High-rollers abandon The Star as it braces for second inquiry

The Star Entertainment Group, an Australian casino operator, is currently facing a significant challenge as high-rolling patrons have started to avoid its three casinos in Sydney, Gold Coast, and Brisbane. This trend comes as the company's former and current senior executives are set to appear before a public inquiry.

The New South Wales Independent Liquor & Gaming Authority (ILGA) announced on March 15, 2023, that it would hold a new inquiry into the Star Entertainment Group's suitability to hold a casino license due to allegations of money laundering, VIP junket operations, and other regulatory breaches. This inquiry follows a previous investigation that led to a suspension of the casino's VIP program in December 2022.

The high roller market is a crucial segment for casino revenue, with these players contributing significantly to the overall earnings. However, the ongoing investigations have led to uncertainty among high rollers, causing many to shift their gambling activities to competitors such as Crown Resorts and The Star's main rival, The Crown Sydney.

The Star Entertainment Group's woes began in 2021 when reports surfaced about its involvement in money laundering activities through its VIP junket program. In response, the New South Wales government suspended the casino's VIP program, which catered to Chinese high rollers, and appointed an independent review panel to investigate the allegations.

The panel's report, released on February 28, 2023, found that the casino had breached anti-money laundering laws and regulations on numerous occasions. It also identified significant deficiencies in the casino's governance, risk management, and compliance systems.

Following these findings, the New South Wales government announced that it would hold a public inquiry into the casino's suitability to continue holding a casino license. This decision came after a similar move by the Victorian Commission for Gambling and Liquor Regulation, which launched an investigation into Crown Resorts' suitability to operate its Melbourne casino due to similar allegations.

The Star Entertainment Group's executives, including its CEO Matt Bekink and Chairman John O'Neill, have been summoned to appear before the ILGA inquiry. Their testimonies will provide insights into the casino's operations and management during the period under investigation.

The ongoing investigations and uncertainty surrounding the casino's future have led high rollers to seek alternatives, causing a decline in revenue for The Star Entertainment Group. The company's share price has also been affected, with its stock price dropping by over 20% since the start of the year.

In conclusion, The Star Entertainment Group is facing a significant challenge as high rollers avoid its casinos due to ongoing investigations into money laundering allegations and regulatory breaches. The company's former and current senior executives are set to appear before a public inquiry, which will provide insights into the casino's operations and management during the period under investigation. These developments have led to uncertainty and a decline in revenue for the casino operator.