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Crown Resorts stock slumps after 18 staff detained in China for 'gambling crimes'

What are the implications of China's Crown clampdown?

Shares in Australia's Crown Resorts plunged on Monday after the Australian gaming company confirmed that 18 employees had been detained in China.

In a statement to the Australian Securities Exchange, Crown said Jason O'Connor, its executive vice president for VIP international, was one of the workers detained. It was not clear from the statement or media reports whether the staff were in mainland China or in the Chinese gaming hub Macau.

"To date, Crown has not been able to speak with its employees and is working closely with the Department of Foreign Affairs and Trade to urgently make contact with and ascertain the welfare of its employees," the statement said, adding that the casino owner had not been given details on why its workers had been detained.

Crown stock was down just over 12 percent in early afternoon trade at A$11.38 on the news. Rival Star Entertainment traded down 4.45 percent at A$5.45 per share, while in Hong Kong, casino companies Wynn Macau, Sands China and Melco International also lost ground.

According to Australia's national broadcaster ABC, the detained staff work in sales and marketing, and O'Connor runs the team responsible for attracting high-rollers to Crown's Australian casinos.

The City of Dreams complex, operated by Melco Crown Entertainment, stands illuminated at night in Macau in February 2016.
Xaume Olleros | Bloomberg | Getty Images

The Chinese Ministry of Foreign Affairs told CNBC in an emailed statement that Australian nationals had been placed in "criminal detention" by Chinese authorities "for their suspected involvements in gambling crimes."

"At the moment, the case is under further investigation," a spokesman said.

China is in the midst of a long-running corruption crackdown that has dramatically cut the number of Chinese visitors to casinos in Macau and other gambling centers. The anti-graft push has also focused on foreign casino operators that work in China to lure Chinese gamblers to casinos outside the mainland.

Analysts at China-specialist firm JL Warren told Dow Jones that it was common practice for casino executives to visit China to market non-Chinese casinos and to chase high-rollers for outstanding payments, adding that 14 Korean casino staff were detained in China in similar circumstances last year.

The detentions were unlikely to be Crown-specific, but pointed another crackdown on VIP gaming by Beijing, JL Warren told Dow Jones.

Melbourne-based Crown has casinos in Australia as well as in Macau and Manila.

On Monday afternoon local time, the office of Julie Bishop, Australia's Minister for Foreign Affairs, released a statement that confirmed three Australian citizens were among the Crown staff detained in China on October 13 and 14.

"Consular officials in Shanghai are making arrangements to visit the Australians to offer appropriate assistance, all of whom have legal representation provided by their employer," the statement said. "The Australian Government is also providing consular support and information to the families in Australia, in consultation with Crown."

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