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Star under fire again with second Bell inquiry

| By Robert Fletcher
The New South Wales Independent Casino Commission (NICC) has confirmed a second inquiry into Star Entertainment Group, after the casino operator requested a temporary trading halt for its ordinary shares on the Australian Securities Exchange (ASX).
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Adam Bell SC – who famously undertook the first Bell report – has been appointed to conduct the second inquiry, entitled Bell Two. It begins today (19 February) and will run for 15 weeks. The deadline for the final report is 31 May 2024.

Philip Crawford, chief commissioner of the NICC, said the second Bell report would examine how Star has attempted to implement the recommendations from the first Bell inquiry.

“Bell Two will bring us back to the Bell report and The Star’s efforts to regain its casino licence in the shadow of that report,” he said. “There is much at stake for The Star, so the NICC is giving the casino every chance it can to demonstrate whether it has the capacity and competence to achieve suitability.

“The inquiry will provide the NICC with the information needed to make an important decision for The Star, its employees, its stakeholders and the wider community.”

What will Bell Two cover?

In a statement released today, Star confirmed that it had been advised about the second Bell report.

As well as examining the fallout of the first Bell report, the second inquiry will look at the culture at Star, which will include risk management culture and Star’s management and reporting lines. It will also examine whether Star has been able to obtain the financial resources needed to support The Star Casino.

Adam Bell SC’s original report outlined anti-money laundering and social responsibility failings at The Star Sydney stretching back years. A year later, a report into Star Sydney’s progress found the casino had implemented 22 of 30 recommended measures from the Bell report.

The blow comes as Star works to recover its reputation in NSW. It was declared unsuitable to hold a casino licence in the state in September 2022.

Star also faces a similar suspension in Queensland, as well as four class actions and a potential AUSTRAC fine. Most of these relate to connections to Chinese junket operators.

Trading halt

Star said the immediate trading halt request was related to contact today from the NICC. At the time of this statement, the operator did not disclose any further information about this inquiry.

It did, however, request that the trading halt remain in place until it releases further details about the inquiry, or 21 February, whichever comes first.

Star adds that it expects the trading halt request to be granted by the ASX.

Star agrees jobs guarantee deal in NSW

Contact from the NICC comes just days after Star struck a jobs guarantee deal in the state. Agreed last week, the binding deal requires Star to maintain a minimum headcount at its Sydney operations.

Under the same agreement with NSW treasurer Daniel Mookhey, Star will also begin a trial of cashless and carded play at its Sydney casino. This is a precursor to reforms due later this year in NSW.

In August last year, Star also secured concessions on casino duty rates with the NSW state. It has since worked on a transition plan to stabilise operations at its Sydney casino and curb further cuts.

Impact on financial performance

Regulatory action has, understandably, had an impact on Star’s financial results. Last August, Star announced a full-year loss of AU$2.4bn (£1.24bn/€1.46bn/US$1.57bn).

Star noted $2.8bn of outgoings labelled “significant items” in the year. These were linked to the series of fines the operator faced.

A $2.2bn non-cash impairment was reported for Sydney, Gold Coast and Treasury Brisbane goodwill and property assets. There were also regulatory and legal costs of $595m, debt restructuring costs of $54m and redundancy costs of $16m.

Those costs, minus a positive and growing EBITDA of AU$317m, meant an after tax loss of AU$2.4bn.

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