The Star’s shares drop 23% amid Sydney casino licence concerns after money laundering allegations

Shares in Star Entertainment group have dropped 23% following allegations of poor anti-money laundering checks ahead of a review of its Sydney casino licence.

Star Entertainment has been hit with allegations of poor anti-money laundering checks ahead of a review of its Sydney casino licence. Picture: Bloomberg

Shares in The Star Entertainment Group have dropped 23 per cent amid concerns the company could be at risk of being found unsuitable to run its Sydney casino following allegations it courted high-risk gamblers while knowing its anti money laundering controls were deficient.

The allegations of The Star’s cavalier attitude towards properly vetting high-rollers and international gambling tour partners — or “junket” operators — mirror those made against the James Packer-backed Crown Resorts that ultimately resulted in the Bergin Inquiry temporarily revoking Crown’s NSW casino licence earlier this year.

And they emerge as the man responsible for prosecuting the case for Crown to lose its licence, former senior counsel assisting the Bergin Inquiry Adam Bell SC, kicks off the NSW gaming regulator’s scheduled review of The Star’s suitability as a casino operator.

The news sent shares in the casino group — which operates a casino in Sydney and two in Queensland with a third on the way — down 21 per cent to $3.39 early Monday morning.

The stock closed down 22.9 per cent at $3.30, wiping more than $700m from The Star’s market capitalisation.

The stock price move reflects fears its growth plans like a sale and leaseback of its Darling Harbour site or a renewed merger attempt with Crown Resorts will be put on hold.

NSW Premier Dominic Perrottet said Monday the allegations, published by Nine Entertainment outlets on Sunday night, were “concerning” and did not rule out taking additional action before Mr Bell’s review is finalised.

“There’s a review being undertaken by ILGA in relation to Star’s obligations, whether it is fulfilling its statutory obligations,” he said.

“My understanding is that is due to be presented, to be finalised by March next year, so obviously we will consider that.

“But if anything comes to light in the meantime where we are provided advice that appropriate action needs to be taken, I can assure you it will.”

Premier Dominic Perrottet said the NSW government would not rule out taking additional action against Star as Adam Bell carries out his review if more information comes to light. Picture: Getty Images

A spokesperson for Queensland’s Office of Liquor and Gaming Regulation (OLGR) said the regulator has “already commenced additional inquiries and compliance activities relating to Queensland casinos,” but did not say whether it planned to zero in further on The Star.

“OLGR has been closely monitoring and acting on findings of the New South Wales Bergin Inquiry and casino inquiries in Victoria and Western Australia,” they said.

“The Queensland Government will use the recommendations of interstate inquiries and Austrac investigations to consider enhancements to Queensland’s casino regulatory framework.

“Allegations of organised crime infiltration are taken very seriously and Queensland has one of the most robust systems in the country.”

The media reports allege that The Star enabled money laundering at its casinos by courting high-rollers with possible links to organised crime and foreign influence operations as recently as this year.

This is despite a 2018 confidential report from KPMG presented to the group’s audit committee outlining flaws in its anti-money-laundering and counter-terrorism finance regime.

KPMG also allegedly found that due diligence on The Star’s international junket partners was limited in scope, exposing the company to further money laundering risks, particularly from junket operators linked to Asian organised crime groups.

It is also claimed that high rollers who were banned from The Star Sydney by NSW and Victorian police over organised crime concerns were allowed to gamble at The Star’s Gold Coast casino. The Australian does not suggest the allegation are correct, but notes they have been made.

In a statement to the ASX on Monday, The Star said it considered a number of the allegations to be “misleading” and that it would co-operate with all regulatory authorities to address the reports.

“The Star is concerned by a number of assertions within the media reports that it considers misleading. There are constraints on publicly discussing specific individuals,” the group said.

“We will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities, including Mr Adam Bell SC who is undertaking a regular review of The Star Sydney in accordance with the Casino Control Act 1992 (NSW).”

The media reports also claim that The Star used another controversial practice once employed by Crown to help high rolling Chinese gamblers circumvent controls on moving money out of the country for gambling purposes.

It alleges that between 2014 and 2018 The Star allowed Chinese customers to withdraw millions from their hotel properties for gambling purposes using Chinese credit and debit cards like China Union Pay, with the resulting transactions disguised as a hotel expense.

NSW Independent Liquor and Gaming Authority chair Philip Crawford told The Australian that Mr Bell’s upcoming review would be just as “serious” as the public NSW Bergin Inquiry.