Adelaide Casino-owner SkyCity axes junkets as scrutiny grows

The owner of Adelaide’s casino will stop dealing with international gambling tour operators, amid questions over organised crime links.

SkyCity’s Adelaide casino. Picture: Russell Millard

The owner of Adelaide Casino will cease dealing with international gambling tour operators - or “junkets” - after the NSW Bergin inquiry into Crown Resorts raised questions about their links to organised crime and money-laundering.

In a statement the $2.4bn New Zealand-based SkyCity, which owns and operates casinos in Adelaide, Auckland, Hamilton and Queenstown, said it would stop dealing with junkets, effective immediately, following a review of its international business.

“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,” it said on Tuesday.

“Under the revised operating model, SkyCity will deal directly with international business patrons after appropriate know-your-customer and 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.”

Junkets typically arrange travel and accommodation in Australian casinos for VIP clients - often from Asia - and handle remittance for the gambling debts they incur, usually in exchange for a fraction of their turnover.

In the 2019 financial year, SkyCity’s international business - which includes high-net worth international players and junket operators - recorded normalised revenue of NZ$190.5m ($175.7m) against NZ$1.11bn ($1.02bn) in broader group normalised revenue.

Junkets have been favoured by casino operators in Australia for externalising the risk of attracting clients from China, where promoting gambling to its citizens is a criminal offence and collecting gambling debts is difficult due to capital controls.

But the NSW Bergin inquiry into the James Packer-backed casino giant Crown Resorts highlighted the risk of infiltration of junkets by organised crime, with financial crimes regulator AUSTRAC saying last year they are vulnerable to “multiple criminal threats”.

The inquiry recommended that junkets be banned in NSW.

SkyCity’s move to ban junkets also comes after the company and Xiongming Xie, a Chinese junket operator, was hit with a $4.84m lawsuit by Chinese high-roller Linong Ma in March.

Mr Ma claims that during a junket tour arranged by Mr Xie to SkyCity Adelaide in 2019, he won more than $5m, most of which was remitted by SkyCity to Mr Xie, who allegedly retained the money.

In a statement of claim to the South Australian supreme court Mr Ma claimed he was a victim of “fraud” on the part of Mr Xie and “negligence” on the part of SkyCity.

He also said in court documents “Mr Xie was arrested in Sydney in July 2019 and charged with “having allegedly ... threatened a man with a knife, demanded the transfer of a $10 million property and stabbed the man almost to death’’.

The action prompted South Australian upper house member for SA-BEST Connie Bonaros to write to state gambling commissioner Dini Soulio and request an “independent investigation into the Adelaide casino operations of the SkyCity Entertainment Group for any evidence of criminal activity.”

On Tuesday South Australian treasurer Rob Lucas said Mr Soulio issued a notice to SkyCity requesting information “consistent with those considered by Hon Patricia Bergin SC” after she handed down her report in February.

“I am advised SkyCity’s response to the formal notice is being considered by the Commissioner and will inform his advice to Government as to what action, if any, is required,” Mr Lucas said.

“In the meantime, I’m advised Consumer and Business Services’ Liquor and Gambling Inspectors continue to undertake daily inspections into SkyCity’s operations to ensure compliance with its regulatory responsibilities.”

SkyCity’s announcement comes as Crown Resorts faces two concurrent royal commissions into its operations in Victoria and WA.

In the initial hearing of the WA commission yesterday, commissioner Neville Owen said it would explore “grave matters” of public interest unearthed during the Bergin inquiry relating to issues of money laundering and organsied crime activity.

Shares in SkyCity closed unchanged at $3.18.

Originally published as Adelaide Casino-owner SkyCity axes junkets as scrutiny grows