Casino operators should reassess their relationships with their junket partners in the wake of the Bergin report into Crown Resorts and the changes in the global geopolitical climate, according to SVA, a corporate and political risk consultancy.
CEO Steve Vickers gave evidence during the Bergin inquiry last August, detailing how some junkets rely on triads to carry out “extra legal” services such as promotion of gaming, evasion of China’s capital controls and the collection of gaming debts.
In a report, SVA details how the lessons of the Crown Resorts probe, which resulted in the company being found unsuitable to hold a license in Sydney, apply to many other operators.
“After all, many gaming companies have hitherto relied on Macau’s junkets to find VIP gamers, and in some cases, have downplayed the risk of indirectly dealing with triad societies when doing so,” SVA said.
“This report makes clear that they must change tack and should refresh their due diligence assessments of their junket partners.”
One of the recommendations of the Bergin report was a ban on the use of junkets in the state of New South Wales, putting further pressure on an already shrinking segment of the industry.
The SVA report says this increased focus on diligence has become even more important given the changing geopolitics.
Crown’s ties with junkets posed minimal risk in 2015 when relations between Australia and China were stable and business was booming.
Now however, trade tensions between the two countries are high and as a result “relevant authorities no longer willing to overlook questionable practices.”
The report says Crown misjudged the determination of the Chinese government to crack down on gaming promotion, disregarding the arrest of 13 Korean gaming promoters in 2015. The following year 19 of its own employees were detained in China.
Crown Resorts erred in not responding to clear signals, it said.
As well as re-examining junket relationships, SVA encourages companies to strengthen their Anti-Money Laundering practices and to monitor any changes in regulatory regimes to respond quickly to any further compliance requirements.
It also said companies need to evaluate the geopolitical exposure, with attention to matters such as capital outflows from China.