China Sentences Crown Resorts Employees to Prison Over Macau Casino Crackdown

On June 26, Crown Resorts revealed that 19 current and former employees, including three Australian citizens, have been convicted of gambling crimes by a Chinese court.

In a disclosure statement provided to the Australian Securities Exchange (ASX), Crown confirmed that the Shanghai Baoshan District Court found the casino employees and executives guilty of violating two tenets of the Criminal Law of the People’s Republic of China.

Per the statement, Crown’s employees were convicted under Article 303, Clause 1 and Article 25, Clause 1 — both which cover gambling-related offenses.

Article 303, Clause 1 specifically defines the operation of illicit gambling enterprises:

“Anyone who organizes gambling parties or is engaged in gambling as one’s main business for the purpose of making profits shall be sentenced to not more than three years of fixed-term imprisonment, detention, or surveillance, and shall be jointly fined.”

Article 25, Clause 1 concerns conspiratorial connections between the parties involved in the commission of gambling offenses:

“A joint crime is an intentional crime committed by two or more persons jointly.”

In October of last year, 19 employees affiliated with Crown Resorts’ operations in Macau were arrested and detained, charged with using illegal means to “lure” high-rolling Chinese gamblers to Australian-owned properties in Macau.

Of that group, 16 employees were collectively fined a total of 8.62 million Chinese yuan ($1,267,721) — an amount that Crown Resorts paid ex gratia. Eleven of the fined employees were also sentenced to nine months’ imprisonment, while five face prison terms of 10 months.

Those facing prison time include three Australian citizens, with Melbourne-based vice-president of international operations Jason O’Connor sentenced to a 10-month term, and China-based employees Jerry Xuan and Pan Dan sentenced to nine months.

All prison terms are retroactive to October 14, 2016, meaning Xuan and Dan should be released on July 14, while O’Connor must wait until August 14 to return home.

In its statement to the ASX, Crown made it clear that it would respect the Chinese government’s sentencing procedures, with no plans to file for appeal or otherwise delay the proceedings.

Sudhir Kalé, founder of Australian-based gambling industry consultancy firm GamePlan Consultants, spoke with the New York Times to offer his take on the Macau casino crackdown’s wider implications:

“The uncertainty was stifling for a lot of casino operators because they didn’t exactly know how this was going to pan out and what the exact objections were because not much was made public.

“Most operators will also learn that, every now and then, the government does become very serious about implementing the laws in the strictest sense of the word, and therefore they will be a lot more subtle in terms of promoting their properties to the mainland Chinese market.”

Vivienne Bath, who serves as a professor of Chinese law at the University of Sydney, was more direct in her appraisal of the punishments during an interview with Bloomberg News:

“It’s a rap over the knuckles. To get away with nine or 10 months is not bad. They’re not handing out long sentences but their position is still clear.”

Amid the Chinese government’s increased focus on retaining domestic gambling income, Crown Resorts’ ambitious expansion plans in the lucrative Macau market were scuttled.

The company’s mogul James Packer has been forced to withdraw from proposed Macau casino projects, while selling off Crown Resorts’ fleet of luxury yachts, jetliners, and other amenities that were previously used to attract well-heeled Chinese gamblers.