Star Entertainment faces licence loss after explosive inquiry

Lea Hogg August 30, 2024

SiGMA news

Star Entertainment faces licence loss after explosive inquiry

Star Entertainment has been declared unfit to reclaim control of its Sydney casino after a scathing inquiry revealed widespread shortcomings in the company’s operations. Today, the New South Wales casino regulator paused trading of Star’s shares while deliberating the future of the operator’s licence.

What will happen to over 70,000 Star shareholders who invested $4.7 billion in joint ventures with the NSW and Queensland governments? As of February, this year, Star had $2.178 billion in accumulated losses and claimed remaining equity of $2.5 billion, which now seems at risk of being wiped out as shares have been placed in “trading halt”.

The second inquiry found the company still falling short of the necessary standards for responsible management. Star’s Sydney licence remains suspended after an earlier investigation uncovered severe anti-money laundering and counter-terrorism lapses. Despite this, the casino has continued operations under a regulator-appointed manager.

Fresh findings of compliance failures

The latest report, led by Adam Bell, exposed a series of missed opportunities and four major compliance breaches since the 2022 findings. Notably, a $3.2 million fraud was uncovered, where customers exploited a software glitch to claim unearned funds over a six-week period. The inquiry also identified serious violations of mandated gaming break rules, with staff falsifying records to cover up failures to intervene in extended gambling sessions.

An external review commissioned by Star in mid-2023 highlighted problematic internal values, such as prioritising profit over ethical practices. The NSW Independent Casino Commission is now considering its next steps in response to the report’s findings.

Star’s shares were halted not only due to the report’s release but also to allow the company time to finalise its 2024 financial results, which were initially expected on Friday but have since been delayed.

The regulator’s chief commissioner, Philip Crawford, noted that the latest findings validated the need for the second inquiry, emphasising the company’s slow response to previously identified governance and cultural issues. The inquiry also revealed internal communications from former executives discussing a confrontational stance against the regulator.

Star’s chair, Anne Ward, (pictured above) admitted earlier this year that the company was not fit to retain its licence but expressed confidence that the management team could be reformed swiftly. The company has since appointed Steve McCann, former CEO of rival Crown, as its new chief executive. Star Entertainment also operates casinos in Brisbane and the Gold Coast.

This article is based on news by the Australian Associated Press today.