Posted on: March 14, 2022, 07:00h.
Last updated on: March 14, 2022, 01:00h.
Star Entertainment Group and the New South Wales government are facing off. The Australian casino operator is under review in the same fashion that toppled Crown Resorts.
The NSW Independent Liquor & Gaming Authority (ILGA) announced that it will begin conducting public hearings of Star’s The Star Sydney casino this Thursday. These public hearings are going to be part of a regular review process to determine if it deserves to retain its casino license.
It wasn’t too long ago that Crown Resorts fell apart. Investigations across Australia determined that the former darling of the casino industry had fooled a lot of people for years. Tampering with gaming machines, illegal marketing efforts, anti-money-laundering (AML) policy violations, and more went on for years under the noses of regulators.
As a result, Crown Resorts had its foundation completely shaken, and the aftershocks are still being felt. Now, authorities in New South Wales (NSW) want to know if Star Entertainment conducted business in a Crown-like manner.
NSW Hearings Begin
Already, Star has come under fire for allegedly following the same Crown pattern with its operations. Media reports have circulated for more than a year that it cozied up to organized crime figures and turned its back on AML violations.
The hearings come as NSW conducts a separate, private investigation into Star’s background. Leading that investigation is counsel Adam Bell, who played a major role in NSW’s scrutiny of Crown.
Bell’s review will consider how effectively The Star is complying with its statutory obligations and whether it remains suitable to hold a casino licence,” said ILGA chairman Philip Crawford.
If all of the rumors that have already circulated about Star’s activities are true, its future in NSW is not very bright. NSW suspended Crown’s license when it concluded its investigation, and could do the same with The Star Sydney license. Subsequent investigations in other Australian states could also produce additional suspensions.
Star Execs Updating CVs
When Crown began to fall apart, a number of high-ranking executives jumped ship. Others left under direction. Now, virtually the entire upper echelon at Crown is new, with none of the former decision-makers remaining in positions of power.
Seeing how Crown’s executive team and the board changed will likely have some Star executives preparing for the worst. NSW is reportedly going to put a Chinese high-roller in the spotlight this week who can show how Star facilitated illegal financial transactions.
Phillip Dong Fang Lee is a Chinese billionaire who made frequent trips to The Star Sydney. During that time, he routinely converted large amounts of cash using China’s Union Pay bank card platform. The casino, NSW asserts, disguised the transactions as hotel expenses, even though the money was used for gambling. This is a violation of both Chinese law and Australian AML regulations.
More Financial Trouble Coming
Last month, Star gave its latest financial health report. It stated that, for the first half of its fiscal year, it suffered a net loss of AU$74 million (US$53.68 million). Its EBITDA (earnings before interest, taxes, depreciation and amortization), at $$29 million (US$21 million), suffered a year-on-year drop of 87%.
Most of that was a result of COVID-19, which forced casinos across Australia to close. However, financial problems could continue throughout this year.
NSW expects to release the findings of its report in only a few short months. When it does, if Star receives punishment similar to that Crown received, its financial situation is going to get worse.