Casino’s shares plunge after $1.6 billion warning

Shares in the casino operator plunged by 18.7 per cent to $1.52 after the announcement – dropping them to what could be a record low. Its previous low was $1.61 in March 2020.

The group has been hit by scandals after it was found unfit to hold a casino licence in NSW following a damning inquiry into its “confronting” conduct last year.

A report by Adam Bell SC into the group’s activity was released by NSW independent Casino Commission over alleged criminal activities that took place at The Star in Sydney.

He said it had allegedly allowed money laundering, criminals to gamble in its casino and assisted with organised crime.

In Queensland, where Star Entertainment Group owns Treasury Casino in Brisbane and The Star Gold Coast, it also copped a massive fine and was given 12 months to “get its house in order” and prove why it shouldn’t face a 90-day licence suspension in the state in December last year.

Queensland Attorney-General and Justice Minister Shannon Fentiman said the group had until December 1, 2023 to improve its practices or face a 90-day licence suspension.

Star Entertainment was deemed “unsuitable” to hold casino licences in Queensland in October following the explosive findings of an independent report.

The expert review, led by Robert Gotterson, made 12 recommendations to enhance integrity, minimise potential for harm, ensure probity and restore public confidence in the operations of Queensland casinos.

Star revealed that as a result of operational changes implemented after both the Bell and Gotterson reviews it was facing the staggering $1.6 billion slump in its earnings.

It said it had written down the value of Star’s assets by between $400 million to $1.6 billion based on operational changes, while a proposed increase to NSW state casino duty rates would also impact.

Revenue had been particularly affected at its Sydney casino, while the opening of Crown at Barangaroo had also seen increased competition.

“This saw an increase in the number of excluded patrons and a reduced level of complimentary services and benefits in private gaming areas impacting both slots and table games performance,” the company said.

“The Star has also been impacted by increased competition since the opening of Crown Sydney in August 2022.”

It said it had spent $20 million in the second half of 2022 to improve compliance with its anti-money laundering obligations and to prevent fraud and exploitation of the casino by organised crime groups.

Star also expects half of these costs to continue as part of ongoing maintenance.

It reported that its domestic revenue in Sydney tumbled by 13.5 per cent compared to pre-Covid levels, but it boomed in Queensland with revenues soaring by 30 per cent on the Gold Coast and 9 per cent in Brisbane.

Overall, the group’s revenue fell by 1 per cent compared to before the pandemic.

Star is currently in discussions about the proposed duty increases in NSW.

“In their current form, the proposed duty rate increases would have a significant adverse impact on the profitability of The Star Sydney,” it added.

Star said its corporate profitability would be between $195 million to $205 million in the first half of the financial year, while it expected profit of between $330 million to $360 million for the year ending June 30, 2023.