The Star Entertainment Group may be about to find out how low it can go before its casino licence is cancelled.
Almost 18 months since Star was fined $100m after being found unsuitable to run a casino, and after the appointment of an external manager and criticism for not taking its responsibilities seriously, the New South Wales regulator has taken action – with another review.
The NSW Independent Casino Commission (NICC) has asked Adam Bell SC to conduct the second inquiry into the Star Entertainment Group in two years because it does not believe the company has done enough to address its concerns and may not be capable of doing so.
Bell’s first report, released in September 2022, accused Star of “serious governance, risk management and cultural failures”, including the provision of “false documents and misleading, untruthful and unethical communications” to banks. It also criticised “deceptive and unethical” processes and a “failure to account for money laundering and counter-terrorism financing risks”.
The regulator did not revoke Star’s licence in 2022, despite the review’s findings, as it believed the company had shown contrition and a willingness to make change. The NICC’s then chair, Philip Crawford, said revoking the licence would have meant “thousands of Star employees would have lost their jobs overnight”.
Instead, an external manager was appointed to oversee the casino’s operations. In late November, the external manager’s term was extended until 30 June because the regulator was not satisfied with the Star’s remediation work. Bell’s second report is due on 31 May.
Crawford, who is now the NICC’s second commissioner, said Bell’s second review, which will be undertaken over 15 weeks with more public hearings, would provide the commission with a thorough assessment of whether the Star’s licence should be revoked.
“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,” Crawford said.
But some analysts have questioned how many chances the Star should be afforded and why – after the regulator had confirmed serious breaches and criticised the company’s remediation work – its licence wasn’t already revoked.
“They have committed some extraordinary violations of both the letter of the law and public trust,” said Charles Livingstone, a gambling expert at Monash University who has researched casino regulation in Australia.
“At what point do [the regulators] say, ‘enough is enough, we’re taking this from you’? And at what point do [the Star] lose their social licence? Maybe a second chance, sure, but how many chances do they get?”
In a statement released to the ASX on Tuesday, a Star spokesperson welcomed the inquiry and said it would provide an “objective forum in which to demonstrate it is capable of returning to suitability”.
“The Star will dedicate all necessary resources to the Inquiry to ensure it meets all its requirements and expectations,” the statement said.
Australia’s casino industry has been the subject of multiple inquiries around the nation since 2019, when Nine revealed money laundering and criminal infiltration of junkets at Star’s bigger rival, Crown Resorts.
“Until such time as one of these mobs losses its licence, then no one is going to take it seriously,” Livingstone said.
Transparency International Australia’s chief executive, Clancy Moore, said it was clear that the Star had not addressed concerns about money laundering that were raised in the 2022 inquiry.
“One wonders what it would take for an operator to have its licence fully revoked,” Moore said.
Alex Simpson, a criminologist at Macquarie University who has written extensively about the casino, said the announcement of a second inquiry and further negative press could test the company’s commitment to the casino.
“A real point of significance is whether Star can actually afford to go through with this?” Simpson said. “They seem to be in significant financial difficulty, given all the bad publicity surrounding the firm. Maybe this is what it takes?”
On Monday, the company’s shares were placed into a one-day trading halt. On Tuesday morning, Star postponed the release of its latest financial results scheduled on Wednesday as planned. Its share price dropped by 23% after the announcement.
Simpson questioned whether the Star was seen as “too big to fail” and whether the number of staff employed at the casino was being used as a reason not to take tougher action, at least in the short term.
The NSW government is still concerned about what could happen to workers at the Star. Last week, before the second inquiry was launched, it signed a deal with Star requiring it to maintain more than 3,000 jobs at the casino until 2030 or face fines up to $1m a quarter.
“I would argue, why shouldn’t it shut its doors and the staff be looked after at the same time?” Simpson said.
