Inquiry shortens the odds of Star Entertainment losing its casino licence
Allegations of spying, a mysterious whistleblower and fraud all set against the backdrop of high-roller gaming rooms and high-stakes gambling. The inquiry into Star had it all this week.
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Allegations of spying, a mysterious whistleblower and fraud, all set against the backdrop of highroller gaming rooms and high-stakes gambling.
The revelations at the first week of the second Bell inquiry into Star’s suitability to keep its Sydney casino licence had all the makings of a cheap paperback novel. But the stakes are higher for Star and already fragile state economies than throwaway fiction.
There is now a real possibility that Star loses both its Sydney and Queensland licences, throwing thousands of people out of work, costing investors billions of dollars and leaving governments in both states with a nasty mess with deep economic implications.
Robbie Cooke, the ousted chief executive named as the clean-up guy following the first Bell inquiry, has been accused of spectacular failure and a fractious relationship not only with the regulator and special manager Nicholas Weeks but with some members of his senior leadership team, who have left the business and described it as having a “toxic corporate culture”.
Among the more serious allegations this week was that Mr Cooke, along with Star chairman David Foster, spied on the diary entries of Mr Weeks as they prepared for “war” with the NSW Independent Casino Commission, withheld reports and correspondence from his senior colleagues and went back on mutually agreed decisions with his leadership team.
The inquiry also heard that on his watch a $3.32m fraud was committed against Star involving malfunctioning cash machines that led to the chief financial officer being pressured to cook the books to make the losses more attractive on its financial reports.
Mr Cooke also allegedly refused to provide copies of correspondence from the NICC that were critical of Star’s reform efforts to his chief legal officer, who said the CEO on several occasions went back on previously agreed decisions and froze her out of important decisions. A complaint from an anonymous whistleblower about Mr Cooke is now being investigated by an external law firm.
Mr Cooke should have been the perfect man for the job when he was appointed to the job in October 2022. That was the same month that Mr Weeks, also a lawyer, was named as special manager after the first Bell inquiry found a litany of dodgy practices at Star that needed cleaning up. Mr Cooke led Wotif, Tatts Group and Tyro before landing at Star.
While at Star, Mr Cooke was successful in raising hundreds of millions of dollars in capital to keep Star’s doors open during the tumultuous period, but as the regulator’s noose tightened he appears to have adopted a siege-like attitude towards the NICC and his own leadership team. One person who has known Mr Cooke personally for 20 years described him as “affable and goofy” but someone who wears a “a silk glove with an iron fist”.
“He is too lawyerly,” said the person. “Star needed an entrepreneur to be across all their businesses, but that is not Robbie.”
Star is now teetering on the brink, with the odds shortening that it will fail or be broken up. Assets including Queen’s Wharf and Star Gold Coast will be lucrative prizes in any break-up of the company. The finishing touches are being made to the $3.5bn Queens Wharf resort in Brisbane ahead of an August opening.
Chief among those interested in picking over the carcass of Star would be billionaire pub baron Bruce Mathieson, who this week lifted his stake in the group to just below 10 per cent.
Mr Mathieson this week declined to comment on his increased investment, but had previously noted Star’s “attractive assets”.
Politicians of all persuasions, who have been milking casinos for their tax revenue for decades and have largely turned a blind eye to their nefarious activities, now face the impact of thousands of job losses, empty billion-dollar casino and hotel buildings and loss of tax revenue if Star collapses.
Taxes from gambling provides the NSW government with more than $2bn each year, while Queensland garners more than $1.3bn. Across the country, casinos employ 25,000 people and contribute $1.7bn in wages. Star employs 8000 people and paid $456m in government taxes and revenues last year, enough to build 30 school, or eight hospitals.
Alliance for Gambling Reform chief executive Carol Bennett said this week’s inquiry showed that years of “opaque” regulations were coming home to roost. “Star has failed and continues to fail,” Ms Bennett said. “They have not been held to account and you have to ask what they have to do to lose their licence.”
Ms Bennett said that, despite the revelations, she would be shocked if Star actually lost its licence. “It has been very opaque in NSW despite the state having 90,000 gaming machines, second only to Las Vegas,” she said. Melbourne-based Crown Resorts, which also has been subject to an inquiry, had done a better job of cleaning up its act.
Comment was sought from NSW Gaming and Racing Minister David Harris. Queensland Attorney-General Yvette D’Ath said the state government was committed to ensuring that casinos in Queensland were “operating with the honesty and integrity expected by the community”.
“We are monitoring the evidence coming out of the second Bell Inquiry in NSW and will consider the findings and their implications to The Star’s Queensland operations as they are made available to the regulator and the government,” Ms D’Ath said, adding it would be “inappropriate comment on the proceedings while they remain under way”.
Brokerage firm Ord Minnett this week warned that Star faced a catastrophe if the Bell inquiry decided it was not suitable to keep its Sydney casino licence.
Ord Minnett said the risk of the doors closing on its Sydney casino had “risen on the back of the second Bell inquiry”. “We think there is an almost binary decision at the conclusion of the inquiry – that is, The Star Sydney closes its doors, or it doesn’t,” the brokerage said.
A temporary closure could cost the group $2m a day while a permanent cancellation of its licence would be a catastrophic event.
Ord Minnett said Star’s prospects were clouded by increased competition from Crown Sydney, which opened in 2022. It said Star could lose up to 30 per cent of its gaming table business and more than half of its VIP business to Crown over the next few years.
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Originally published as Inquiry shortens the odds of Star Entertainment losing its casino licence
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