Star announced through an ASX filing that it has been notified by the NSW Independent Casino Commission (NICC) that the suspension of its Star Sydney licence will be extended through 30 September.
The suspension was due to expire 31 March, as well as the term of state-appointed independent manager Nicholas Weeks. Both have now been pushed back six months.
Star Sydney has been the subject of two suitability inquiries in the last three years, and has been deemed unsuitable both times, most recently in October. Weeks has been in place since the first ruling, handed down in late 2022. The casino has had its licence suspended since then.
After the second inquiry, there was speculation that the NICC could revoke Star Sydney’s licence altogether. The casino was discovered to have failed in its remediation efforts from the first investigation and devolved further into a toxic culture. However, several factors, including the introduction of Star Entertainment CEO Steve McCann last June, led regulators to extend the suspension ultimately through September.
Financial woes driving factor for Star
Since McCann’s arrival, Star seems to have steadied its remediation but has faced significant financial challenges.
In January, the company announced it was hemorrhaging cash and was fighting for survival. Since then it has sold off assets and is currently in talks with Salter Brothers Capital on a massive A$940 million ( £456.9 milli/€261.5 million) refinancing package. It appears that these factors led Star to request the extension instead of fight against it.
“NICC Chief Commissioner, Mr Philip Crawford said that the submissions demonstrated steady
improvements in The Star’s remediation but uncertainty around The Star’s financial situation meant
that progress was slow, and The Star’s licence suspension should remain in effect,” the NICC said in a release.
McCann said in Star’s filing that his company “appreciate(s) the comments made by the NICC in respect of the Company’s progress”. He added that Star “recognises the importance of continuing to deliver on its commitments under the remediation plan and returning to suitability.”
Gold Coast suspension deferred
In contrast to Sydney, Star also announced that a planned 90-day suspension of its Gold Coast licence in Queensland has also been pushed to 30 September. Weeks is also overseeing that property and will have his tenure extended there to the same time.
Star first came under investigation in Queensland in 2022 and was subsequently deemed unsuitable for licensure in October that year. In addition to fines and the appointment of Weeks, a 90-day licence suspension was ordered but has been delayed several times.
The Queensland state government in a release mentioned similar reasons as the NICC in approving the latest postponement.
“In making its decision, the Government reviewed The Star’s progress across priority remediation
measures, as outlined in the February report prepared by Special Manager, Mr. Nicholas Weeks”, the government said. “Mr. Weeks also acknowledged the impact of The Star’s recent challenges on its ability to make material headway on some key measures within the set timeframe.”
Future uncertain but possibilities abound
With both extensions in tow, Star now has more time to evaluate its current options, which are numerous. In some ways, the company has already committed to a smaller, more streamlined version of itself.
On 7 March Star announced it had sold off its 50% stake in the multibillion-dollar Queen’s Wharf development in Brisbane for A$53 million. The stake was sold to Chow Tai Fook and Far East Consortium, the other partners in the joint venture. Just opened last August, the development was supposed to be a major driver for Star but proved too expensive. By offloading the stake Star was freed from any further financial commitments as well as its portion of the project’s debt facility.
As part of the deal, Star was also able to buy back full ownership of Gold Coast from the two partners. The operator essentially punted on Queen’s Wharf and doubled down on Gold Coast. This plan, it said, “will enhance The Star’s customer offering and provide further depth to its accommodation mix on the Gold Coast”.
Meanwhile, US-based Bally’s Corporation also in March submitted a takeover offer for Star. In February, Bally’s was discovered to have sent officials to Australia to meet with Star and tour its properties. The offer was for A$250 million for 50.1% of the company, but Bally’s made clear it was “very open” to a larger deal. Bally’s ran up on a deadline on Friday listed in the offer.
Bally’s also made clear that it did not support the Queen’s Wharf deal and wished to keep all of Star’s assets together. The US operator said its proposal “offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets”.
Original article: https://igamingbusiness.com/casino/land-based-casino-regulation/star-licence-suspensions-regulators/
