A Chinese official has warned Taiwan to halt its casino plans or face revocation of trade and transportation privileges with mainland China.

Taiwan has been making glacially slow progress toward launching its domestic casino industry after lifting its casino ban in 2009. Legislation that would provide the framework for the development of a number of integrated resorts on Taiwan’s outlying islands has yet to pass and won’t ever pass if Beijing gets its way.

On Sunday, Zhang Zhijun, director of China’s Taiwan Affairs Office, warned businessmen in the Kinmen islands that the introduction of casinos would cause China to revoke its ‘Three Small Links’ policy. This policy, which was enacted in 2008, allows direct trade, postal and transportation channels between China and Taiwan, which Beijing officially regards at its ‘renegade’ province, not a different country.

This isn’t the first time that China has made such a threat. In 2013, shortly after residents of Taiwan’s Matsu islands approved a referendum on the desirability of a local integrated resort, officials in China’s neighboring Fujian province announced that it would prevent its citizens from traveling to Matsu for the purpose of gambling. Such a ban would be akin to China banning residents of Guangdong province from visiting Macau and could spell doom for a Taiwan casino’s prospects.

Back in October we looked at the UK bookies. Ladbrokes (LAD), William Hill (WMH), and Paddy Power (PAP) weren’t doing all that great, but signs of a nascent recovery were starting to show. New taxes were and still are threatening that recovery. Ironically, the higher tax, being the 25% sales tax on machines, is actually the less threatening one because the market is shifting heavily towards online and mobile. A high tax will only shift demand further in that direction, more reshaping the market faster than it would at its own pace, buLAt not shrinking it significantly.

The real problem is, and will continue to be, the 15% POC tax that took effect in December last year. That tax can’t simply reposition demand as it is a suffocating blanket that covers the whole market. The full impact of it has yet to be seen, and so far, the slow, fragile recovery continues for all three, some more fragile than others.

Ladbrokes

Beginning with Ladbrokes, the positive highlights are mobile sportsbook, with staking up 110% and active players up 62%. While these numbers are nice, Ladbrokes is still heavily weighted towards retail rather than digital. Digital is only 20% of total business, with retail at 70%. That Ladbrokes is still heavily reliant on its retail business exposes it to that 25% tax, in addition to it being less balanced than its competitors. The consequence is that overall net revenue in 2014 dropped by 2.4% even though digital revenue increased by over 20%.

Macau’s Secretary for Security Wong Sio Chak released the latest crime statistics for the region. Police reported investigating 3,588 crimes in the first quarter of 2015, a rise of 2.4% over the same period in 2014.

The number of casino crimes ballooned 22.45% to 310 cases investigated by the enclave’s police force. These are crimes connected to Macau’s casinos such as loan sharking and illegal detention.

Wong Sio Chak said that despite double digit growth, the growth rate is down from the boom years of 2012 and 2013 but the 310 casino related crimes in the first quarter have them on pace for 1240 crimes, up significantly compared to the 667 investigated in 2012.

Illegal detentions have almost doubled in Q1 2015; rising from 34 to 67, while loan, sharking is up 25.9%. A casino industry source told the South China Morning Post that the rise is due to “criminal enterprises” looking to make up for losses due to the corruption crackdown, which has resulted in a crash in the lucrative VIP Junkets market.