By Colin Kruger
Star Entertainment chief executive Steve McCann has told investors that daily average gambling revenue plunged 15.5 per cent in the first four weeks after cash gambling was restricted at its Sydney casino in August, adding to the group’s struggles to stay solvent.
Shareholders were already planning to vent their fury at the disastrous state of affairs at Star, launching a first strike against the remuneration report with 43 per cent of the vote opposing it, and significant votes against millions of dollars worth of retention benefits and performance rights being awarded to the new CEO.
“We are at a critical point in our liquidity, with the business currently experiencing material negative cashflow on a monthly basis,” McCann told investors at the casino operator’s annual general meeting in Brisbane on Thursday morning.
Star chief executive Steven McCann faces one of the biggest transformation projects of his career.Credit: Dominic Lorrimer
Restrictions on cash gambling were introduced in select areas of Star’s Sydney casino in August, with carded play and $5000 cash limits coming into effect across the entire gaming floor in October.
McCann said the big drop in gambling revenue may partly reflect the initial shock of carded plays’ introduction rather than a permanent impact. But he said the company is still getting to grips with what its business now looks like.
“We need to make sure that we understand what the revised revenue model is for our business across gaming and non-gaming over time,” he said.
McCann told investors that the company had posted an underlying loss before significant items of $27 million for the first four months of fiscal 2025.
McCann and Star chair Anne Ward laid out the many challenges the business is facing as it attempts to win the confidence of regulators – and regain suitability to hold its casino licences – while keeping the business afloat.
“Near-term liquidity challenges, and the broader overall financial viability of the business, will remain the largest concerns for the board and the executive team as they simultaneously stabilise the business and progress the remediation program along the pathway of suitability,” Ward said.
Queried by investors, she later clarified the scale of the task of keeping the company solvent.
“Continuing as a going concern will require us to be successful in relation to a range of matters, and they include meeting the various conditions precedent to secure the drawdown of the new debt, securing additional sources of liquidity, further progressing our plans for longer-term funding, implementing cost-reduction plans that we’ve outlined, completing non-core asset sales and continuing to progress our remediation plan to reach suitability,” Ward said.
Ward and McCann are just months into their new roles as the group attempts, for a second time, to work its way back from scandal.
In August, a second probe into the culture of Star Entertainment found the company unsuitable to hold a casino licence, slamming its previous management as “dysfunctional”.
Adam Bell, SC, was commissioned by the NSW casino regulator to launch a second probe into Star following concerns it had not adequately committed to cultural reform since it was exposed for extensive anti-money laundering and counter-terrorism failings in 2021.
Another issue hanging over the Star AGM is the imminent release of a bombshell probity report into Star’s Hong Kong-based partner Chow Tai Fook Enterprises (CTFE).
The previous Queensland government this year waved through CTFE as a suitable casino operator, declaring the evidence did not substantiate that the company had deliberately concealed its relationship with jailed “junket king” Alvin Chau.
Star’s future is still in doubt as revenue from its casino business shrinks amid rising costs and it struggles to find funding from either banks or investors.
The anti-money-laundering regulator AUSTRAC is also determining a fine that could run to hundreds of millions of dollars.
Budget blowouts at Star’s new Brisbane casino have also added to the group’s financial struggles.Credit: Glenn Campbell
The licence for its flagship Star Sydney casino remains suspended.
Star has completed the paperwork on $200 million worth of debt funding, but it is subject to onerous conditions including a 13.5 per cent loan rate and security over company assets, and the second tranche relies on the group raising $150 million from investors.
This month, long-time investor Perpetual dumped most of its shares, sending the stock to a record low of 20c.
Analysts at Jefferies say Star may need $400 million in funding from other sources on top of the $300 million it expects to raise from planned asset sales.
Macquarie Equities says the dire need for cash suggests that “everything is for sale, at a fair and reasonable price”.
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