Australian casino operator Star Entertainment says that it is estimating that the results of legal cases being filed against it for alleged anti-money laundering malpractice, as well as changes to the New South Wales casino act and tax rates could result in a non-cash impairment charge between AU$400 million ($276.57 million) and AU$1.6 billion ($1.11 billion).
The group issued a note on Monday, informing of its operating outlook for the remainder of the 2023 financial year, ending June 30th.
During the period, the group is estimating remediation costs of AU$35 million ($24.2 million) to $45 (31.1 million), expecting that 50 percent of this total will also be recurring in FY24.
Noting the group’s first-half results, the group stated that The Star Gold Coast’s domestic revenue was actually up – by 30 percent compared to 2019, achieving its highest revenue result on record.
Meanwhile, Treasury Brisbane saw domestic revenue up 9 percent on pre-COVID levels.
However, The Star Sydney was actually down 13.5 percent in domestic revenue, compared to 2019.
The Sydney property has been forced to compete with the new opening of Crown’s Barangaroo property, in particular regarding its higher-end clientele.
The group is now expecting to report underlying EBITDA of AU$195 million ($134.83 million) to AU$205 million ($141.74 million) in the first fiscal half of 2023, with expectations for AU$330 million ($228 million) to AU$360 million ($248.9 million) in underlying EBITDA for the year ending June 30th.
The group notes that a proposed change to the tax rates paid out by casinos in New South Wales could have a ‘significant adverse impact’ on the group’s profitability, ‘further compounded by the changing operating and competitive environment’.
The group has vowed to continue its “constructive discussions with the NSW Government” regarding the proposed rate changes.
Speaking of the group’s return to compliance, as its three properties are currently being run by a Special Manager appointed by the courts, the group’s CEO notes that “We are singularly focused on working with our regulators and the NSW Manager and Queensland Special Manager to remediate our businesses, as we seek to return to suitability. Our key priority is to regain the trust of our community and demonstrate to our regulators that we are suitable to hold our casino licenses.”
The group further notes that it is in continued support of “the NSW Premier’s initiatives around cashless gaming and improved harm minimization across the industry.”