Star Entertainment Group’s shares plummet after shock Sydney Casino licence call
Star Entertainment Group took a massive hit on the sharemarket yesterday, losing more than 20% in an unexpected twist to its Sydney casino licence viability saga.
Shares plunged after the NSW Independent Casino Commission (NICC) launched a second inquiry into whether Star was fit to hold a casino licence in Sydney.
The NICC stated Star was not moving quickly enough to reform its business, following the initial inquiry and recommendations into its practices.
The move by the NICC forced Star to hold back the release of its interim results, with the company having to consider the impact of this second inquiry.
Star has been run by an external manager since October 22.
It was then an independent inquiry concluded that the gaming giant, whose value is upwards of $2.6 billion, had set up an “inherently deceptive and unethical process”.
Star Sydney was issued a six-month ultimatum to regain its gaming license or risk closure, as regulatory authorities in New South Wales determined that ongoing supervision was necessary for its Sydney property.
The inquiry accused the casino of disguising more than $900 million as hotel expenses to allow wealthy gamblers to bet at the venues. It said the casino had failed to check the source of the money and that it had known it was in breach of the rules.
Star was the biggest loser on the market on Tuesday, with shares dropping to 44 cents. It has lost 66% of value in the last 12 months.
A new date for the release of the interim report will be released shortly.
“The Star remains committed to, and focused, on executing its remediation plan and earning back the trust of the community,” Star said. “The Star appreciates the opportunity to demonstrate it has the ability to regain suitability and will do all in its power to work cooperatively with all its regulators including the NICC and its appointed manager.”
The NICC has appointed Adam Bell SC to lead a fresh inquiry before the tenure of independent manager Nicholas Weeks concludes in June. Meanwhile, trading of Star shares remains suspended.
NICC chief commissioner Philip Crawford said that when the manager's term was extended for the second time in December, the NICC remained dissatisfied with The Star's pace in addressing its remediation efforts. He stated, "The NICC has been apprehensive about discerning the proportion of remediation progress attributed to the manager's oversight and guidance as opposed to The Star's internal reform initiatives."
"Bell Two" will revisit the findings of the Bell Report and assess The Star's endeavours to regain its casino license in light of that report. Crawford emphasised the significance for The Star, indicating that the NICC is affording the casino every opportunity to demonstrate its capability and competence to attain suitability. This encompasses fulfilling its financial commitments under the casino license and adequately funding its remediation program.
Bell Two is scheduled to span approximately 15 weeks, with the final report slated for submission to the NICC by May 31.
Meanwhile, Star is gearing up to unveil its $3 billion Queen's Wharf project in Brisbane later this year.
Star finished Wednesday slightly higher, with a 3.33% gain to 46.5 cents.
Jonathan Jackson, 21st February 2024
