The Star Entertainment Group (ASX: SGR) has been hit with a “show cause” notice by the NSW casino regulator two weeks since it flagged concerns about the company’s suitability to hold a casino licence.
The NSW Independent Casino Commission (NICC) has issued the notice to The Star, giving the company 14 days to respond and tell the regulator why it should not take disciplinary action in respect of breaches found in the second Bell Report.
The second Bell inquiry in NSW found that The Star was not only unsuitable to hold a casino licence, but failed to run a source of wealth checks on hundreds of members flagged as high risk, had fraudulent guest welfare entries that put vulnerable customers at higher risk of harm and a breach that resulted in cash fraud against The Star.
The NICC has also issued correspondence to The Star in relation to its management, operation and culture and the adequacy and implementation of its remediation plan, which was overseen by Nicholas Weeks – a special manager appointed by the regulator. His appointment has been extended up to four times up to March 2025 as The Star grapples with a leadership exodus as a result of the inquiries.
The second inquiry also found the casino “had not moved quickly enough to address the governance and cultural concerns raised in the first Bell Report.”
The regulator also noted that The Star had “only very recently turned its attention to dealing with challenges that should have been prioritised earlier.”
Today’s news comes a week after The Star struck a deal to sell its leasehold interest in the Treasury Brisbane Casino building to Griffith University for $67.5 million in order to help the cash-strapped gambling giant secure financing.
The Star CEO Steve McCann, who has been in the role for two months, is reportedly negotiating with the NSW and Queensland state governments to find $300 million to stabilise the group’s short-term finances. The Star’s earnings report for FY24 is yet to be released and shares are currently suspended as the company says it is not yet in a position to finalise its preliminary financial report.
In an update to shareholders today on the ASX, the Star said it expects to respond to the show cause notice by Friday 27 September.
“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.
“The Star is continuing to work with various stakeholders and advisers in respect of its financial position. These discussions are ongoing and involve, among others, state governments, regulators and the company's lenders.”
After 14 days, the NICC will then consider what course of disciplinary action it will take, with the options including a cancellation of the casino licence, a financial penalty of up to $100 million, amendment of the terms or conditions of the licence, an enforceable undertaking to refrain The Star from doing certain conduct or a letter of censure to the casino operator.
The second Bell inquiry was called by the NICC on 19 February and was set to run for 15 weeks in private sessions, but Adam Bell SC later called for an extension and for the hearings to be made public in April.
In the closing submissions at the second Bell inquiry, it was concluded “that The Star and Star Entertainment are not presently suitable” to hold a casino licence.
Caspar Conde, the special counsel assisting Adam Bell SC, added that there was “no basis in the evidence to discern a future time by which the inquiry can be satisfied that The Star and Star Entertainment will or are likely to become suitable”.
The NICC has also hit the company with a $3.2 million bill for the full cost of the second Bell inquiry which revealed a state of dysfunction between the former board of the casino group and the regulator.
In 2022, Bell held the first inquiry into The Star – which was triggered by a raft of allegations that the casino group was enabling suspected money laundering and organised crime activities through its VIP operations.
Enjoyed this article?
Don't miss out on the knowledge and insights to be gained from our daily news and features.
Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.
Support independent journalism and stay informed with stories that matter to you.