No free drinks: Star earnings drop as gaming controls hit home
The embattled casino operator’s interim earnings took a hit against the backdrop of new gaming controls that included the end of free drinks to high-roller punters.
Embattled casino operator Star Entertainment says it’s focused on restoring its damaged social licence, with restrictions on the time guests spend at gaming tables and the suspension of gambling incentives such as complimentary drinks.
Star’s first-half profit before significant items dropped 43 per cent to $25m as the company was forced to put a tighter rein on gamblers amid a new regulatory probe into its suitability to hold a casino licence in NSW.
Revenue declined 15 per cent to $865.7m.
Statutory profit of $9.1m was a massive recovery from a $1.3bn loss in the previous period but below analyst expectations of about $15.4m.
Star is attempting to win back its social licence, damaged by a series of regulatory probes into its suitability to operate in NSW and Queensland.
Star shares climbed 8.3 per cent to 52c but are still down 60 per cent over the past year. Star Entertainment chief executive Robbie Cooke said the company’s performance had been impacted by the “necessary implementation of controls” that had resulted in increased guest exclusions and compulsory breaks for gamblers.
Casinos can exclude guests that they believe are gambling excessively or spending beyond their financial means.
Mr Cooke said Star also had reduced incentives for guests in its premium areas, specifically the supply of free drinks in private gaming rooms.
“There was an impact for most of the period from certain operating restrictions impacting our customer experience, principally the cessation of complimentary drinks in our private gaming rooms,” said Mr Cooke. “This has reduced the performance of tables and gaming in those facilities.”
Revenue from gaming tables slipped 20.9 per cent during the first half, while takings from electronic gaming machines fell 15.9 per cent.
Mr Cooke said Star would not look at reintroducing lucrative rebate players for at least another 12 months and until it was “very confident” about gambling controls. Rebate programs are often used by casinos to attract VIP players.
The Star has introduced time restrictions on guests, including a limit of three hours of continuous play on an electronic machine or six hours continuous play on a table, after which a patron is asked to take a 15-minute break.
After 11 hours of cumulative play on all game types a patron is asked to take at least a 24-hour break.
Star faced weaker discretionary spending and competition from larger pubs and clubs as well as the Crown casino in Sydney. Revenue at The Star Sydney dropped 17 per cent, 14 per cent at its Gold Coast property and 10 per cent at The Treasury Brisbane.
Mr Cooke said the “cultural renewal” process for Star would take several years as the company repaired the damage to its reputation incurred by the actions of the past. The NSW Independent Casino Commission announced a second inquiry earlier this month into Star’s suitability to operate its Sydney casino, following concerns it was not moving quickly enough to reform its business.
Star shares plummeted more than 22 per cent on February 20 after the company deferred the scheduled release of its 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.
Star’s dividends are on hold in line with debt arrangements, the resolution of Austrac’s civil proceedings into alleged anti-money laundering and counter-terrorism financing breaches and the completion of its $3.6bn Queens Wharf Brisbane project.
Queen’s Wharf Brisbane is expected to open progressively from August, featuring gaming rooms, hotel and retail space.
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