In recent developments, the NSW Independent Casino Commission (NICC) has launched a secondary probe into casino operator Star, spearheaded by Adam Bell SC, the same counsel that conducted the initial investigation. Set in motion on 19 February, this 15-week long inquiry mandates a comprehensive review to be presented by 31 May. The primary focus will be an assessment of how Star executed the recommendations provided in the original Bell report.
Subsequent to the announcement of this new scrutiny, Star called for a halt in trading on the Australian Securities Exchange (ASX), highlighting the gravity of the situation. Adding to a series of corporate upheavals, Star confirmed a delay in releasing its financial results for H1 of the 2024 fiscal year, which was initially scheduled for release on 21 February. Instead, a revised date is expected to be communicated shortly.
The Star welcomed the NICC’s decision to carry out the inquiry, seeing it as an opportunity to establish an “objective forum” where it can demonstrate its ability to reinstate its license suitability within New South Wales (NSW). Ever since being deemed unfit to hold a casino license in NSW in September 2022, the group has been under intense pressure to revalidate its operational integrity.
In response to the inquiry, Star declared its intent to partake fully and transparently, emphasizing the criticality of this period in implementing its broad remediation plan. The organization pledged to allocate all necessary resources to fulfill the inquiry’s demands and meet its stringent expectations.
Star’s engagement with this inquiry is seen as pivotal. Under the terms set by the NICC, the investigation will ascertain whether Star Sydney is suitable to “be concerned in or associated with the management and operation” of its facility in Sydney. Star is determined to prove that it has the capability to regain suitability as a casino operator and is committed to cooperating with regulatory bodies, including the NICC and its appointed manager, to earn back community trust.
The areas under the microscope for the second Bell report are both comprehensive and crucial. There will be an exploration of the aftermath of the initial report and a detailed look at Star’s corporate culture, focusing on risk management as well as organizational structure. Additionally, the investigation will assess Star’s ability to secure adequate financial resources to support its Sydney casino operations.
Recalling the outcome of the initial Bell report, severe lapses in anti-money laundering measures and social responsibility at Star Sydney were revealed, dating back several years. Despite having implemented 22 of the 30 measures recommended in the first report over the past year, the company’s license suitability remains in question.
It’s not just NSW that has levied severe penalties; Star also faces suspensions and investigations in other states like Queensland, along with four class actions, and the looming prospect of a substantial AUSTRAC fine, most of which are linked to affiliations with Chinese junket operations.
Regulatory actions have undeniably shaken Star’s financial health. The company reported a net loss of AU$2.4 billion for the 2023 financial year. Star’s financial statements revealed significant outgoings worth $2.8 billion, tied to an array of monetary sanctions imposed on the organization. These involved a substantial non-cash impairment for several of its properties, as well as notable regulatory and legal costs, debt restructuring charges, and redundancy expenses. After factoring in a positive yet growing EBITDA, the losses still accumulated to a hefty AU$2.4 billion.
The extent of these financial and regulatory difficulties on Star’s performance in the recently concluded H1 will be duly noted once the company publicly releases its financial results, the announcement of which is currently on hold.
