‘One-eyed focus on profit’: The Star’s Queensland licence now also under threat

The Star Entertainment Group (ASX: SGR) has been slapped with a second show cause notice threating its licence to operate after Queensland authorities today followed the lead from NSW by declaring the company unfit to run a casino.

The Brisbane-based group is also facing a separate investigation into the suitability of its relationship with Queen’s Wharf development partners Far East Consortium and Chow Tai Fook as the companies progress construction of the massive $3 billion casino project along the Brisbane River.

While the Gotterson report left open its recommendation on The Star’s suitability to hold a casino licence, despite identifying serious failings by The Star’s management, Queensland Attorney-General Shannon Fentiman declared her intention to seek a show cause within 21 days why The Star’s Queensland licence should not be revoked.

“Mr Gotterson’s report highlights major failings and makes very serious findings which adversely affect The Star’s repute, character, integrity and their honesty,” Fentiman says.

“Mr Gotterson found The Star was not forthcoming or transparent in its dealings with their banker or with the regulator and its actions were indicative of a one-eyed focus on profit.”

Fentiman says she has come to her decision because The Star has shown itself to be ‘not truthful’ with the regulator and ‘not taking their responsibilities around gambling harm and money laundering as seriously as they should’.

“(They are) pretty alarming and damning findings and that’s on top of the findings of the Bell inquiry as well.”

The Bell report handed down last month also led to a show cause notice to The Star, although the NSW Independent Casino Commission is yet to make a final determination on The Star’s casino licence after the company issued a detailed response early last week.

The damning findings from the Bell inquiry have led to a cleanout of The Star’s board since March, including the departure of former CEO Matt Bekier and former chairman John O’Neill. Acting CEO Geoff Hogg, who was The Star’s head of Queensland operations for more than a decade, resigned last month ahead of the Gotterson report being handed to the Queensland Government.  

Just as the Bell inquiry heard, Gotterson also found that The Star allowed Chinese VIP players to use China Union Pay debit and credit cards for gambling and characterised them as hotel transactions in violation of the terms of use of those cards.

“The Star was insufficiently transparent with the regulator and they made a concerted effort to obscure the purpose of these transactions and deliberately misled the regulator and their own banker,” says Fentiman.

The Gotterson report also found that The Star, in allowing patrons excluded from interstate casinos by police to gamble at its properties on the Gold Coast and Brisbane, was ‘highly deficient’ and demonstrated a ‘lively disregard for the law’, she says.

The Gotterson inquiry heard in August that The Star allowed a patron with alleged links to an Italian crime syndicate to gamble at its Queensland properties despite being barred from casinos in Sydney and Melbourne.

“The report also found serious deficiencies in The Star’s anti-money laundering program which despite expert evidence persisted over a number of years," says Fentiman.

“Considering Mr Gotterson’s advice and the findings of the Bell inquiry, I have formed the view that The Star is unsuitable to hold a casino licence in Queensland. I have asked the Office of Liquor and Gaming Regulation (OLGR) to issue The Star with a show cause notice.”

The Queensland Government has accepted the 12 recommendations from the Gotterson report, which include strengthening oversight of money laundering activities and increasing gambling harm minimisation measures. Among the measures recommended are mandatory pre-commitments for poker machine players and cashless play provisions for poker machine gambling above $1,000 in Queensland casinos.

“As a priority, the government will progress urgent amendments to the Casino Control Act which would allow the appointment of a special manager to oversee the operations of the casino,” says Fentiman. “The recommendations will ensure that Queensland casinos operate lawfully and transparently as we all expect them to do so.”

In another looming issue for The Star, Gotterson has revealed that the regulator is conducting an independent review of the suitability of Far East Consortium and Chow Tai Fook to partner with The Star on developments such as Queen’s Wharf and its hotel and apartment projects at The Star’s Gold Coast casino property. It is unclear what an adverse finding will mean for the projects currently under way by The Star and its partners.

The Attorney General says it will take a couple of weeks to prepare the show cause notice for The Star but warned that depending on the response the government could issue censures or fines against the company or possibly suspension or cancellation of its casino licence.

“The Star are the major partner in the joint venture agreement to have the casino licence for Queen’s Wharf, so obviously a finding of unsuitability does have implications for the casino licence for Queen’s Wharf,” she says.

“If The Star is unsuitable to hold a licence, the recommendations from Mr Gotterson would allow us to put in place a special manager.”

The Star is currently considering the report and the matters raised by Mr Gotterson and will continue to work cooperatively with the OLGR.

Meanwhile, Fentiman says inquiries are also progressing into Queensland’s other casinos – at Cairns and Townville – relating to junket arrangements. The Cairns casino is operated by Reef Casino Trust (ASX: RCT) while Townsville’s The Ville Resort-Casino is owned by Computershare (ASX: CPU) founder Chris Morris’sColonial Leisure Group.