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 (NSW) Independent Liquor & Gaming Authority 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 relationships with suspected criminal figures, and other regulatory breaches. This inquiry follows a previous investigation that began in 2020, which led to a suspension of the issuance of new casino licenses and a review of existing ones.

The Star Entertainment Group has been under scrutiny since 2019 when reports emerged that its Sydney casino had allowed junket operators to bring high-rolling Chinese gamblers into Australia without proper background checks. Junkets are third-party operators that bring VIP gamblers to casinos and extend them credit, taking a commission on their losses.

The latest allegations against the Star Entertainment Group include claims that its executives turned a blind eye to money laundering activities and allowed known criminals to gamble at its casinos. These allegations have led to a significant drop in business from high-rolling patrons, who account for a significant portion of casino revenue.

The NSW government has taken a tough stance on money laundering and other illegal activities in its casinos following a series of scandals involving organized crime figures and corrupt officials. In response to these issues, the NSW government passed new legislation in 2021 that requires casinos to report all cash transactions over AUD 10,000 (approximately USD 7,300) and to conduct due diligence on all VIP gamblers and junket operators.

The Star Entertainment Group has denied any wrongdoing but has agreed to cooperate with the inquiry. The company's CEO, Matt Bekink, and other senior executives have been summoned to appear before the inquiry, which is expected to begin in April 2023.

The outcome of this inquiry could have significant implications for the Star Entertainment Group's future operations in New South Wales. If found to be in breach of its casino license, the company could face fines, sanctions, or even have its license revoked. This would be a major blow to the company's revenue and reputation, particularly given its reliance on high-rolling patrons from Asia.

In the meantime, the company is working to reassure its customers that it is taking steps to address these issues and strengthen its compliance with anti-money laundering regulations. It has also announced plans to invest AUD 1 billion (approximately USD 730 million) in upgrading its Sydney casino, which is expected to create new jobs and attract more visitors to the city.

However, the damage to the Star Entertainment Group's reputation may already be done, with high-rolling patrons likely to continue avoiding its casinos until the outcome of the inquiry is known. This could result in significant financial losses for the company and put pressure on its competitors, such as Crown Resorts and The Star's own subsidiary, Treasury Brisbane, to capitalize on the situation.

In conclusion, the Star Entertainment Group is facing a significant challenge as high-rolling patrons avoid its casinos due to ongoing regulatory investigations and allegations of money laundering and other illegal activities. The outcome of this inquiry could have significant implications for the company's future operations and reputation, with potential fines, sanctions, or even license revocation a possibility if found to be in breach of its casino license. The company is working to reassure customers that it is taking steps to address these issues but may face significant financial losses in the meantime.