At the time of its prime, Star Entertainment Group was estimated at more than AU$6 billion, with the company’s value rising as much as AU$6.38 a share in 2018 – just the time when the Australian casino operator was allegedly turning a blind eye to money laundering activities in its casinos in Brisbane, Sydney, and the Gold Coast.
However, the recent issues faced by the company have resulted in a revenue decline at the operator’s flagship casino in Sydney. At the beginning of the week, Star Entertainment Group issued a warning of a massive impairment charge in the half-year results it is set to announce soon. In a preliminary expectation disclosure, the Australian casino company revealed it anticipated a non-cash impairment charge amounting to between AU$400 million and AU$1.6 billion linked to its business in New South Wales to seriously affect its results for the first half of the year.
The gambling operator attributed the writedown to the ongoing operational changes it experiences after a regulatory investigation resulted in the suspension of its casino operating permit in the state of NSW. The company also warned of a potential increase in NSW casino duty rates that could begin in the 2023/2024 fiscal year.
The chief executive officer of the group, Robbie Cooke, explained that Star Entertainment had to take a prudent approach to evaluating the carrying value of the company’s assets at a time when the outcome of recent regulatory and legislative developments is still uncertain.
NSW and Queensland Authorities Suspended Star Entertainment’s Casino Licences Following Alleged Money-Loundering Failures
The NSW casino licence was suspended by the state’s gambling regulatory body in October 2022. At the time, the watchdog also served a record AU$100-million fine to the company after the Royal Commissioner’s inquiry found the casino had facilitated money laundering inside private VIP rooms and identified a variety of compliance failures.
A similar Royal Commissioner’s review in Queensland also saw an AU$100-million financial penalty imposed on Star Entertainment Group and found the company unsuitable to hold the two casino licences in the state after it presented evidence that the company had breached the state’s responsible gambling and anti-money laundering laws.
As Casino Guardian already reported, the shareholders of the Australian casino operator have separately rolled out a class action lawsuit against the company over its failure to disclose its links to criminal organisations. In fact, four class actions have been so far lobbed by its own shareholders, who are now suing the company for compensation based on claims the operator knowingly and willingly misled the market, violated Australia’s continuous obligation laws, and eventually wiped billions off its own value.
Now, Star Entertainment Group revealed that the ongoing regulatory challenges have affected the casino company’s performance, with the operator incurring compliance and remediation costs worth AU$20 million. The gambling giant also shared that the revenue generated by its main Sydney casino fell by about 13.5% for the six months to the end of December 2022 in comparison to pre-Covid-19 levels. Furthermore, the total revenue was the group was down just 1% thanks to a positive impact of Star Gold Coast’s performance.
The company shared that it has felt the negative impact of increased competition since the opening of Crown Resort’s casino in Sydney in August last year.
Star Entertainment expects to report earnings of between AU$195 million and $205 million over the first six months of the current fiscal year on February 23rd, when it is set to release its official financial report.
- Author
Olivia Cole
