By Farah Master

HONG KONG, (Reuters) – Macau Legend, the company that owns and manages a Macau casino resort, announced Monday its chief executive resigned after he was detained and arrested by authorities in Macau’s largest gambling hub. This led to a 19% drop in shares.

Chan Weng Lin, CEO, was arrested as the authorities intensify their crackdown against illicit capital outflows to the Chinese mainland. This follows the arrest in November of Alvin Chau, Suncity boss.

Macau Legend stated in a statement that Chan quit “to avoid distracting” the company from its interests and to protect shareholders. The company stated that it didn’t expect to experience any negative impact on daily operations.

Chan controls about one third of Macau Legend. It operates three casinos through a service contract with SJM Holdings. Chan also owns Fisherman’s Wharf entertainment complex, located near Macau ferry terminal. Tak Chun Group is Chan’s chairman. It operates cross-border junkets to Macau’s gambling casinos.

Tak Chun has not yet responded to our request for comment. Reuters could not reach Chan.

Another suspect was arrested by police on charges related to illegal gambling and money laundering.

Analysts claim that these arrests are a sign of a new zero tolerance policy for gambling promotion in China. In which government support development of the “mass-market” segment of China’s gaming industry, and not of high rollers,

Junket operators offer easy credit to VIPs of mainland China, who gamble in Macau-ruled Macau and manage their debts via underground financing channels.

The opaque VIP sector, which was almost non-existent until a few years back, accounted for more than two thirds of Macau’s total gambling revenues.

The latest arrests in Suncity in November were connected to Tak Chun’s Suncity case. Police believe that Suncity and Tak Chun worked together and engaged in criminal and illicit activities.

Suncity, Tak Chun, the largest junket firm in Macau employed many thousand of workers. However, data from Macau’s gambling regulator indicates that there has been a 46% decline in the number junkets licensed over the past twelve months.

Macau Legend shares closed lower by 19% and dropped as high as 29.8% at HK$0.40 in trading.