Star Entertainment narrows losses as premium gaming revenue dives
Revenue from the embattled casino group’s premium gaming rooms has plunged ahead opening its Queen’s Wharf site in Brisbane and a fresh fight to keep its Sydney licence.
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Troubled casino operator Star Entertainment Group has recorded a steep drop in revenue from gaming rooms across the country ahead of a probe into whether it is fit to hold a licence in Sydney that kicks off on Monday.
A trading update from Star showed that it narrowed losses to $6.8m in the three months to March, compared to a loss of $49.7m across the same period in 2023.
But overall revenue was down 4.6 per cent to $419.2m as it suffered a sharp drop off in demand as its premium gaming rooms (PGR).
The group said Star Sydney PGR revenue was down 19.3 per cent on the prior comparable period, The Star Gold Coast was down by 20.0 per cent and Treasury Brisbane dived 28 per cent.
Shares in the group tumbled on Friday, down 8.3 per cent to 50c by midafternoon.
The losses in Brisbane come as Star has taken control of gaming floors on levels 5 and 6 of its new casino at Queen’s Wharf in the central business district, which it said remained on track to open in August.
Star said negotiations for the sale of assets including the Treasury Casino, Hotel and car park are progressing well and “an update will be provided in due course”.
Revenue from the main gaming floors at its three facilities increased in the quarter, led by a 6.4 per cent bump at Treasury Brisbane with a 5.4 per cent rise at The Star Sydney and 4.6 per cent at The Star Gold Coast.
Star lurched to a fresh crisis with the sudden departure of chief executive Robbie Cooke last month as the board considered “a change in leadership to be in the best interests of the company at this time”.
On Monday, an inquiry into whether Sydney’s Star Casino is fit to hold its licence will grill a who’s who of the Pyrmont venue.
The outcome of that 15-week inquiry – led by barrister Adam Bell SC in his second probe after a one in 2022 – could see Star forced to close its flagship casino if it fails to convince the regulator that it has reformed its culture.
Star told shareholders that it had increased resourcing in the risk, controls and transformation teams to strengthen the control environment. Operating expenses, although down 4.2 per cent from the previous third quarter, were up $1.8m on the monthly run-rate from the first half of the 2024 fiscal year.
“The board and management will continue to exercise cost control with a focus on making the appropriate investment in improving the control environment,” the group said.
“The FY24 normalised operating expenses excludes provisions for fines, regulatory costs, costs associated with the Bell Two Inquiry (legal, consultant and other costs) and any one-off costs associated with the group’s cost initiatives, all of which will be treated as significant items.”
Shares in Star have been in free fall, down 57 per cent in the past 12 months to 54.5c at Thursday’s close, but have risen 3 per cent since the start of January.
Hunter Green broker Charlier Green said the company may be worth more split up or sold to private equity rather than continuing as a listed company.
Under the scenario, the property and hotels would be sold off separately to its casino operations. Mr Green said alternatively the business could be sold to private equity much like Crown Resorts in 2022 to Blackstone for $8.9bn.
“A sale to private equity means they can renovate the business in private,” said Mr Green. “And it’s a massive renovation that is needed. Sticking points would be to compensate the shareholders who came in on the way down. The sooner this happens the better.” Mr Green said that while Blackstone could be interested in folding Star into Crown, the Australian Consumer and Competition Authority would want to look at any such deal.
Originally published as Star Entertainment narrows losses as premium gaming revenue dives
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