Star Entertainment Escapes Loss of Sydney Casino License, but Still in Trouble
Star Entertainment Group has narrowly avoided a complete disaster after ongoing compliance failures, including money laundering and fraud, were exposed at its Sydney casino. The New South Wales (NSW) Independent Casino Commission (NICC) has stopped short of permanently revoking the casino's license, providing the company with an opportunity to regain it by next year.
The exterior of The Star Sydney casino resort in Sydney, Australia, at night. (Source: Bloomberg)
LISTEN TO THIS ARTICLE:The issues at The Star Sydney site came to light following an initial report, which found the casino unfit to hold a license. Two separate inquiries into the casino's operations, collectively known as the Bell Inquiries, uncovered serious lapses in governance and compliance.
The inquiries revealed that The Star had engaged in misconduct, including money laundering and fraudulent activities on a large scale. These findings led to the suspension of the casino's license, which will now remain suspended.
The NICC has imposed a series of strict conditions that The Star must meet in order to have its license reinstated. Among these conditions is an AUD15 million (US$10 million) fine, which the company has been given nine months to pay.
The Commission has also mandated additional financial and operational reporting requirements, as well as changes to the company's governance structure. The NICC is scheduled to reassess The Star's suitability to hold a casino license by March 31 next year. Whether or not the casino will be able to operate again will depend heavily on its ability to meet these conditions and demonstrate that it can operate in a compliant and transparent manner.
Despite the severity of the breaches, the NICC ultimately chose not to revoke the casino's license entirely, citing the potential economic consequences of such a decision. NICC Chief Commissioner Philip Crawford acknowledged that revoking the license would be a final and irreversible step, one that could lead to the collapse of the entire Star Entertainment Group.
Crawford emphasized the broader impact this could have, including the loss of jobs for more than 9,000 employees and the disruption to a significant number of suppliers who rely on the business. Given the current economic climate, the NICC considered this outcome too severe to justify.
More Business News
Star Entertainment Continues Recovery
While Star has avoided the worst possible outcome, the road to recovery will not be easy. The company must demonstrate a sustained commitment to reform in order to regain the trust of both regulators and the public. Crawford noted that while transparency and accountability had improved since the appointment of a new CEO, Steve McCann, there was still much work to be done. The NICC identified ongoing compliance failures, despite efforts to improve operations, and stressed the need for continuous oversight and stricter governance controls.
Following the NICC's decision, trading in The Star Entertainment Group's securities was temporarily halted at the company's request. The Australian Securities Exchange (ASX) granted the halt to give the company time to address the NICC's conditions and manage the financial and operational implications of the decision. The trading halt will remain in place until the commencement of normal trading on October 18, unless the ASX decides otherwise. A trading halt is limited to two trading days, during which time the company is expected to engage with the NICC and other relevant stakeholders.
Star indicated that it remains committed to addressing the concerns raised by the inquiries and improving its operations. It also acknowledged the need for ongoing collaboration with regulators as it seeks to rebuild its reputation and regain its license.
Among the additional conditions imposed by the NICC are changes to The Star's internal control procedures and governance structure. The Bell Inquiries had identified serious breaches of four internal control manuals, prompting the NICC to demand stricter oversight of the company's financial and operational activities. These requirements will remain in place until at least March 2024, when the NICC will reassess the company's progress.
The NICC has also proposed changes to the Casino Control Act, based on recommendations from the Bell Inquiries, to prevent future misconduct. These amendments would impose more prescriptive requirements around board composition and key management personnel at Star.
RELATED TOPICS: Business
Latest News
Most Read
Must Read
Interviews
When Helping Others Is a Life-Long Mission - An Interview with Gordon Moody CEO, Monica Shafaq
Dec 17, 2024
Interviews
Review this New Post
Leave a Comment
User Comments
Comments for Star Entertainment Escapes Loss of Sydney Casino License, but Still in Trouble