Star keeps Sydney casino licence but remains under regulator supervision

The powerful NSW casino regulator will allow Star Entertainment to keep its Sydney casino open but the group will remain under close government supervision.

The NSW casino regulator has stopped short of removing Star’s gaming licence over fears the entire company could fold, instead dishing out a modest $15m fine while keeping operations under the close supervision of government regulators..

The NSW Independent Casino Commission (NICC) on Thursday said it will prolong the suspension of Star’s licence until at least March following the Bell II inquiry, which found continuing regulatory failures by the group. The NICC-appointed manager Nick Weeks will continue to have oversight of its casino.

NICC chief commissioner Philip Crawford said the inquiry identified continuing compliance failures and operations at The Star that fell far short of suitability to hold a casino licence.

But Mr Crawford said taking Star’s licence away would cripple the company and have serious impacts that would ripple through the economy. Stripping the casino group of the licence would not only affect its 9000 staff, but multiple connected businesses.

“If Sydney Star fails, Star Group would fail, and that’s a group that employs 9000-plus people,” Mr Crawford said. “And if you add on to that the huge number of suppliers to the business, it would affect the lives of a lot of people and it will be a very, very final act to take the licence away, particularly given the current economic times.”

NICC commissioner Philip Crawford announces the regulator’s decision at a press conference on Thursday. Picture: Nikki Short

Asked whether Star’s financial situation influenced the fine amount, Mr Crawford said no.

“Obviously we’re not going to impose a fine that’s going to knock them over but we didn’t discount it,” he said. A fine of $100m could have been imposed.

Mr Crawford said the Bell report illustrated how quickly weak controls can lead to criminal infiltration and gambling harm.

“The NICC understands the many challenges The Star is facing and will continue to closely monitor,” he said.

“Despite more prescriptive supervision that prevented the type of misconduct seen in the first inquiry, numerous shortcomings in governance, regulatory compliance, technology and risk management remain, including in areas that The Star claimed it had remediated.”

He said reform of the company’s systems, policies, processes and culture that support these areas cannot be understated in a business as complex as The Star’s.

“In a casino setting, compliance breaches can have serious consequences for the community.”

Mr Crawford said there was no suggestion of criminality or links to organised crime, but Star had failed to follow internal control manuals.

Mr Crawford said new Star chief executive Steve McCann had established “open lines of communication and co-operation” with the NICC that had resulted in a much healthier relationship between the company and the regulator.

“The NICC is encouraged by the steps initiated since Mr McCann’s appointment, and the company is now taking the opportunity to reset its remediation priorities, strengthen its financial position and bolster the leadership team to refocus the business,” he said.

“However, more work needs to be done before The Star can be regarded as a compliant and responsible operator, deserving of a licence.” Star shares rose 13.7 per cent to 29 cents after going into a trading halt earlier in the day.

New Star Entertainment Group chief executive Steve McCann.

The NICC last month issued a show cause notice against The Star after the second Bell report showed continuing regulatory missteps by the group as well as increasingly serious financial challenges.

The regulator said four significant breaches had been detailed in the report by Adam Bell SC, including one that resulted in a cash fraud against The Star, a failure to run source of wealth checks on hundreds of members flagged as high risk, and fraudulent guest welfare entries that put already vulnerable customers at higher risk of harm.

Disciplinary options available to the NICC included cancellation of the licence, and a pecuniary penalty of up to $100m. The commission could also decide to amend the terms or conditions of Star’s licence, or require an enforceable undertaking on its future actions.

Star reported 2024 losses of $1.69bn after $2.44bn in red ink in the prior corresponding period, as it continued to battle regulatory costs and challenging trading ­conditions.

Mr McCann is looking to slash up to 350 jobs and offload hotels and other assets after warning the company was “on its knees”.

Star Entertainment Group’s auditors have raised red flags about its ability to continue as a going concern with expenses related to the new Queen’s Wharf casino precinct in Brisbane a key issue. Star also warned earnings uncertainty arising from loss of market share, financial crime remediation and the impact of casino operating reforms cast significant doubt on the group’s ability to continue in business.

The phased opening of the $3.6bn Queen’s Wharf project, which has faced cost overruns and delays, also continues to dog the company.

The Queensland Department of Justice and Attorney-General said The Star’s Brisbane and Gold Coast casinos would continue to operate under an approved remediation plan, with Mr Weeks as an independent adviser.

Star gets to live another day.

“The Queensland Government is aware of the New South Wales Independent Casino Commission’s announcement,” said a spokesperson “We are considering the commission’s response in regard to any implications relevant to The Star’s Queensland casinos, including any future amendments to The Star’s remediation plan.”

Star said it will continue to “engage constructively” with the NSW and Queensland casino regulators.“The Star looks forward to continuing its constructive engagement with both the NICC and OLGR, and its other stakeholders, as it embeds a sustainable remediation of the group and progresses a viable pathway toward suitability,” Star said.