Amidst regulatory scrutiny and intensifying competition, Star Entertainment Group has reported a 14.6% decrease in revenue for the half-year, attributing the decline to factors such as increased competition from pubs and rival casino operator Crown Resorts, as well as stricter game-time regulations. Despite these setbacks, shares in the company surged over 8% on Thursday.
Star Entertainment remains embroiled in a series of regulatory challenges, particularly regarding its Sydney casino, where a second independent inquiry is underway to determine its suitability to retain its operating license. The company told investors it was “likely” to meet its debt obligations if it regains licenses in NSW and Queensland.
CEO Robbie Cooke said that resolving regulatory matters remains the company’s key goal. “The remediation remains our number one priority. We continue to uplift our risk management, safer gambling and AML capabilities and are starting to embed greater accountability and more robust governance,” he stated.
The Sydney casino, which is at the center of regulatory scrutiny, reported a significant 17% drop in revenue for the six months ending December 31, with earnings before interest, tax, depreciation, and amortization (EBITDA) plummeting to AUD37.4 million ($24.29 million). Despite implementing an AUD100 million ($64.9 million) cost-out program, net profit stood at AUD9.1 million ($5.91 million), reflecting the challenges faced by the company in navigating regulatory headwinds and operational disruptions.
While gaming at its Sydney, the Gold Coast, and Brisbane casinos remains the primary revenue driver for Star Entertainment, the company boasts a diverse portfolio encompassing over 120 food and beverage venues and thousands of hotel rooms. Non-gaming revenue experienced a relatively modest decline of 5.6%, offering some respite amidst challenging market conditions.
“There was an impact for most of the period from certain operating restrictions impacting our customer experience, principally the cessation of complimentary drinks in our private gaming rooms. This has reduced the performance of tables and gaming in those facilities,” added Cooke.
The introduction of time restrictions for guests, limiting continuous play on electronic machines and table games, has also impacted performance, according to Cooke. However, some investors view the stabilization of earnings as a positive sign, emphasizing the company’s commitment to remediation efforts and rebuilding trust.
The regulatory landscape poses significant challenges for Star Entertainment, with the New South Wales Independent Casino Commission engaging Adam Bell, SC, to conduct a second inquiry into the company’s operations. The move follows a scathing report by Bell in 2022, which highlighted ethical lapses and cultural failures within the company, raising concerns about its suitability to hold a license.
Original article: https://www.yogonet.com/international/noticias/2024/03/01/71061-star-entertainment-faces-regulatory-challenges-amid-revenue-decline-of-over-14-in-halfyear
