Australian gaming operator The Star Entertainment fell to negative EBITDA in its first financial quarter, ending September 30th, amongst a ‘challenging operating environment and the continued implementation of mandatory carded play and cash limits’.
The group announced its quarterly results on Tuesday, indicating an EBITDA loss of AU$18 million ($11.84 million) for the fiscal quarter, compared to positive EBITDA of AU$23 million ($15.1 million) in the previous quarter and AU$62 million in the same quarter of 2023.
This comes on the back of a revenue reduction of 18 percent yearly, narrowed to 11 percent sequentially – at AU$351 million ($230.85 million).
The Star Sydney
The main revenue contributor, The Star Sydney saw revenue slide by 11 percent sequentially and 16 percent yearly to AU$186 million ($122.23 million), causing a substantial drop in EBITDA.
According to the financials, The Star Sydney EBITDA was negative AU$21 million ($13.81 million), as opposed to positive AU$3 million ($1.97 million) in the previous quarter and AU$22 million ($14.47 million) in the same quarter last year.
Looking at the results, the group noted that the group was impacted to the tune of AU$4.4 million ($2.9 million) due to the system outages in July. It notes that ‘the challenging consumer environment and changes in business practices have weighed heavily on gaming, particularly in the premium segment’.
The group notes that revenue was down by 11 percent at the property prior to the introduction of mandatory carded play and cash limits (on August 19th) compared to the fiscal 2024 average. It declined a further 12 percent after the changes were introduced.
Electronic gaming ‘also faced significant pressure from competitive venues, evidenced through revenue losses and limiting market share recovery’.
The Star Gold Coast
The Star Gold Coast fared better, with revenue up by 6 percent sequentially but down by 9 percent yearly, to AU$108 million ($71 million). EBITDA was positive at the property, at AU$7 million ($4.6 million) – still a fall of one-third from the previous quarter and down 70 percent yearly.
As fully carded play and cash limits hadn’t yet been mandated at the property during the quarter (and a date has yet to be finalized), the group noted that ‘revenue has stabilized and the anticipated season uplift materialized in the quarter, albeit from a lower base’. Gaming revenue was up 3 percent yearly.
However, ‘ongoing higher remediation and regulatory costs continue to impact EBITDA’.
The Star Brisbane
While the group closed The Treasury Brisbane casino in late August for the staged opening of The Star Brisbane, the property contributed some AU$53 million ($34.86 million) in revenue and AU$2 million ($1.32 million) in EBITDA during the quarter.
The Star Brisbane, which commenced operations on August 29th of this year, brought in AU$4 million ($2.63 million) in revenue, but EBITDA was negative AU$7 million ($4.6 million). The Star holds a 50 percent share in the Brisbane operation, partnered with Chow Tai Fook and Far East Consortium in the Destination Brisbane Consortium joint venture.
Revenue generated by the resort amounted to AU$45.9 million ($30.2 million) in the 33 days of opening during the quarter and EBITDA totaled AU$4.5 million ($2.96 million), excluding certain costs.
Overall financials
During the quarter, the operator managed to increase its available cash to AU$149 million ($98 million) – up from AU$130 million ($85.5 million) on August 31st, boosted by net proceeds of AU$60.4 million ($39.72 million) from the sale of the Treasury Brisbane Casino building, which it received on September 27th.
The group continues to work with lenders to finalize documentation for its new debt facility which will translate into AU$200 million ($131.54 million) in liquidity, ‘subject to conditions precedent’.
Expenses during the quarter were also lessened by 1 percent quarterly but rose by 10 percent yearly, to AU$287 million ($188.76 million).
The group is further working to cut its costs by at least AU$100 million ($65.77 million) annually, ‘with implementation targeted by March 2025’.
Not included in the financials is the AU$15 million ($9.87 million) fine imposed by the New South Wales Independent Casino Commission (NICC) – which it will pay out in three equal installments – on December 31st, March 31st of 2025 and June 30th of 2025.
The group notes that it ‘continues to engage constructively with the NICC in respect of The Star Sydney and its operations while its license remains suspended.
The group’s Sydney casino operation will remain under the NICC-appointment manager Nick Weeks ‘until at least 31 March 2025’, according to the NICC earlier this month.
This comes after the results of the Bell Two inquiry found that the group ‘fell far short of suitability’.
