The NSW government may push back a long-awaited deadline to restrict casino gambling to card-only following a request from the new boss of struggling Star Entertainment Group, who said the group was not yet ready for such a complicated transition.
Star Sydney and rival Crown Sydney were given until August 19 to transition all poker machines and table games to card-only following serious breaches of the anti-money laundering and counterterrorism financing act which resulted in both groups losing their right to independently operate casinos.
Star Sydney and Crown Sydney were given until August 19 to transition poker machines and table games to card-only.Credit: Peter Braig
Under the current plan as legislated in the NSW Casino Control Act, customers at Crown and The Star will soon be limited to loading $1000 cash per day onto their respective carded systems before gambling. This limit will only apply to cash transactions. Such a transition is expensive for both cash-strapped casino businesses but is considerably more complicated for The Star, which has to refit 1500 poker machines.
The Star’s newly-minted chief, Steve McCann, asked for a review of this timeline and argued Star Sydney is not in a position to safely move to card-only trading without security and outage concerns, according to sources familiar with the discussions but not authorised to speak publicly. All machines across the group’s three casinos in Sydney, Brisbane and the Gold Coast were switched off last month after a planned upgrade to prepare for the carded rollout failed.
Senior members of the NSW government met to discuss what to do about the card-only policy on Wednesday, the sources said. They are also considering whether to increase the cash limit as part of a compromised arrangement.
NSW is often dubbed the pokies capital of the world, and has more poker machines than anywhere else in Australia. The government has been criticised for not enforcing stricter regulation over pubs and clubs, with anti-gambling harm advocate Tim Costello accusing them of being “captured” by the industry.
Mandated carded play has not been imposed on the state’s pubs and clubs, which operate 98 per cent of poker machines in NSW. Instead, 28 of 400 venues signed up 4500 machines to participate in a voluntary cashless trial in December. Sources familiar with the figures confirmed this participation rate has plummeted in the months since.
Blackstone-owned Crown Resorts does not have any poker machines in the state due to The Star’s exclusivity arrangement and confirmed the business is ready to move its 266 table games to card-only in line with the current timeline. The Star declined to comment.
“Crown is able to comply with upcoming requirements as part of the NSW Casino Control Act,” a Crown spokesperson said.
Gaming Minister David Harris declined to comment about the alleged discussions or whether a decision has been made. The casino regulator, the NSW Independent Casino Commission, will be informed of any changes and is currently weighing up whether to reinstate Star Sydney’s licence to operate its casino after approving Crown Sydney to operate independently in April.
The Star’s chief executive Steve McCann asked the government to reconsider so the company would be better prepared to facilitate mandatory carded play.Credit: Dominic Lorrimer
A Liquor & Gaming spokesperson said the government continues to work with both casinos on the implementation of mandatory carded play.
“This includes ensuring the technology is established in the right way from the very beginning,” a spokesperson said.
The NSW Independent Casino Commission is due to release the findings of Adam Bell, SC, this month in a report, following a lengthy inquiry into The Star’s culture in response to concerns expressed by its special manager, Nicholas Weeks.
The regulator confirmed last week it has moved to extend Weeks’ tenure at Star Sydney until at least March next year, which indicates the casino is unlikely to be shut down entirely.
Unlike Bell’s first inquiry into The Star in 2021, no breaches of the anti-money laundering or counterterrorism act were raised over the three weeks of hearings which featured the bulk of The Star’s current and former leadership.
Despite this, more than 10 executives have left the struggling business in recent months due to an array of embarrassing cultural failures exposed by the hearings, which included a suggestion from former chair David Foster to launch a shareholder-led class action against the regulator and Weeks.
Crown Melbourne, which does have poker machines, has already transitioned to card-only as part of a similar compliance regime in Victoria. Sources within the business familiar with the privately listed company’s books say the bulk of Crown Melbourne’s remediation spend this year has gone into the cashless transition, and revenue from its gaming floor has fallen by more than 5 per cent since its introduction.
The Star is due to unveil its results for the 2024 financial year on August 29. The government’s decision could change the outlook for the Sydney business over the next financial year. The group issued a sombre trading update in June, following poor trading and sustained costs associated with its regulatory compliance.
It now expects to make $1.68 billion in total revenue this financial year, a fall from 2023’s $1.8 billion. At the time, 2023’s net loss of $2.44 billion was expected to be the low point for The Star, but it has continued to be plagued by setbacks since and is still bracing for a multimillion-dollar penalty from the financial regulator.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.