Too big to fail: Star survives to live another day

Star Entertainment, despite its many sins, has been hit with a regulatory wet lettuce following the findings of the Bell II inquiry.

The decision by the NSW Independent Casino Commission (NICC) to allow the group to keep its Sydney casino operating under government supervision for the time being — and not to cancel its licence — was recognition its failure would be a bridge too far.

The spectre of huge jobs losses and a big dent to government coffers was too much to bear for the NICC.

A meagre $15m fine, as opposed to the $100m penalty, which could have been imposed as a result of the continuing regulatory missteps identified by Adam Bell SC, underscored the NICC’s determination not to financially sink a deeply-flawed but economically important player in the NSW economy.

NICC chairman Philip Crawford revealed this pragmatic approach when he told a press conference this morning taking Star’s licence away “would cripple the company and have serious impacts that would ripple through the economy.” The possible loss of 9000 jobs and the impact on multiple connected businesses also was considered.

It would be a “very, very final act to take the licence away, particularly given the current economic times.” Mr Crawford also revealed a hefty fine could have sunk the already financially shaky business.

New Star boss Steve McCann must grab this reprieve with both hands.

The NICC has taken a pragmatic step to keep Star under its watchful eye as it beds down it remediation plan. But, anyone who sat through the weeks of the Bell II inquiry, which revealed a company more interested in profit than the interests of its customers or transparency, would wonder if justice has been served.

The antagonism exhibited towards the regulator by Star’s former executive team, the poor oversight of problem gamblers and a fraud committed under its watch revealed a company which had not learnt its lesson.

New Star boss Steve McCann, a keen poker player, has played a masterful hand in getting the support of the NICC as well as long-suffering investors, allowing him to keep the casino doors open — at least in the short term.

The low-ball fine imposed by the NICC is perhaps recognition there is only so much blood you get can out of a stone and that Mr McCann needed breathing space.

By Mr McCann’s own admission, Star is “on its knees” and requires time to not only clean up its regulatory act but to pay down huge debt levels.

Getting more people through its doors - not only to gamble but to stay at its hotels or eat in its restaurants - will be crucial over the next 12 months.

The casino business is not the money spinner it used to be. The high-rollers of yesteryear who fattened the coffers of Star and rival Crown are long gone. In their place are the mum and dads who perhaps like a flutter and a meal at the casino, but expect such establishments to be run fairly and transparently.

Whatever opinion you have about gambling — and the social ills it can obviously cause — no one can argue we should return to the bad old days when casinos were easy pickings for money launderers and criminal elements.

The NICC has made a pragmatic decision and Star needs to grab its reprieve with both hands if it is to survive over the long term.