Star Entertainment has announced a postponement in releasing its first-half results following the confirmation of a second inquiry into the casino operator by the New South Wales Independent Casino Commission (NICC).
Paf 2023
The inquiry, which was announced yesterday (19 February), is set to last for 15 weeks, culminating in a final report expected by 31 May. Adam Bell SC, the author of the initial Bell report, will spearhead the investigation, examining the ways in which Star has acted on the recommendations from the previous inquiry.

Following the announcement, Star sought a pause in trading on the Australian Securities Exchange (ASX). 

The operator has officially announced a postponement in the release of its results for the first half of the 2024 financial year. The report on the results originally scheduled for tomorrow (21 February) has been postponed. The operator has announced that an updated release date will be shared in the near future.

Star: The investigation will offer an impartial platform
In response to the inquiry, Star expresses its approval of the NICC's decision. Star asserts that the investigation will provide a “impartial platform” to showcase its ability to regain licence suitability in NSW. It was declared unsuitable to hold a casino licence in the state in September 2022.

“Star plans to engage in the investigation with openness, transparency, and a supportive approach,” it stated. “Additionally, it is important to highlight that the investigation is anticipated to extend over the next 15 weeks, a pivotal timeframe for Star as it implements its multi-year remediation strategy. Star is committed to allocating all essential resources to the investigation to guarantee compliance with all requirements and expectations.”

“Star highlights that, according to the inquiry’s terms of reference, it is evaluating the appropriateness of Star Sydney in relation to the management and operation of the Star casino in Sydney.” 

Furthermore, Star pointed out that the NICC is providing it with “every opportunity” to prove its ability to meet the necessary standards. Star has announced its commitment to supplying all essential information required for the regulator to determine its future in New South Wales.

“The operator expressed gratitude for the chance to show its capability to restore suitability,” the spokesperson stated. “We remain committed to collaborating fully with regulators, including the NICC and its designated manager.” 

“Star is dedicated to implementing its remediation plan and regaining the community's trust.”

Second bell tolls for Star
The upcoming second Bell report will address several important focus areas.

The second inquiry will not only assess the consequences of the initial report but will also investigate the culture at Star. This encompasses the culture of risk management along with the structures for management and reporting.

The investigation will also examine if Star has successfully obtained the necessary financial resources to sustain Star Casino.

Adam Bell SC’s initial findings highlighted longstanding issues related to anti-money laundering and social responsibility at Star Sydney. A year later, an evaluation of Star Sydney revealed that the casino had successfully put into action 22 out of the 30 suggested measures from the original assessment.

The findings ultimately resulted in its designation as unfit for a licence in NSW. Nevertheless, Star is also confronted with unpredictability in various regions, such as a comparable suspension in Queensland, multiple class actions, and the possibility of a fine from AUSTRAC. Many of these pertain to ties with Chinese junket operators.

The influence of regulatory choices on financial outcomes
It is clear that regulatory measures have influenced Star’s financial outcomes. In its financial report for 2023, Star revealed a net loss amounting to AU$2.4 billion (£1.25 billion/€1.46 billion/US$1.57 billion).

At that moment, Star reported $2.8 billion in expenditures categorised as “significant items.” The operator encountered a series of fines related to these issues. 

A non-cash impairment of $2.2 billion has been recorded for goodwill and property assets related to Sydney, Gold Coast, and Treasury Brisbane. Furthermore, it highlighted regulatory and legal expenses amounting to $595 million, costs associated with debt restructuring totalling $54 million, and redundancy expenses of $16 million.

The expenses, when offset by a favourable and increasing EBITDA of AU$317m, resulted in an after-tax deficit of AU$2.4bn.

The effects of the choices made on Star's performance during the latest H1 will be revealed in the postponed results announcement.