The junket business is dead, says casino operator Star Entertainment

Star, with its casino operations in Sydney, Brisbane and the Gold Coast, had already been cutting back on its use of junket operators to bring super wealthy Asians to gamble in Australia.

Star chief executive Matt Bekier in Pyrmont. Picture: Sam Ruttyn

As far as Star Entertainment chief executive Matt Bekier is concerned, the use of junket operators to bring in high rollers into casinos in Australia is dead.

“The junket business is dead,” he told The Australian on Thursday afternoon.

“It’s not going to come back.”

Star, with its casino operations in Sydney, Brisbane and the Gold Coast, had already been cutting back on its use of junket operators to bring super wealthy Asians to gamble in Australia for a few years before last year’s inquiry shone an uncomfortable spotlight on Crown’s dealings with junket operators.

Star did use controversial junket operator Suncity before the Australian borders closed a year ago to bring in high rollers to its Sydney casino but that era is now over.

The report issued earlier this month by former NSW Supreme Court judge Patricia Bergin after a year of inquiry into Crown’s suitability to hold a casino license in NSW, recommended strongly that the use of junket operators be banned in New South Wales.

With Australia’s borders closed indefinitely to foreign travellers, the issue of junket operators is a moot point at the moment.

But in many ways, when business is down due to Covid and border closures, this is the best time to set some new standards for the regulation of international casino traffic to Australia when it does open up, may by later this year or next year.

The Bergin inquiry highlighted that in this day of more focus on issues of anti-money laundering and cash transactions and moving money around the world for high rollers, there are big risks in using junket operators and courting their super high rolling clients.

Under the Swiss-born Bekier, the Star has studious kept it head down while its rival Crown Resorts, which is still seeking to open the doors of its casino in Sydney, has had a blow torch applied to its belly, prompting a string of high level departures including former chief executive Ken Barton and several key directors.

The news of a new investigation by authorities in Western Australia will ensure it is under a continued cloud of uncertainty for the next few months while the future of major shareholder James Packer is also in question..

Star, which has adopted a far more cooperative approach in dealing with NSW’s Independent Liquor and Gaming Authority (ILGA) than Crown approached the Bergin inquiry a year ago, is more than happy with the idea of a strong new independent casino regulator to oversee both it and Crown in Sydney.

Bekier has been very careful what Star has said and has made it clear the company will work with whatever new reporting requirements are needed to do business in Sydney.

The ongoing delays in Crown opening in Sydney have been good for Star but, sooner or later, it will have to face competition which stems from the deal done years ago between James Packer and former NSW Premier Barry O’Farrell.

As Bekier explained yesterday, the end of junket operators in supplying NSW casinos will mean Star will work harder to get the premium mass market – aka the wealth tourist and businesspeople from Asia (but not the junket operator delivered super higher rollers)- to come to its sites in Australia once the borders open.

As he admitted, the business from junket operators has a lot tighter margins – generating about a third the earnings than from ordinary upmarket gamblers.

But the volumes the whales or VIPs can spend gambling is a lot larger.

Banning junket operators mean that casino operators have to work harder to generate the same volume of gambling revenue.

Net net, the combination of the Bergin inquiry, the closure of borders to international tourists, the stricter rules about money transfer and people movement out of China, and the prospects of stricter regulation of casinos in NSW and around the country means that many of the rivers of gold which James Packer had envisaged underwriting his Crown Sydney operations have all but dried up.

By keeping its head down and adopting a cooperative relationship with ILGA, Star is carving out a pragmatic route to protecting its business in Sydney as much as it can while stepping up its business in south east Queensland where there is considerable upside.

Bekier has worked hard to keep Star out of the headlines over the past year, focussing on controlling its costs and expanding its properties in its three cities.

Having started his career as Star CEO behind the eight ball in terms of having its key market opened up to James Packer with no compensation for the competition, and then had to weather the associated controversy from the Bergin inquiry, Bekier continues to play the cards in front of him with a combination of Swiss pragmatism and Australian adaptability.

Like the tale of the hare and the tortoise, Bekier’s Star has been steadily working to maximise its potential amid a radically changing environment more than happy for Crown to retain the glare of the spotlight.