The Star’s licence to operate its Sydney casino will be suspended from Friday and the group will be fined an unprecedented $100 million, the NSW Independent Casino Commission (NICC) has announced.
In response to a damning inquiry into the casino's operations that heard allegations of money laundering, fraud and criminal activity, a manager will also be installed to oversee the business.
This means The Star casino will be able to continue trading under the manager’s licence for at least 90 days, but the NICC chief commissioner, Philip Crawford, said it could take longer to restore the casino to "suitability".
He said it was in the "public interest" to appoint manager Nicholas Weeks to oversee the licence until it can be determined whether The Star can rectify its wrongdoings and prove it is fit to hold a licence.
"We've lifted the lid and put the spotlight on [what has happened], and we want to see real action on their part,” Mr Crawford said.
The $100 million fine is the maximum penalty under new casino regulation laws introduced by the NSW government in August.
This afternoon, the Star released a statement to the ASX confirming it will pay the $100 million penalty "on a timetable yet to be agreed by NICC" and acknowledged its licence "will be suspended indefinitely."
It also noted Mr Week's position as manager is to run the casino in a way that is "broadly consistent with the manner in which the former casino operator operated the casino," except when it is "necessary" or "appropriate" to make changes that will "address matters identified in the Bell Review."
Last month, Star Entertainment Group accepted the findings of an inquiry headed by Adam Bell SC, which included that it was unsuitable to hold a licence for its Sydney casino.
The inquiry heard allegations of money laundering, organised crime links and fraud at the casino in Pyrmont.
In response, the Star Entertainment Group said it had taken "significant and urgent remedial steps" and would do "whatever necessary" to "restore" the casino to suitability.
The company said it had developed a comprehensive, multi-year plan, with 130 milestones to meet over two years, including:
- permanently exiting junkets
- increased risk, compliance, and security staff
- changes to leadership.
It was this response that convinced the NICC that Star was aware of the "gravity" of the inquiry and would work "transparently" with the regulator.
"If it were not for The Star’s change in attitude and our belief that it is in the public interest to protect the thousands of jobs at risk, there might have been a different outcome," Mr Crawford said.
The announcement coincides with the first day on the job for Star's new chief executive, Robbie Cooke.
Mr Crawford said he was hopeful Mr Cooke could apply his experience and leadership to guide the company towards suitability.
"We didn’t have much confidence in that, after the Bell review, but we’ve now met Robbie Cooke, and we’ve seen that letter, and [Star chairman] Ben Heap is leading the board in a way that shows contrition," Mr Crawford said.
Even though the net profits of the gambling operation will continue to flow to Star, Mr Crawford argued, the suspension was a form of punishment and Star would need to earn the licence back.
"The Star Casino company that holds a licence in NSW has one major asset — and that is its licence, and that licence has been suspended,” he said.
"So, I would assume that’s causing some degree of angst amongst bankers … and stakeholders in that business.
“Gambling in this country is not illegal, but it's got to be done by certain rules and there's a really big building piece that needs to be undertaken by The Star to win back the public confidence," he said.
Mr Weeks is no stranger to the casino industry, having worked as Crown Resorts' executive general manager of transformation and regulatory response, according to his LinkedIn profile.
Prior to that, he was NRL's long-term chief operating officer.
Aside from controlling the casino licence, Mr Weeks is tasked with completing a root cause review into Star Sydney’s culture to identify any other compliance issues that need to be addressed.
Premier Dominic Perrottet welcomed the suspension, adding it was his expectation the licence would not be renewed until Star is compliant.
Shares in The Star Entertainment Group were placed in a trading halt pending the release of the announcement by NICC.
The halt is set to last until Wednesday.
Just across Sydney Harbour, The Star's main competitor, Crown Sydney, reopened its doors in August on a conditional basis less than two years after it was deemed unfit to hold a gaming licence.
