There are things that the struggling casino group, Star Entertainment (ASX:SGR), can’t afford financially (having lost any moral claims), and one of those is losing its Sydney casino licence or facing a hefty fine.
But that’s exactly what it was threatened with on Friday, as the NSW gambling regulator warned of cancelling its Sydney casino licence and imposing a massive fine.
The NICC stated on Friday that it had issued a show cause notice in relation to four significant breaches detailed in the second Bell Report (an inquiry into Star’s suitability to hold a casino licence). These include a breach that resulted in cash fraud against The Star, a failure to conduct source-of-wealth checks on hundreds of members flagged as high risk, and fraudulent guest welfare entries that exposed already vulnerable customers to greater harm.
The NICC has also sent correspondence to The Star regarding its management, operations, culture, the adequacy and implementation of its remediation plan, and its overall suitability to hold a casino licence.
The potential disciplinary actions the NICC could take against Star include the cancellation of its casino licence, a pecuniary penalty of up to $100 million, amendments to the terms or conditions of the licence, a requirement that the casino operator or a close associate give an enforceable undertaking to do or refrain from doing something, or a letter of censure to the operator. Star has 14 days to respond.
The Star said it will comply with the 14-day deadline, up to September 27, to explain why disciplinary action should not be taken.
"The Star is currently considering the matters raised in the notice, the additional requests by the NICC, as well as the Bell Two Report,” the company said in a statement late Friday.
“The Star is continuing to work with various stakeholders and advisers regarding its financial position. These discussions are ongoing and involve, among others, state governments, regulators, and the company's lenders."
The Star has been suspended from trading by the ASX for failing to file its latest financial results on time.
The suspension began on September 2, and it’s clear the company doesn’t have the funds or capital base to prepare and release accounts that would accurately reflect the value of its assets, particularly the over-budget Queen’s Wharf casino complex in the heart of Brisbane.
Media reports late last week claimed that the company’s banks were prepared to lend a further $150 million, and Star recently sold a property in Brisbane for $67.5 million.
Any fine or restriction of its Sydney casino licence would make it even harder to keep the company solvent and would force directors to reassess the value of its Sydney licence.
