Star given reprieve over looming Queensland licence suspension

The operator was sanctioned in Queensland in December last year over a series of failings. Star was fined AU$100.0m (£52.3m/€60.2m/US$65.6m) and was told its licence would be suspended.

Sanctions came after Star was found “unsuitable” to hold a licence in Queensland following an inquiry into operations at Star Gold Coast and Treasury Brisbane. 

Star was given 12 months to resolve the issues and bring Queensland operations in line with the demands of regulators. The deadline for this was due to expire on 1 December but has now been pushed back six months.

This means Star has until 31 May 2024 to satisfy the demands of Queensland authorities. Star said this comes after it submitted a draft remediation plan over how it will address issues. It has committed to approximately 640 milestones across 15 workstreams, to be implemented over a multi-year period.

Queensland’s attorney-general, Yvette D’Ath MP, approved the remediation plan and the extension. It was also agreed that a special manager appointed to oversee changes at the Gold Coast and Brisbane casinos will remain in place for an additional 12 months to 8 December 2024.

In addition, Star must update the Queensland government ahead of the May deadline on the progress of its remediation plan. 

Star CEO: We must regain trust and confidence

Robbie Cooke, CEO and managing director of Star, welcomed the news of the extension. He said the operator is committed to addressing the failings and regaining trust in Queensland.

“We’re pleased to have our remediation plan approved in Queensland,” Cooke said. “It’s an important step on our path to returning to suitability in Queensland and will track and hold us accountable throughout the multi-year programme we are committed to delivering.

“At the same time, we are fully aware that successful implementation of the remediation plan will require the utmost rigour and discipline. We need to regain the trust and confidence of all our stakeholders and communities and continue to have an unwavering focus on transformation.

“That comes from a clear understanding that holding casino licences is a privilege, not a right.”

What did Star do wrong?

Many failings in Queensland were broadly aligned with those uncovered by Adam Bell SC’s report into Star in New South Wales (NSW), where the operator was also found unsuitable to hold a licence. 

Highlighted issues included Star’s “concerted effort” to deliberately mislead banks and regulators on the purpose of China UnionPay transactions. This, authorities said, was in contravention of Chinese capital flight laws.

Star also sought out individuals linked to criminal organisations and encouraged them to gamble against the advice of police commissioners.

Investigators also uncovered social responsibility failings and deficiencies with anti-money laundering and combating the financing of terrorism practices. In addition, Star was rapped over its historic dealings with junket operators.

The operator is due to pay the final part of its $100.0m fine in the state by the end of 2023. This was split into three parts, with earlier payments of $30.0m made on 31 March and 30 June of this year. The remaining $40.0m is payable by 31 December 2023.

Star noted the extended period to address these issues only applies in Queensland. It said it continues to engage with the NSW Independent Casino Commission in relation to its Sydney operations and will make a separate announcement in relation to the position in the state.

The New South Wales sanctions also include a mooted licence suspension and a $100.0m fine.

What else has happened at Star?

Shortly after the Queensland sanctions were announced, Ben Heap announced he would step down as Star chair. This was after he was named among several current and former directors and former executives facing civil proceedings from the Australian Securities and Investments Commission (ASIC).

A total of 11 current and former directors and executives were named in the case, including ex-chair John O’Neill and former CEO and managing director Matthias Bekier. Richard Sheppard, Gerard Bradley, Sally Pitkin and Zlatko Todorcevski, all of whom are no longer with Star, were also flagged.

Moving into 2023, Star in April announced it would engage in new cost and restructuring initiatives. This came as it warned it was experiencing “significant” and “rapid” deterioration in operating conditions. At the time, Star said earnings performance was at unprecedented low levels, excluding the Covid-19 period. 

This was highlighted further with the group posted an AU$2.40bn net loss for its full-year in August. Star said this was due to a writedown in the value of its casinos in Sydney, Gold Coast and Brisbane.

Some $2.8bn in outgoings were labelled “significant items” for the year to 30 June 2023.

This consisted of an AU$2.2bn non-cash impairment of the Sydney, Gold Coast and Treasury Brisbane goodwill and property assets. There were also regulatory and legal costs of AU$595m, debt restructuring costs of AU$54m and redundancy costs of AU$16m.

Building for the future

As for its wider plans, Star is undertaking an organisational restructure to create property-based operational business units. These will cover Star locations in Brisbane, the Gold Coast and Sydney.

Each unit will be led by a property-based CEO reporting directly to the group CEO, Cooke. The most recent appointment under this strategy is Jessica Mellor, who became chief executive of Gold Coast operations in October.

This week, Star received further good news when new tax rates were confirmed in NSW. Star had criticised the government for some of the suggested increases but following talks over the matter, lower increases were agreed.