the recent growth spurt in Macau VIP revenues to over 20 per cent in November [four times greater than mass growth for the month] is not sustainable and that it could lead to negative policy responses from Beijing if it were to persist.”