Star Entertainment facing $45m hit in third quarter of 2022

The Star Entertainment Group is expected to shoulder remediation costs of up to $45 million for the third quarter as part of its efforts to address deep-rooted “systemic failings” that were found in the company through a series of investigations over the past two years.

In addition to the $45 million, there will also be recurring costs totalling 50% of that amount. Newly appointed CEO Robert Cooke informed the shareholders of this and other updates during the last Annual General Meeting.

This is mostly due to the company’s regulatory shortcomings found in its New South Wales and Queensland properties. Both states have declared the operator unfit to hold a license, with the NSW Independent Casino Commission fining Star $100 million and suspending its license. The Sydney casino is currently under the leadership of Nicholas Weeks, the NICC-appointed external manager for the casino.

READ: Star Sydney to operate under special manager during suspension

In addition to the firm facing such a huge loss, the company has also reported an 11% drop in domestic revenue at its Sydney location, which remains open under the special manager, between July 1 and November 15 this year as against pre-COVID levels. However, there has been a 1% uptick in the group’s total domestic revenues in that same period as against pre-COVID levels. Specifically, there has been a 32% increase in its Gold Coast property and a 9% increase at its Treasury Brisbane location.

During the shareholder meeting, the group’s chairman detailed plans for returning the company back to suitability. The company plans to permanently exit junkets, close international offices, bank accounts and increase Responsible Gambling and Financial Crime staff, among other measures.

“We will transform our culture, be more transparent, have more robust governance, greater accountability, be open and honest with our regulators and act swiftly when issues arise,” Cooke said.

“We need to earn back the trust and confidence of all our stakeholders.

“From an operational perspective, let me assure you that the whole team, understands and acknowledges the need for change. Cultural change is part of that.

“So too is the focus on having all areas of our business operating with the highest levels of integrity. As CEO, I want our regulators and the governments we work with to see us as an operator of the highest repute.”

Meanwhile, Star is facing two class-action suits in Victoria based on misrepresenting the company to its shareholders.

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