Star Sydney posts revenue drop amid regulatory troubles

Star Entertainment is set to face more difficult times ahead after the gaming company recorded a minor revenue slip at its embattled Sydney casino; however, the long-term effects of the recent operational changes within the company will likely ensure Star spends more money.

This week alone, the gaming company reported that it incurred additional costs in the fiscal year 2023 of between $35 million and $45 million. The amount is due to Star’s remediation procedures for its New South Wales and Queensland subsidiaries.

During the company’s Annual General Meeting on Tuesday, Robert Cooke, the newly appointed Managing Director and CEO of Star Entertainment, disclosed the news to the company’s investors. He made the revelation during his first address to them since his appointment.

After Star’s involvement in widespread money laundering was discovered, the company was issued a $100 million penalty — the highest fine given by the NSW Independent Casino Commission (NICC). The regulatory body was recently formed to monitor the actions of Star Sydney and Crown Sydney. Star also had its licence suspended.

After Cooke took over from Matt Bekier, Star’s previous CEO, last month, he officially started laying out plans to put the troubled company back on track. He will continue in his role as the appointed head until either Star is deemed suitable for a license again or the company closes down entirely.

Nicholas Weeks was also appointed as an independent monitor who would observe the company’s daily operations. Star was to pay for the duration of Weeks’ supervision.

According to Cooke’s estimates, next year will see Star spending considerably more in its bid to restore suitability. He also revealed that there would be a 50% recurring cost of the amount used for the next few years after.

Amid all the bad news, Cooke gave Star’s investors some good news during the Annual General Meeting. He stated that between January 1 to November 15 this year, the core domestic revenue of the casino operator has risen by 1% compared to the figures of the pre-COVID-19 era.

The number includes The Star Gold Coast’s 32% rise in addition to the 9% increase recorded at Treasury Brisbane. The improvements were, however, diminished as a result of Star Sydney’s 11% reduction in NSW.

READ: Star Entertainment issued show-cause notice by OLGR

Star reportedly brought in a monitor of its own besides Weeks in a bid to appease the NSW regulatory bodies. The company, however, did not receive the response it expected. The NICC informed Star that the appointed in-house monitor was rejected, and as a result, the entity’s actions would not be recognized.

Law firm Allen & Overy Consulting was brought in by Star in August to monitor the company, and it started in its role immediately. The film had already presented reports concerning Star’s progress, but the NICC likely discovered something that put them off, leading to the rejection.

The casino operator announced the decision of the NSW regulators but did not go into details concerning it.

“The Star does not anticipate that the NICC will consider endorsing or approving any remediation program for some time,” Star wrote.

Star was allowed to keep its properties despite the authorities finding it unsuitable to hold a licence. The only way this can go on, however, is via the presence and supervision of Weeks, who is a part of Wexted Advisors, a corporate restructuring firm.

Weeks will continue in his NICC-appointed post in The Star Sydney 90 days from his October appointment. He will oversee all operations in the company in order to determine if it is making the necessary changes required to continue running as a licensed casino.

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