Star Entertainment claims any AUSTRAC fine over $65M would render it insolvent

Australia’s embattled gaming operator Star Entertainment is claiming that any fine by the nation’s financial watchdog (AUSTRAC) over AU$100 million ($65.22 million) would force the company into bankruptcy.

According to the Australian Financial Review, The Star representative Steven Finch indicated that the AU$100 million fine was reasonable because the amount “is all the money that we have and reasonably anticipate being able to borrow, hoping, but not certain, that we will be able to survive”.

This comes as the Australian Transaction Reports and Analysis Center (AUSTRAC) seeks a AU$400 million ($260.88 million) fine, noting that investors are expected to inject some $300 million ($176 million) into The Star in exchange for a majority share of the company.

AUSTRAC highlighted the capital injection in closing submissions to the Federal Court.

The strategic investment is split between Bally’s Corporation – contributing AU$200 million ($130.5 million), and Investment Holdings Pty Ltd (controlled by the Mathieson family) – investing AU$100 million ($65.3 million).

While The Star’s board has unanimously recommended the investments, shareholders are scheduled to vote in a general meeting on the issue on June 25th.

Finch called the potential that The Star could pay the AU$400 million fine “fanciful”, and said that it “is a massive deterrent […] not only to us, but to other players in this and perhaps other markets”.

The Star representative claimed that a similar case of Crown Resorts, which had to pay out a AU$250 million ($163 million) fine after investigations by AUSTRAC was not a just comparison.

“That penalty was agreed at a rate which would not result in the insolvency of Crown, which was a very much larger organisation. Whereas here, if one had a fine which was a small amount less than that, we say the evidence is that it would be insolvency,” stated Finch, as cited by the publication.

However, AUSTRAC is standing firm, with representative Simon White noting that “unlike Crown, Star had the benefit of seeing the Bergin Inquiry […] and failed to act”. White was referencing the first AML investigation, which focused on Crown Resorts.