After months of investigation for the Bell Two inquiry, the NSW Independent Casino Commission (NICC) ruled on Thursday (17 October) that The Star Sydney will be fined and subjected to several new regulations. But its casino licence was not revoked, at least for now.
In its release, the NICC said that Star will be fined AU$15m (US$10m/£7.7m/€9.2m). It will also be subject to “a suite of directions and licence conditions” as a result of the inquiry, which was launched in February.
Trading of Star stock was halted on the ASX shortly after the announcement. The company’s stock, according to Capitol Brief, dropped 40% in one day in September after the company failed to report quarterly results. The trading stop is the second in two months and the stock is now worth $0.255, compared to $0.595 cents a year ago.
Star said it will make an announcement after considering the report.
For Star, both penalties have become more or less status quo over the last two years. The main question, though, was whether the regulator would revoke the casino’s licence entirely. It did not and instead the state-appointed manager Nick Weeks will remain in charge at least through 31 March 2025. That timeline is not surprising given that Weeks’ term was extended to that date in August.
While the ruling is favourable for Star, the operator may not be out of the woods just yet. The NICC said it would “reassess The Star’s suitability to regain its casino licence” at the conclusion of Weeks’ extension, implying that the ruling is not final.
“In a casino setting, compliance breaches can have serious consequences for the community and the Bell Report illustrated how quickly weak controls can lead to criminal infiltration and gambling harm,” NICC chief commissioner Phillip Crawford said in the release. “The NICC understands the many challenges The Star is facing and will continue to closely monitor The Star’s progress in proving it is capable of regaining its casino licence.”
NICC to implement Bell’s recommendations
In addition to the fine, the commission said there were several other conditions to come from the investigation. These largely “reflect Adam Bell SC’s report recommendations,” which were submitted on 31 July.
Star will be subject to “additional financial and operational reporting” requirements from now through March. It will also face “more prescriptive requirements around board constitution and key management personnel” and the state’s Casino Control Act (CCA) will be amended with new requirements.
The latter two issues were highlighted in detail in the inquiry, which has since been made public. Bell detailed the fact that most of Star’s leadership was at the group level rather than the casino level. Part of Star Sydney’s problem, he said, is that it has not had an adequate board in place.
Although the NICC did not specify how the CCA would be amended, it is presumably a reference to patron probity checks. One of the violations outlined in the report was Star’s failure to conduct proper wealth checks for some 25,000 patrons.
McCann already making big impact
For all of Star’s poor decisions in recent years, the hiring of Steve McCann has not been one of them. Star appointed McCann as CEO in June, replacing Robbie Cooke. Cooke, along with former chairman David Foster, both left the company as a result of the inquiry.
McCann is widely respected in Australia and previously served as CEO of Star’s rival Crown Resorts. He eventually oversaw that company’s sale to Blackstone Group in 2022. Since joining Star, McCann secured a new $200m financing agreement with the company’s lenders in September. He has downplayed M&A speculation, saying it’s to early for those conversations.
Bell said in his report that McCann’s arrival was “to be welcomed” and those sentiments were reiterated on Thursday.
“The Star CEO, Steve McCann, has established open lines of communication and cooperation with the NICC which has resulted in a much healthier relationship between the company and the regulator,” Crawford said.
“However, more work needs to be done before The Star can be regarded as a compliant and responsible operator, deserving of a licence.”
Could this finally be Star’s turning point?
Star Sydney and its stakeholders are hoping that the NICC’s ruling can be a turning point in its fortunes. The casino has now survived two inquiries, both conducted by Bell.
The first was handed down in September 2022 and sent Star into a tailspin from which it has not recovered. It has paid millions in fines, its projections have been slashed and countless executives have departed.
Before the launch of Bell Two, things appeared to be progressing smoothly. But public hearings throughout the spring unearthed several new violations, including falsified RG paperwork and a faulty cash-out machine that was defrauded thousands of times. Further, Bell’s report also painted a picture of a hostile internal culture with an “us versus them” mentality.
“Despite more prescriptive supervision that prevented the type of misconduct seen in the first inquiry, numerous shortcomings in governance, regulatory compliance, technology and risk management remain, including in areas that The Star claimed it had remediated,” Crawford said.
Despite this, there is now a path for the casino to return to suitability. Its counterpart Crown has regained its licences in Victoria and NSW – Star now has the opportunity to do the same.
