How did it all go wrong for Star Entertainment

A week after it opened the doors to its partly-completed $3.6bn Queen’s Wharf project, casino operator Star is in a world of pain. How did it make such a wrong bet?

Star Casino Queen's Wharf opened its doors last week. Picture, John Gass

A week after it opened the doors to its partly-completed $3.6bn Queen’s Wharf project, casino operator Star is in a world of pain. How did it make such a wrong bet?

How did Star get into trouble?

The company, which operates casinos in Sydney, the Gold Coast and Brisbane, has faced a perfect storm over the past two years that has included two reviews of its regulatory controls by Adam Bell SC.

Mr Bell found Star was continuing to fail the standards required of a casino operator, exposing itself to criminal elements and money laundering. At the same time, Star was facing costly delays in building the $3.6bn Queen’s Wharf project, which opened last week.

Why did things come to a head this week?

The NSW Independent Casino Commission (NICC) last week publicly released Mr Bell’s second report that flagged continued concerns about the company’s suitability to retain its Sydney casino licence. That sparked the deferral of the group’s annual financial results, leading to the suspension of its shares on the ASX and a loss of confidence by investors and banks in the future of the company.

What happens now?

Star Entertainment chief executive Steve McCann and his board are now locked down in crisis talks with bankers and government representatives in an attempt to nail down a refinancing deal that could raise up to $300m. Star late on Wednesday issued a statement saying it is reviewing its financial and liquidity position with various advisers as it tries to finalise its preliminary financial accounts for the 2024 financial year.

Will the company survive?

It is understood the future of the company now hinges on the Queensland and NSW governments deferring hundred of millions of dollars in tax. That will free up much needed cash for Star and give more confidence to banks and other investors to back the company with more money. It also would allow Star to proceed with asset sales worth up to $220m, including the offloading of the Heritage buildings in Brisbane.

What is the state government offering?

Queensland Premier Steven Miles said his government are in talks with the company about possible deferral of tax payments to protect almost 3000 jobs at Queen’s Wharf in Brisbane. Any lifeline granted in Queensland would make it harder for NSW to reject similar help, given Star employs close to 4000 people in Sydney.

Originally published as How did it all go wrong for Star Entertainment