Star Entertainment takes COVID business insurance fight to court

The casino and hotels group suffered a loss for 2020 but said trading during July and August had improved.

The Star chief executive Matt Bekier. Picture: Justin Lloyd

The Star Entertainment Group is taking legal action in its pursuit of a payout under a business ­interruption insurance claim that it lodged at the height of the COVID-19 pandemic, which caused the casino and hotel business to shut its doors and stand down 8600 staff.

The Star in April lodged a claim for the insurance, considered to potentially be a major test case for businesses that were forced into the government-mandated shutdowns.

A dispute is understood to have eventuated between The Star, the owner of casinos in Sydney, Brisbane and on the Gold Coast, and its insurers, with The Star set to seek declaratory relief in a case for which it is asking for an as-yet unspecified payout.

“The insurer has a different read to us, so it is going to court,” The Star chief executive Matt Bekier told The Australian. “We are claiming business interruption cover, and given that we were forced to close as a result of the government, we think our policy will protect us.”

The news came as The Star revealed a statutory net loss of $95m from $1.487bn revenue in a year hit by COVID-19, but said trading in July had shown positive signs as restrictions in NSW and Queensland eased.

It said domestic gaming revenue in July had been within 80 per cent of the previous corresponding period, even though it was still not allowed full capacity at its venues.

Trading during the first 17 days of August had also been good in Queensland, though spatial distancing restrictions for its patrons in NSW had been tightened.

Mr Bekier said the group was cashflow positive in July and had been buoyed by welcoming customers back, though he admitted he was planning for a full 2021 ­financial year without an influx of international visitors

“So we are skewing our ­marketing to much more of a domestic focus and business travellers. We have reduced headcount in our international business and are saving about $10m there,” he said.

The Star had been trading at record levels to the end of February, after which COVID-19 hit. EBITDA at its Sydney casino had been up 21.4 per cent to February but eventually fell 7.6 per cent to $284m for the full year.

It received $64.8m from the federal government’s JobKeeper scheme, which could reach $130m by September 27.

“We had good momentum on the back of the cost-­cutting we did in the first quarter,” Mr Bekier said. “During the crisis, we ­really took a close look at our costs and kept a lid on our expenses, and now we’re well placed to come out of this even with some positive momentum,”

He also said The Star was ready for competition in Sydney when Crown Resorts opens at Barangaroo in December. “We are looking forward to taking them on, ” he said.