Can Star’s Mr Fix-it transform the gaming giant?

Scott Wharton spent four years rebuilding the reputation of the Commonwealth Bank. Picture: John Feder

Scott Wharton is Mr Fix-it, the man the Star Entertainment board has picked to do two jobs, both critical for long-term investor returns. He will need all the experience from his last four years rebuilding the reputation of the Commonwealth Bank.

First, Wharton is to fix up the besmirched casino business and restore confidence with regulators so that no one can be in any doubt that Star is indeed a responsible licence holder. That it is a far cry from the business that former chief executive Matt Bekier and chairman John O’Neill walked out on earlier in the year.

“There were deficiencies and failings that came to light. We fell short of our own expectations for this company as well as those of our community. My job and the job of the new leadership team is to ensure this never happens again,” says Wharton.

His second job is broader – the transformation of a group with some $6bn of projects underway or in planning in Sydney, Brisbane and the Gold Coast.

By the 2032 Olympics in Brisbane, the idea is Star will have grown to a business of hotels, restaurants and entertainment, of which gaming is but one part.

Step into Wharton’s shoes and his job – Star Sydney chief executive and group head of transformation – looks formidable.

Star is waiting for the findings of the Bell review. That inquiry, in NSW, heard allegations that the company had hid an illegal cash cage for a junket operator linked to criminal gangs, breached anti-money laundering regulations and misled banks. The findings go to the regulator this month.

Public hearings of the Gotterson review into Star’s Queensland operations begin next week, and as The Weekend Australian reports on Saturday, there were plenty of early regulatory concerns at the Queen’s Wharf development to be trawled over.

And Star is waiting for its new CEO, Robbie Cooke, to extricate himself from Tyro Payments.

Meanwhile, its rival Crown Resorts has dusted itself off under new private owners Blackstone and is finally open for business with a licence for tables at its new Sydney casino.

Four weeks into the new job, Wharton’s top priority is to respond to Bell. He says work is already underway: junkets and China Union Pay cards are banished, a clean-out of management responsible for failures and the legal and risk role split into two new executive positions.

“We will take the key findings from Bell and Gotterson, and assess carefully and implement any requirements in full. But we are not standing still. We are moving on uplifts in financial crime practices, risk management practices and culture,” says Wharton, adding technologies including facial recognition is being used to exclude patrons. New state laws will require increased information sharing on exclusions with Crown.

Parallels with Wharton’s job at the Commonwealth Bank are striking. Over four years, he led the design and implementation of the bank’s response to the prudential regulator’s damning inquiry into governance, culture and accountability. Technology simplifications, supply chain and risk manage improvements rebuilt reputation.

Wharton’s own reputation is as a stickler for detail. He says the hardest part of reform is to maintain a burning platform for change, make sure plans are understood by everyone including regulators and a continual learning and adjustment.

The second part of his job is Group transformation. Part of what lured Wharton across were the strong fundamentals of the business and the multi-billion dollar development pipeline.

“We have three hotels today in Sydney … and 32 bars and restaurants, and a great theatre in Sydney Lyric,” says Wharton. “Gaming will always be important but the opportunity is to reposition peoples’ understanding of what the business is.”

Star’s $2.8bn multi-use development at Queen’s Wharf in Brisbane will now open in the second half of 2023 after delays from floods and the Covid-19 pandemic. Wharton now sees momentum from the Olympics win which will lift tourism in Queensland and Sydney.

In Sydney, after years of political wrangling, state planning controls for the Pyrmont Peninsula were finalised last month.

This opens the door for Star to put up a six star hotel over the next five years. And two more theatres alongside The Lyric: one Broadway style to seat 1550 and the second a 1000-seat comedy theatre; and a new rooftop area to top off 30-plus restaurants and bars.

And what of the arrival of Crown Sydney, the six star hotel already operating with clients at tables? “Crown is a great player. It will lift the overall market and importantly for customers it will lift options available in the market,” says Wharton.

Not to be outdone, Star has spent over $250m in upgrades for premium customers.

Wharton says compared to Crown Sydney, The Star offers good access to parking, food inside the gaming space and of course, the slots where huge profits can be made.

The next task is to diversify. Today, gaming makes up 70 to 80 per cent of the revenue for the Sydney property. Around the world, integrated resorts including those in Las Vegas, take only 30 to 40 per cent from gaming.

“Across the group we have 60 cafes and restaurants. Over next five years that could expand to over 130, and 8 hotels could go up to 12, 13 across the group as we step through our developments plans,” says Wharton.

Star’s board renewal brings in a mix of regulatory expertise in this week’s appointments of David Foster and Anne Ward with Michael Issenberg, chairman of Accor Asia Pacific and Tourism Australia joining last month. Cooke, the new chief executive, has a background in hospitality and gaming from Wotif and Tatts and most recently from the highly regulated banking sector in Tyro.

Star Entertainment’s annual results are on Monday.