SkyCity Entertainment Completes Strategic Review
SkyCity Entertainment’s Board of Directors completed a strategic review of its International Business. That strategic review has resulted in the company ceasing all activities with the highly controversial junkets.
The company announced the Royal Commission into Crown Resorts affairs began. The Bergin Inquiry into Crown’s suitability to hold a Sydney gaming licence uncovered mass money laundering in the company. Much of that money laundering came through Chinese VIPs brought to Crown’s properties via junkets.
A strategic review of how StarCity conducts its international affairs resulted in the company stopping using junkets.
SkyCity Strategic Review Stops Junkets Use
“SkyCity Entertainment Group Limited (SkyCity) advised that, following completion of a strategic review into its International Business division, the SkyCity Board has determined to permanently cease dealing with all junket operators, effective immediately, and continue to operate its International Business division under a revised operating model.
As previously indicated to the market on 18 February 2021 (as part of SkyCity’s interim result announcement for six months ended 31 December 2020), earlier this year, SkyCity commenced a strategic review of its International Business.
Under the revised operating model, SkyCity will deal directly with International Business patrons after the appropriate know your customer and customer due diligence requirements are satisfied.
SkyCity will consult with its gaming regulators in New Zealand and South Australia in relation to its revised operating model.”
How Will SkyCity Attract Well-Heeled Chinese VIPs?
Chinese and other foreign VIPs account for huge percentages of casinos’ revenue and, therefore, profit. This unique group of ultra-rich gambler spend billions of dollars each and every year. Balance sheets of SkyCity and Crown suffer significantly without this clientele, customers junkets provide.
Gambling is all but banned in China, and the Chinese authorities are cracking down on its residents travelling abroad for gambling purposes. SkyCity cannot simply head to China, pick up VIPs, and ship them to its casino. In addition, it cannot even contact these people and ask them to visit their properties. It needs these customers, so it needs to find a way to bring them in.
Furthermore, the super-rich VIPs prefer to remain anonymous. Likewise, they like to keep their financial affairs under lock and key. There is no way they will undergo any know your customer verification processes.
Permanently banning junkets is a strong statement, much more potent than Crown’s half-hearted attempt to appease the authorities. Crown promised to permanently ban junkets following a strategic review, but only until 30 June 2021. How having a resumption date is permanent is anyone’s guess.
Why Have Junkets Got a Bad Reputation
Casinos have used junket operators for a long time. Australian and Macau casinos make no secret into their use. Junket operators make a lot of money; a hell of a lot of money. Some are publicly traded entities on the Hong Kong Stock Exchange. So why do people hate junkets? Why are junkets shrouded in controversy?
First, junkets operate in a grey area. China bans its citizens from travelling abroad on gambling holidays. Junkets facilitate these trips by pretending the journeys are for business purposes or legitimate vacations.
Many junkets, although not all, have strong ties to Triad organisations. These organised crime families have links to serious crimes, including drug and human trafficking, and more. They are not the kind of people you want to frequent your casino or hotel.
Money laundering is commonplace with how junkets work. Crown, for example, allowed junkets access to bank accounts it turned a blind eye to. Nobody knew where the funds stemmed from or where the withdrawals went.
Australian casinos are under close scrutiny right now, thanks to the Crown Resorts Royal Commission. It is no surprise the SkyCity strategic review ruled the banning of these shady groups.