AUSTRALIAN gambling giant Crown was hit with a class action today after 18 employees were arrested in China, alleging it did not give shareholders enough information about the risks being taken.

The employees, who pleaded guilty, were held for 10 months on charges of luring rich Chinese to Australia, before being released in August.

They included Jason O’Connor, the executive vice-president of Crown division VIP International.

The case hurt the James Packer-controlled casino operator’s high roller revenues, with anti-corruption laws in China banning organising gambling activities overseas for wealthy Chinese.

Class action specialists Maurice Blackburn Lawyers said the case, on behalf of hundreds of investors, centred on a sharp share price drop of almost 14% on October 17 last year when news of the arrests emerged.

Their detention also raised questions about Crown’s significant investment in its under-development Sydney venture in Barangaroo, which has been spruiked as a VIP-focused casino and luxury resort, the lawyers said.

Crown’s VIP revenue in Australia slumped in the 2017 financial year.

Maurice Blackburn’s head of class actions, Andrew Watson, claimed that Crown decided to roll the dice on its Chinese VIP operations against the backdrop of a known crackdown by Beijing on illegal gambling-related activities.

“Shareholders should have been appraised of the risks that Crown was taking in China and the threat they posed to the company’s revenue streams.

“Chinese authorities could not have made the risks of marketing gambling any plainer to Crown or other casino operators, and yet, Crown ignored these warnings.

“Fortunately in Australia, companies can be held accountable via the class action mechanism, for breaching their legal obligations to make timely and accurate disclosures to the market. Those failures affect many, many people.”

Crown, which has since pursued a restructure, exiting its holding in Melco Resorts in Macau and shelving plans for a Las Vegas casino to focus on its Australian operations, confirmed that it had been served with the action.

“The proceeding has been filed on behalf of persons who acquired an interest in Crown shares between February 6 2015 and October 16 last year,” it said in a statement to the market.

“Crown will vigorously defend the proceeding.”

Crown shares were down 1.14% at A$12.19 (RM37.84) at midday. – AFP, December 4, 2017.