It’s been a tough year for Australian casino magnate James Packer. From the 18-month delay in getting planning permission for the Crown Sydney casino, to the $362 million tax bill he had to pay in January, 2016 hasn’t been all that kind to him.
And now, to add to his list of woes, shares in his Crown Resorts business have seen a sharp fall in value. Lucky Nugget are here to look at James Packer’s problems and the effect they’ve had on the business.
China’s gambling crackdown pushed shares down
On 15 October, 18 of Crown Resorts’ staff were detained in China over accusations of soliciting gambling: 15 were local staff, and three were Australian nationals. All kinds of gambling are illegal in mainland China, as is encouraging citizens to gamble overseas – but Chinese tourists make up a sizeable portion of casino visitors in Australia.
The arrests made shares fall across entertainment and casino businesses as the industry responded to fears of a Chinese crackdown on 18 October. Concerns were felt in other businesses too, such as Sands China, Galaxy Entertainment and MGM China – all of which fell around 3% upon news of the arrests.
Crown Resorts’ own shares took a nosedive, falling by 13.9% in the space of a day. And the subsequent month has not been kind: while James Packer’s stocks were worth $13.12 on 11 October, a month later they’re sitting at a paltry $10.48.
No new information on the arrests
There has been no publicised information about what has happened to the detained employees since they were arrested almost a month ago. They are potentially still being held in Shanghai on charges.
At the time, China’s foreign ministry said that the employees were under arrest for suspected “gambling crimes”. Australia’s foreign minister, Julie Bishop, said that consular officials in Shanghai would offer help to the three Australian citizens who were arrested.
But many people are still unsure about what is happening. The husband of one of the arrested employees was “completely dumbfounded” by her detainment, and it seems unlikely that he has more news.
James Packer will be unhappy about the continued problems with his business, as well as with his depleted employee numbers. His business shares are continuing to lose value, despite the new Sydney development that’s due to start construction soon.
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