Australian Crown Casino brings in AUD$2 billion from junkets, source says
This appeared in The Millennial Source
An individual who works as a middleman for a company that connects wealthy gamblers to casinos, claims that they are responsible for almost AUD$2 billion flowing through the Crown Melbourne casino. The middleman (officially known in the industry as a “junket”,) works closely with the Australian casino group, Crown Resorts, and receives a commission for steering big spenders towards casinos under the Crown umbrella.
Currently, Crown Casinos is being investigated for selling shares to a Macau-based gambling group.
In 2019, Crown Resorts also made headlines for alleged connections to organized crime in Asia, including allegations of money laundering.
Billions flowing into Crown Casinos
A middleman for a company whose purpose is to steer big spending clients to casinos has revealed to The Millennial Source they were responsible for injecting AUD$2 billion into the Crown Melbourne casino over a three-year period. In that same period, customers they directed to the casino lost AUD$43 million, which netted the junket operator a commission of AUD$17 million.
The middleman, who has asked to remain anonymous, explained that they had a line of credit worth AUD$3 million with casinos across Asia and Australia. The middleman also added that the AUD$2 billion over the last three years was achieved in large part due to that credit line with Crown Resorts.
What is a junket?
A junket is a word that refers to both the companies that connect big spending clients with casinos and the middlemen whose job it is to track down those clients for the company.
Reuters explains that with casinos booming in Macau (the only place casino gaming is legal in Asia), junkets have become increasingly vital to the industry. In recent years, Macau has become the largest gambling destination in the world, outpacing even Las Vegas, Nevada.
In Asia, there are more than 190 junkets, which are publicly traded companies, including Sun City and the Hong Kong-based Rich Goldman Hold, Ltd. Each junket employs agents to seek out wealthy customers to direct towards the casinos.
With their cadre of big spenders, junkets ensure a base level of revenue is consistently coming into the casinos. VIP customers are responsible for 70% of the revenue in Macau’s casinos, so casinos attract them with “free accommodation, travel and other perks.”
The middleman who spoke with The Millennial Source said the resorts also rely on shows, events, free transportation, hotel rooms and tournaments to hold onto those big spenders.
Junkets are given credit by the casinos, which they then extend to their VIP customers. If the gamblers accrue debts at the casinos, it’s on the junkets to collect those debts.
As compensation, the junkets receive a percentage of the high roller’s chip turnover or a portion of the casino’s winnings from the gambling.
What is Crown Resorts?
Crown Resorts runs two of Australia’s largest casino resorts, Crown Perth and Crown Melbourne, the latter of which was the first casino to operate under the Crown umbrella. Crown Resorts also has a casino in London, England. In addition to the casinos, the Australian resorts include a hotel, restaurants, bars, nightclubs, and entertainment venues.
The owner of Crown Resorts is James Packer, who Forbes reports is worth US$2.8 billion. Prior to Packer owning the company, it was run by his father, the Australian media tycoon Kerry Packer.
Legal inquiries into Crown Resorts
As reported by The Guardian, a legal inquiry into Crown Resorts was opened in January 2020 after nearly 20% of company shares were sold to Melco International, a resort company based out of Macau and Hong Kong. Crown Resorts had failed to alert authorities of the sale, which risked breaching the terms of its casino license.
The inquiry’s broad reach includes investigating money laundering and the relationship junkets could have to organized crime. In July 2019, 60 Minutes Australia ran an investigative report claiming Crown Resorts was involved in sex trafficking, drugs, and money laundering in Asia.
Crown Casino’s board of directors took out ads in local papers in which they called the 60 Minutes report “deceitful,” “unbalanced,” and “sensationalized.”
Authorities are concerned that junkets are using their credit line to launder money for crime syndicates. In 2015, that is precisely what happened with Cheung Chi-tai, a former major shareholder with Neptune Group (now Rich Goldman Holdings, Ltd.). He was accused of laundering HK$1.8 billion attained through criminal enterprises.
Coronavirus affects the casino business
Recently, the coronavirus outbreak has caused disruption in the financial markets. It’s now crippling the casino industry in Asia, which is having a ripple effect in Australia. The government of Macau recently closed all casinos in Macau over concerns of the virus’ spread.
On February 6, ABC News in Australia reported that Melco Resorts was pulling out of the deal with Crown Casinos due to the coronavirus’ impact on tourism. Earlier this week, it was reported that Macau-based junkets were considering laying off agents due to the limited tourism resulting from the outbreak. This was after an already slower than expected year for the casinos due to the trade war between China and the US.
Originally published at https://themilsource.com on February 9, 2020.