Star Entertainment Group could be forced to close its flagship Sydney casino if it fails to convince a new inquiry that it has reformed its culture, after the state watchdog called a second probe into the operations of the struggling business.
Philip Crawford, chief commissioner of the NSW Independent Casino Commission, on Monday ordered a fresh inquiry into Star Sydney, two years after an earlier inquiry found anti-money laundering and counter-terrorism failings.
The inquiry will run for 15 weeks from Monday.Credit: Edwina Pickles
Revoking the casino’s licence is one of five options that will be considered by the commission when it receives the findings of the 15-week inquiry, to be led by barrister Adam Bell, SC.
“I don’t think they’ll automatically regain their licence,” Crawford said in an interview. “If their licence is restored, it’ll be on the condition they operate under an independent monitor. To date, they have not been at the level that we’d be comfortable with that.”
It is the latest setback for the struggling business, which has had its market value halved since Bell’s first inquiry into the casino in 2022. In it, he determined The Star was unsuitable to hold its NSW casino licence after he found evidence of an extensive compliance breakdown that led to money-laundering, criminal infiltration and large-scale fraud.
Bell will consider how the business has progressed since he issued his original 900-page report.
Trading in Star shares was suspended on Monday. The Star will deliver its half-year results on Wednesday.
Star Sydney’s licence has been suspended since 2022. The casino has been operating under special manager Nicholas Weeks, whose term has been extended three times because the regulator is not satisfied by the casino business’s remediation process.
Crawford said he was not yet convinced Star Sydney had changed its culture.
“We do not take this decision lightly, but I’m not yet sure they have addressed the cultural reform Bell identified in his first report,” Crawford said. “Cultural change does take time but you’ve got to be on the right track to start with, otherwise you’re just embedding the bad culture.”
The Star has replaced all of its board and the bulk of its leadership since damning inquiries into its operations in NSW and Queensland. Last month, the group appointed new chief executives Daniel Finch and Janelle Campbell to helm its respective Brisbane and Sydney premises.
Bell’s first inquiry said it was not in a position to determine the suitability of The Star’s chief financial officer Christina Katisbouba, company secretary Jennie Yuen and head of customer George Hughes, who all remain on the company’s leadership team. The business has also promoted Jessica Mellor to head the Gold Coast casino. Mellor was formerly the chief operating officer of the broader business.
Bell will now be tasked with looking into issues of culture and risk management; financial resources; management and reporting structures; and compliance with internal control measures relating to customer risk, financial transactions and due diligence.
His first report found The Star was not suitable to hold its casino licence. It found its business was a “case study of unethical conduct and cultural failure.
“The cultural dysfunction had significant adverse consequences for Star Entertainment’s capacity to withstand the risks of criminal infiltration and money laundering,” Bell’s original report found.
The NSW regulator imposed a record $100 million penalty on The Star in 2022 following changes to the NSW casino legislation introduced by the former Coalition state government.
“The rules have changed since before Bell. Some of the behaviours he was investigating continued during the hearing and right up until the end of the hearing. It’s a tougher regime we’re imposing because it has to be,” Crawford said.
The inquiry will run for 15 weeks from Monday. A final report is due on May 31.
Philip Crawford said Adam Bell’s first report highlighted specific areas that needed further investigation.Credit: Dominic Lorrimer
The regulator will then assess whether Star Sydney has regained suitability to hold its suspended casino licence.
The other options available are as follows: that the inquiry provide conditional approval for The Star to operate under the eye of an independent monitor (as is the situation at rival Crown Sydney); or that it maintains its casino licence suspension and seeks cabinet approval to extend the tenure of the special manager for a fourth term.
It could also retire the manager who currently holds its casino licence, or cancel the licence entirely. Both these options would shut down the casino.
The Star noted the inquiry in an announcement to investors late on Monday. .
Sources close to the business said the inquiry decision had blindsided its leadership, which had had mixed messages from the regulators in the two states in which it operates. Its 640-step remediation plan was recently endorsed by Queensland Attorney-General Yvette D’ath. That was taken as an encouraging step for its Brisbane and Gold Coast casinos, which are also operating under suspended casino licences.
This masthead revealed last December the regulator was not satisfied with the group’s remediation process and did not believe it was ready to operate without the supervision of an independent manager. A spokesperson said at the time it had six months to prove it was able to operate independently or risk its doors closing.
NSW Minister for Gaming David Harris said the decision to appoint Bell to conduct a second inquiry was a decision for the independent commission.
”The NSW government is committed to a casino industry that is safe, responsible and operating with the highest standards of integrity. The NSW government will await the outcome of the review. It would not be appropriate to comment further while this work is ongoing,” Harris said.
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