Star Entertainment shares drop on return to ASX ahead of Federal Court fight with financial crimes watchdog

The troubled casino operator has made a rocky return to the ASX after securing much needed funding, as it prepares to take on Australia’s financial crimes watchdog in court.

Shares in embattled casino operator Star Entertainment were choppy in volatile trading on Wednesday, as it rejoined the market following a six-week hiatus.

The casino operator is also set to clash in court with Australia’s financial crimes watchdog after a brief hearing on Wednesday in the Federal Court ahead of the case kicking off on June 6.

Star shares traded in a range between 10c and 12.5c on Wednesday, as investors digested the group’s interim accounts, which on Tuesday revealed a loss of $302m. They closed flat at 11c, down more than 80 per cent from July last year.

Meanwhile, Wednesday’s court hearing set the scene for its showdown with the Australian Transaction Reports and Analysis Centre.

Star Entertainment CEO Steve McCann. Picture: Max Mason-Hubers/The Australian

The watchdog sued Star in 2022, alleging systemic noncompliance with Australia’s anti-money laundering and counter-terrorism financing laws. Star faces a possible $300m fine for the alleged conduct.

Lawyers for Star told the court it should assume the Bally’s bailout will proceed.

“More time does not result in more certainty. In light of financial results, as at April 11 cash available was $98m after receiving $100m (from Bally’s) and $45m from the sale of Brisbane properties,” the court heard.

“Financial results show Star is trading at a loss of $35m per month. The longer we wait for a resolution of the penalty, the more uncertainty (is) attached to the viability of the organisation.

“Waiting until a deal with Bally finalises, doesn’t solve anything.”

Under the lifeline deal, Bally’s will tip in $200m with another $100m from pubs billionaire Bruce Mathieson.

Bally’s chairman Soo Kim. Picture: Brian Cassella/Chicago Tribune/Tribune News Service via Getty Images.

Austrac intends only to call Star’s chief financial officer and not other experts to the six-day hearing in June, the court heard.

Lawyers for Austrac said Star has not responded to at least one request about who they accept as senior management, the court heard.

As well, Austrac want to rely on suspicious matter reports for their case, which they allege identify conduct observed by staff of gamblers which should have alerted management about issues.

Austrac probed the company’s operations in NSW and Queensland from 2021 when the regulator said it identified poor governance and failures of risk management.

It was also alleged that the company failed to carry out proper customer due diligence, including that Star “failed to consider whether it was appropriate that they continue an ongoing business relationship with higher risk customers”.

“In the absence of these risk-based controls, the Star Entities were vulnerable to criminal exploitation,” Austrac said.

“Star’s failure to manage the (money laundering and terrorism financing) risks of its business in turn exposed the Australian and global financial system to systemic (money laundering and terrorism financing) risk over many years.

Star’s former executives are also being sued in a separate court case brought by the Australian Securities and Investments Commission.

The Federal Court trial will resume in May, after the court heard ex-CEO Mattias Bekier knew about a covert NSW police operation probing suspicious cash transactions at Star Sydney.

The Star is selling assets to reduce costs, including the Sydney Event Centre and Treasury Casino in Brisbane.

Star has so far survived two public inquiries, known as the Bell inquiries, which identified serious misconduct and governance failures.

Originally published as Star Entertainment shares drop on return to ASX ahead of Federal Court fight with financial crimes watchdog