Australia’s second-largest gaming operator, The Star, is facing a second inquiry into its Star Sydney casino operations, as authorities in New South Wales have opened a new probe into its suitability to hold a casino license in the state.
The news comes just days after The Star inked an agreement with state authorities on new tax rates – part of which includes guaranteeing jobs and implementing a cashless trial.
It also comes a day before the group was set to release its half-year results, prompting a halt in trading. A Tuesday release indicates that the group will defer the release of the results ‘to determine what amendments (if any) are required […] arising from the commencement of the Inquiry’. The results are expected to be published ‘over the coming days’.
In a release on Monday, The Star Group noted that it had been advised by the NSW Independent Casino Commission (NICC) that Adam Bell SC has been appointed to oversee the review.
The Sydney attorney two years ago led a similar probe, which found serious shortcomings in the group’s anti-money laundering policies, as well as pointing out concerns over criminal affiliation (largely through junkets) and fraud activities which occurred at the Sydney property.
The Bell inquiry resulted in the group being stripped of its operating license, with a special manager being put in place to run the property until it was deemed compliant.
The new inquiry is set to last 15 weeks, and a final report is expected on May 31st, with Bell being given ‘the powers and authorities of a royal commissioner in NSW’, notes the group.
The inquiry also takes place ahead of the deadline of June 30th – the end of the current manager’s appointment period and when it must be deemed compliant or lose its casino license in the state.
Only two casinos operate in Sydney, one run by Crown Resorts, and the other by The Star.
‘Bell Two’
According to a release by the NICC, the inquiry will encompass the response of The Star to Bell’s previous report and recommendations of the inquiry. It will also consider ‘the culture of The Star […] including risk management culture’, as well as if the group ‘has or is able to obtain financial resources […] suitable and adequate for ensuring the financial viability of The Star Casino’.
The inquiry also probes the company and the property’s ‘management and reporting lines’ and compliance with its internal control manuals.
NICC’s Chief Commissioner, Philip Crawford, noted that “There was a substantial shift required and The Star has had 18 months to demonstrate that it has the capability and resources to regain its casino license”.
The 18-month period includes a six-month extension of the special manager’s appointment, renewed in December for six months, at which time the NICC noted it ‘was not satisfied The Star was progressing its remediation in a timely fashion’.
Crawford furthered that “The NICC has had concerns about the extent that remediation is attributable to the manager’s oversight and direction versus what is being driven by The Star’s reform agenda.”
Despite the concerns, the NICC Chief Commissioner notes that “There is much at stake for The Star, so the NICC is giving the casino every chance it can to demonstrate whether it has the capacity and competence to achieve suitability”.
In the wake of the first Bell inquiry, the company went through sweeping changes to its board and management, while also facing financial difficulties, raising hundreds of millions in equity to support its operations, as well the construction of its new Queen’s Wharf Brisbane property – now slated to open in the second quarter of 2024.
In a Tuesday release, The Star noted that the company ‘welcomes the Inquiry which will provide an objective forum in which to demonstrate it is capable of returning to suitability with particular reference to the actions that have been put in place since the Bell report was issued’.
