Star Entertainment has filed its response to the Bell Two inquiry, and will await a ruling from the NSW Independent Casino Commission (NICC) as to the fate of Star Sydney.
On Friday (27 September), Star said it “lodged its response” to the NICC’s show cause notice from 13 September. The notice pointed to multiple compliance breaches that were unearthed over the course of the investigation. It sought a response from Star as to why it shouldn’t face disciplinary action for its shortcomings.
Thursday (26 September), Star released its FY24 results and a business update, in which it said it will “seek to implement relevant recommendations” that may come.
In addition to the show cause notice, Star said Friday that it has “also made further submissions to the NICC in respect to several matters.” These include “Star Sydney’s suitability,” the company’s “progress in respect of its remediation plan,” its financial position and its “plans to address financial issues on an ongoing basis.” The latter may have been a reference to Star’s recent AU$200m (US$138m/£103.2m/€123.7m) debt facility agreement.
The NICC Friday confirmed it had received the response. While the regulator asserted that “there is no set timetable” to make its final decision, it did say that the verdict will come “sometime in October.”
There are multiple potential outcomes–Star could retain its conditional NSW licence or it could be revoked altogether. But even if it is not revoked, the operator will almost surely face more fines and steeper regulations.
Star resumed trading on the ASX Friday after weeks of being suspended, and the response was eye-opening. Shares slid 44% by market close, shedding almost half its market value. The stock currently sits at $0.25, a new low and a far cry from its all-time highs of above $5.
Bell Two has been calamitous for Star
As stakeholders await the NICC’s verdict, it’s hard to overstate how damaging 2024 has been for Star. The company was already knee-deep in remediation efforts from the first Bell inquiry in 2022 when Bell Two was launched in February.
The NICC was unconvinced of Star’s progress to that point and its intuition proved to be well founded. Over the spring, public hearings showed that the company had developed a combative relationship with the regulator. Its leadership had also fostered a toxic work environment that prioritised meeting obligations rather than addressing root problems.
On 30 August, the NICC released two volumes of the report to the public. They encompass more than 500 pages and give a grim look into Star Sydney’s operations. Ultimately, the report came to the same conclusion as the first: Star remains unsuitable for licensure in NSW.
McCann looks to end leadership carousel
Former chairman David Foster and former CEO Robbie Cooke were both ousted as a result of the inquiry. A slew of other officials have also left the company. In June, Star brought in respected industry veteran Steve McCann as CEO in hopes of righting the ship.
McCann served as CEO of Star’s chief rival Crown Resorts when it faced similar regulatory peril. He was instrumental in guiding Crown through its eventual sale to Blackstone Group in 2022. In response to speculation about a similar path for Star, McCann has said it’s too early to consider M&A.
In the Bell Two report, McCann’s appointment was described as a development that was “to be welcomed” for both Star and the NICC. But in the company’s FY24 report, McCann didn’t parse words as to the challenges that lay ahead.
“We have identified a range of initiatives to improve business performance and cashflow, as well as providing the organisation with additional liquidity,” he said. “However, time and flexibility is required to implement these initiatives. As we work through these initiatives, the Board and management team remain focused on demonstrating suitability to hold our casino licenses and regaining the trust and support of our regulators and the broader community while seeking to enhance shareholder value.”
