Royal Commissions likely inbound for Star: J.P. Morgan

The Star Sydney

Analysts at J.P. Morgan Australia are expecting royal commissions to be announced which will look into Star Entertainment’s recent conduct in relation to anti-money laundering, but says a ban on operating in Australia is not likely on the cards for The Star. 

“Given it appears no casino has operated in accordance with both the court of public opinion or their state’s respective framework, the states will need to review the “go-forward”. 

“However, given we believe casinos are unlikely to be forever banned from operating in Australia, this transition period surrounding the earnings profile of the casinos will surely prevent some investors from participating.”

In fact, the recent report on The Star might also have a positive impact on Crown’s royal commission, as it exposes a larger issue with the casino regulation framework, rather than the actions of an individual casino operator, says the analysts. 

“Given the issues discussed in the report demonstrate a larger issue within the entire casino regulation framework (self-regulated or otherwise), this could help refocus the Victorian Royal Commission towards improving the industry’s regulatory framework, and less-so an individual corporation’s actions.”

However, should South Australia go through with a royal commission, the analysts said they “would not be surprised” if the royal commission also lumped in SkyCity Entertainment Group, which operates SkyCity Adelaide. 

Earlier this week, Star Entertainment Group has found itself in the firing line of a media investigation very similar to the one that exposed Crown’s money-laundering failings some two years ago. 

A recent investigation from the Age, Sydney Morning Herald and 60 Minutes has accused the Star of engaging in many of the same improper practices that landed Crown Resorts in various Royal Commission inquiries

These practices include welcoming unscrupulous high rollers that are allegedly involved in organized crime, drug trafficking, money laundering, tax cheating and corporate fraud.