The Chinese territory of Macau, a former Portuguese colony where gambling is legal, has become the Asian Vegas. Photo / 123RF
The Chinese territory of Macau, a former Portuguese colony where gambling is legal, has become the Asian Vegas. Photo / 123RF
Over felt-covered tables and shiny roulette wheels in the world's most opulent VIP gambling rooms, a murky world exists where super-rich high-rollers meet organised crime.
Hands weighed down by expensive watches and weighty gold jewellery stack the chips high at casinos that trade in serious money and a lifestyle to match.
This mysterious land of excess has long bubbled under the radar, but as the stakes rise, the Chinese government wants to know where its wealthiest citizens are putting their cash, and the industry is being forced into the spotlight.
The arrest of 18 Crown employees - including three Australians - in China exposes the financial power of the country's high-rolling "whales".
Gambling is illegal in mainland China, apart from a couple of state lotteries, and hungry overseas casino operators will do anything in their power to entice wealthy gamblers to their glittering buildings.
But advertising betting in China is also prohibited, and while Crown claims it only promotes its resort facilities, President Xi Jinping made it clear in Thursday's overnight raids that he rules with an iron fist.
"Lots of things are tightening up in China," Jane Golley, from the Australian National University, told news.com.au. "Control is the buzzword for Xi, he's doing it with the internet...
"You've got to play by the Chinese rules and if you try to get around them, you'll pay an incredibly high price. It is a wake-up call to take things seriously."
The Chinese territory of Macau, a former Portuguese colony where gambling is legal, has become the Asian Vegas, with new credit soaring to $1 trillion in the first quarter of this year, according to Bloomberg.
Packer has a stake in three casinos there in addition to those in Melbourne and Perth.
Baccarat is the favourite game for whales, who typically bet at least $15,000 a hand in glizy casinos - and sometimes hundreds of thousands of dollars.
While Macau's gaming revenues still far outrank Las Vegas Strip, peaking at $45 billion in 2013, the glittering gambling hub is in a serious slump after the Chinese government cracked down on corruption following year.
Macau's VIP rooms were dominated by triads, according to a report by the British Journal of Criminology, which said warring members of the crime syndicate "treat the VIP rooms as economic territories."
The March report, titled Triad Organized Crime in Macau Casinos: Extra-Legal Governance and Entrepreneurship, added: "New forms of betting and crime have emerged to meet the needs of high-end gamblers, thus resulting in the formation of a triad-enterprise hybrid that comprises territoriality and reputation of violence commonly found in extra-legal governance.
"They monopolise the VIP rooms, treat them as their territories and ensure that rivals would not steal their whales. They punish cheats and frauds that occur in their territories, where occasional use of violence is seen."
Gambling is illegal in mainland China. Photo / 123RF
PRIVATE JETS, LUXURY HOTELS AND CRIME
The drama in Macau reached a peak in the late 1990s, before authorities cracked down on the triads and busted infamous bosses like "Broken Tooth" on racketeering charges.
But the report said the syndicates simply shifted how they played the game, with triads operating with more subtlety, using VIP room staff and setting up junkets between Hong Kong, China, and Macau and ghost companies to protect gang leaders.
Australian entertainment groups saw Macau's decline as a golden opportunity.
The "junket industry" tempts China's super-rich to billion-dollar casinos by providing credit lines, private jets, luxury accommodation, and extravagant lunches. But many of its operators are linked to money-laundering and violence, opening Australia up to this seedy world.
With so many VIPs gambling on credit, and no legal ways to recover a gambling debt in China, money collecting is an important job for casino staff. This can see junket operators turning to organised crime and violence to get their cash.
It's thought Crown may have been targeted as part of "Operation Chain Break", aimed at stopping the illicit flow of funds into foreign casinos.
"There are plenty of tensions in bilateral relations from the top level down," said Ms Golley. "We don't know how much is tit-for-tat. There is huge bureaucracy and if there is a new line of cheating things they could have a hard time getting people out. China's rule of law is far from perfect."
'HAVEN FOR ESCAPING SIN'
The $500 million loss for Packer may also spell disaster for his ambitious new $2 billion six-star hotel and casino complex under construction in Barangaroo, on Sydney Harbour. The new luxury complex is aimed squarely at ultra-wealthy customers from the lucrative Chinese market, as are several other mega-casinos being built around Australia.
But Ms Golley said it was "hardly the most productive way to bring money in."
She warned that courting wealthy Chinese could also bring problems for Australia. "There's obviously been quite a lot of pessimism about the impact of Chinese businessmen," she said. "When they are connected to parties and the state appartus in ways we don't fully understand, there's a growing concern they may have influence beyond dollars, in the context of the Communist Party tightening up its own mechanisms."
News of the arrests saw Packer's shares in the gambling empire yesterday take a 14 per cent hit, while The Star Entertainment Group's stocks plummeted by five per cent and Sands Macau and Galaxy Entertainment were down more than three per cent.
Last year, 14 Korean casino executives in Beijing and Shanghai were detained after it is thought an indebted high-roller complained to the authorities. Dow Jones reported the Crown staff arrests could be related to a $15 million payment by a Chinese gambler earlier this year.
Chinese state media described Australia as a "haven for escaping sin" and it is one of the top three destinations for the country's financial criminals, according to Neil Thomas Morrison Scholar at the Australian Centre on China in the World.
Australia glimpsed the gambling industry's dark side when suspected underworld crime figure Peter Tan Hoang shot dead in Sydney in September 2014.
The Crown board was updated on Monday night by the Department of Foreign Affairs and Trade, with consular officials in Shanghai making arrangements to visit the Australians to offer assistance.
