Regulatory Background & Current Challenges
In 2022, a critical audit conducted by KPMG unearthed major concerns regarding The Star Sydney’s operations. It highlighted significant risks in the casino’s anti-money laundering processes and exposed systemic governance and cultural failures. These findings played a pivotal role in the NICC’s reassessment of The Star Sydney’s qualifications to maintain its NSW casino licence.
The challenges for The Star were exacerbated by the global shift towards online gambling during the COVID-19 pandemic. As lockdowns and social distancing measures pushed gamblers towards online casinos, traditional casinos like The Star experienced marked revenue declines. This trend added complexity to The Star’s efforts to address the operational deficiencies identified in the KPMG audit.
Despite these setbacks, The Star was granted permission to continue operations under stringent conditions, including substantial remediation efforts under the supervision of a Special Manager, Nick Weeks. The NICC has extended the tenure of the Special Manager from January 2024 to 30 June 2024, indicating this as possibly the last chance for The Star to rectify its operations.
Financial Turmoil & Remediation Efforts
The Star faces multiple challenges, including proposed tax hikes by the state government and ongoing civil proceedings by the AML watchdog AUSTRAC. These issues have compounded the financial strain on the company, leading to a substantial net loss of$2.44 billion (US$1.57 billion) for the year ended 30 June 2023, primarily due to regulatory impairments. In response, Star has initiated another round of fundraising and secured new debt facilities worth $450 million from Barclays and Westpac, indicating a concerted effort to stabilise its financial position and undertake necessary remediation steps.
The Way Forward
The Star’s immediate future hinges on its ability to demonstrate its operational independence and adherence to regulatory requirements within the given timeframe. The NICC’s decision underscores the regulator’s commitment to maintaining stringent standards in the casino industry, particularly concerning AML and CTF controls. As the six-month deadline approaches, the fate of The Star Sydney hangs in the balance, with significant implications for its employees, stakeholders, and the broader NSW gambling landscape.
