Star shares tank 22pc amid second inquiry into Sydney licence
Investors dump Star shares after the embattled gaming group delayed its interim results, as it faces a new 15-week inquiry into its suitability to operate its Sydney casino.
Star Entertainment Group plummeted almost 20 per cent after the embattled gaming group delayed the release of its results amid another inquiry into its Sydney casino licence
The NSW Independent Casino Commission (NICC) announced on Monday a second inquiry into Star’s suitability to operate the casino following concerns it was not moving quickly enough to reform its business.
Star shares plummeted more than 22 per cent after the company deferred the scheduled release on Wednesday of its interim results to consider the financial impact of the latest probe.
An external manager has been running the casino since October 2022 when an independent inquiry concluded that the gaming giant – with a string of casinos and a market value of more than $2.6bn – had set up an “inherently deceptive and unethical process”.
It said the casino had disguised more than $900m as hotel expenses to allow wealthy gamblers to bet at the venues and failed to check the source of the money while knowing for years it was in breach of the rules.
Star’s shares dropped to 44c in a slightly lower market on Tuesday morning, making it the biggest loser on the ASX 200. They have lost more than 66 per cent over the past year.
The Star said the delay to the results would allow the company to determine if amendments were required to the interim report arising from the commencement of the inquiry. A new date will be announced over the coming days.
“The Star remains committed to, and focussed, on executing its remediation plan and earning back the trust of the community,” it said. “The Star appreciates the opportunity to demonstrate it has the ability to regain suitability and will do all in its power to work cooperatively with all its regulators including the NICC and its appointed manager.”
Last December, Star Sydney was given a six-month deadline to get back its gaming licence or face closure after authorities in NSW deemed that its Sydney property still required supervision. The NICC has now appointed Adam Bell SC to conduct a new inquiry, before independent manager Nicholas Weeks’s term ends in June. Star shares remain in a trading halt.
NICC chief commissioner Philip Crawford said Mr Bell’s 2022 report “necessitated deep structural change that would address the casino’s failings and prevent further misconduct”.
“There was a substantial shift required and The Star has had 18 months to demonstrate that it has the capability and resources to regain its casino licence,” Mr Crawford said.
Mr Crawford said that when the manager was extended for the second time in December, the NICC was not satisfied The Star was progressing its remediation in a timely fashion.
“The NICC has had concerns about the extent that remediation is attributable to the manager’s oversight and direction versus what is being driven by The Star’s reform agenda,” he said.
“Bell Two will bring us back to the Bell Report and The Star’s efforts to regain its casino licence in the shadow of that report.
“There is much at stake for The Star, so the NICC is giving the casino every chance it can to demonstrate whether it has the capacity and competence to achieve suitability.
“This includes meeting its financial obligations under the casino licence and funding its remediation program sufficiently.”
Bell Two will run for approximately 15 weeks, with the final report due to the NICC on May 31. Hearings will be held in camera and the report will be released publicly in due course. Star in a release to the ASX said it understood Mr Bell’s findings were to be provided to the NICC by the end of May.
The inquiry comes as Star prepares to open its $3bn Queen’s Wharf project in Brisbane later this year after lengthy construction delays and where it also has faced regulatory action.
The integrated resort development in the heart of Brisbane had faced cost overruns of at least $260m and an opening date more than a year behind the original schedule.
Queen’s Wharf will feature four hotels with about 1000 rooms, restaurants, a casino and retail space. The Queensland government issued a $100m fine to The Star in 2022, following a damning inquiry by Robert Gotterson.
The inquiry found The Star disguised millions of Chinese gambling transactions as hotel charges, allowed gamblers banned in NSW to come to its Queensland casinos, and flouted anti-money laundering and counter-terrorism financing laws.
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