Australia’s Star Keeps Sydney Casino License, Fined US$10 Million

October 17, 2024 Australia Casino & Hotel

Star Casino has been hit with a US$10 million fine by Australia’s casino regulator, and its license suspension is extended until March 2025.

Australia’s No. 2 casino operator Star Entertainment has been hit with a substantial AU$15 million (US$10 million) fine by the New South Wales (NSW) casino regulator, the Independent Casino Commission. The financial repercussions for the Sydney casino do not stop there; its license suspension has been extended until early 2025, a move that reflects ongoing compliance failures revealed in a recent inquiry.

On October 17, 2024, the NSW Independent Casino Commission (NICC) announced that it will appoint a manager that will maintain oversight of Star’s casino operations in Sydney until March 31, 2025. On that date, the NICC plans to reevaluate Star’s eligibility to reclaim its license.

This oversight aims to ensure compliance and restore public confidence in the operations of Star Entertainment. The Chief Commissioner of the NICC, Philip Crawford, has highlighted serious issues revealed in the inquiry led by Adam Bell, SC. According to Crawford, the inquiry uncovered “continuing compliance failures” that could not be overlooked.

After the second report from Bell was released in August, Crawford stated that canceling Star’s license would have been a “very final act.” He emphasized the potential economic implications of such a decision, particularly for the economies of both New South Wales and Queensland. “We’re very heavily still motivated by what our perception of the public interest is. And if Sydney Star fails, the Star Group will fail, and that’s a group that employs 9000-plus people and if you add on to that, the huge number of suppliers to the business,” Crawford was quoted as saying in a report published by The Sydney Morning Herald.

Crawford elaborated on the importance of the casino to the local economy, noting that if the Star Casino were to fail, the Star Group would follow suit. This failure could put over 9,000 employees at risk, along with a vast network of suppliers dependent on the casino’s operations. Such a situation underscores the complexities involved in regulatory decisions affecting major corporations.

Star’s shares faced a trading halt following the announcement of the fine. The stock has seen a staggering 58% decline over the past year, reflecting the deepening financial and regulatory challenges facing the company. Despite this, Crawford refrained from stating whether the casino had become “too big to fail.” He stressed that the loss of the license would leave no chance for recovery.

“There’s no suggestion in this Bell Report of criminality,” Crawford stated, assuring the public that organized crime has not infiltrated the operations of Star. However, he acknowledged the serious doubts surrounding the company’s capability to maintain compliance. “That can’t continue, but we’ve got plenty of work being done on the culture,” he added, recognizing the commitment of the staff to improve their operations under the right leadership.

Star Entertainment’s Sydney casino has been under intense scrutiny since 2022, when a critical report revealed the company’s unsuitability to hold a gaming license in the state. This scrutiny has intensified following the financial losses and operational difficulties the company has faced in recent months.

The AU$15 million fine imposed on Star was specifically related to breaches of internal control manuals. Furthermore, the company has been given directives regarding the operation of its compliance committee and the reporting lines within it. These measures reflect a push for greater accountability and transparency within the organization, necessary steps toward rebuilding trust with regulators and the public.

Crawford noted improvements in transparency and accountability under the new leadership of CEO Steve McCann, who was appointed in June. Following the review that led to the resignation of Star’s chairman, David Foster, and former CEO, Robbie Cooke, Crawford remarked on the significant changes in the dialogue between the regulator and the casino. “We’ve noted a significant change and improvement in the dialogue… especially since the appointment of Steve McCann as the CEO,” he stated.

The challenges for Star Entertainment are far from over. Last month, the company announced plans to slash hundreds of jobs and consider selling off assets to stabilize its financial situation. Back then, Star confirmed the successful sale of its former Brisbane casino building, Treasury Brisbane Casino. This decision came after negotiating a last-ditch deal with its banks for $200 million in loans, aimed at keeping the business afloat amid mounting pressures.

In the fiscal year ending June, Star reported a staggering loss of $1.69 billion, primarily driven by decreased foot traffic and rising operational costs. This loss underscores the severe challenges the company faces in a highly competitive and regulated environment.