Star Entertainment to Temporarily Lose New South Wales Casino License, Pay Record Fine

Posted on: October 17, 2022, 01:51h. 

Last updated on: October 17, 2022, 11:32h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

The New South Wales (NSW) government has handed down its decision on Star Entertainment: the casino operator will be able to continue in the state. But it’s going to have to take a short break and pay a massive fine.

The Star Sydney casino
The Star Sydney casino in New South Wales looks devoid of traffic. It will stay that way for the next few months, as New South Wales has suspended the casino operator’s license. (Image: Perth Now)

Australian authorities reported Monday that they suspended Star’s license for 90 days. This came in response to the investigation that revealed alleged links to organized crime, money laundering, and other violations.

The New South Wales Independent Commission of Casinos (NICC) will also impose a fine of AU$100 million (US$62.3 million) on the Sydney Star casino as a “disciplinary measure.” It’s the largest fine ever against a casino, and is made possible through updated laws from this past August.

Too Legitimate to Quit

NICC commissioner Philip Crawford said at a press conference in Sydney on Monday that authorities have appointed Nicholas Weeks to manage the casino moving forward. He begins this Friday, the day the suspension takes effect.

Star will continue to operate as a company, minus the casino operations. Weeks will hold the license as NSW decides what other measures to implement. More executive departures are likely as a result of the ruling.

Pulling the operator’s license permanently wasn’t an option. Star generates too much revenue for NSW and employs around 8,000 people. Shutting it down would have damaged the economy on multiple levels.

Crawford noted that Australia’s regulators “consistently” refuse to cancel the licenses of Star and Crown Resorts in order to prevent job losses. This is in spite of the egregious violations both have committed.

The move comes in response to the publication in mid-September of a report ordered by the NICC, led by attorney Adam Bell, which addressed allegations of alleged money laundering and fraudulent operations at the Star Sydney, as well as alleged ties to reputed crime figures.

The Sydney casino allegedly disguised AU$900 million (US$560 million) as spending by guests using China UnionPay cards. It tried to hide the intended use of the money by claiming it to be hospitality expenses. 

The report, which found serious governance and management issues, follows the uncovering by media outlets in 2021 of a series of ethical and legal violations in Melbourne casino operations. That resulted from intense scrutiny over the last three years of the casino industry in Australia.

Queensland Revamps Casino Laws

The embarrassment Crown and Star brought to Australia continues to lead to changes. All states with a casino presence are reforming their gambling laws. NSW has already begun the process and will make additional changes moving forward.

The state is going to increase its oversight of casinos. It will rely on the appointment of independent monitors to oversee all operators, hoping they can remain objective.

It is also making sure it covers its assets. When Crown negotiated its license in NSW, it included a clause that would require the government to compensate the company for any license changes. State leaders want to make sure Star can’t try to pull a similar trick.

More changes will arrive as the NICC collaborates with other government officials on reforms. The goal is to have the reforms in place as quickly as possible in order to keep similar incidents from happening again.

As a result of the license suspension, Star announced it would halt trading on the Australian Securities Exchange (ASX) as of today. It’s preparing an announcement about the suspension, which it will release prior to the resumption of trading. If it takes too long to prepare the statement, it will relaunch on the ASX this Wednesday.