Star Entertainment Group Experiences $1.26B Loss after Money Laundering Investigation
Star Entertainment Group experienced a major loss of $1.26 billion during the first half of 2023, driven by charges and fines at its Sydney casino probe.
One year earlier, the company lost $74 million during the same period and their bi-annual financial results were published via ASX on Thursday. The report revealed a $1.3billion charge stated to be a one-off cost, encompassing expected tax changes, $350 million in fines and the expense of ongoing review and new systems to fixing issues. This alleged one-off payment had the potential of being a far larger sum due to the sale of two properties counted against it.
The major factor behind the loss is the $800 million in equity raised to repay debt and increase liquidity. Domestic revenue also suffered significantly and saw a 14% decline in contrast to pre-pandemic levels.
The report reveals that the poor performance is reflective of increasingly restrictive operational requirements and amendments to the State’s Casino Control Act. This deterioration can also be attributed to increased competition posed by the opening of Crown Sydney in Barangaroo.
Star stated that it was urgently working on regaining suitability to hold casino licences in NSW and Queensland after the investigations into the fraud, criminal activity and money laundering. Their NSW licence was also suspended and fined $100 million. The company was granted permission to continue operations under the condition of appointing a new manager
2022 saw the company fined $100million in Queensland and given a twelve month period to rectify its licence to operate as a crypto casino. According to Financial statements, Star Sydney has lost almost $1 billion as a result of regulatory changes and fines.
The half year financial statement reads, “The Sydney property is in a state of significant uncertainty.”
“Recent regulatory changes have increased compliance costs and the Group has paused international and domestic rebate business. Further, proposed increases to casino duty rates could materially alter the profitability of the business.”
“In combination, these factors have reduced the valuation of the Sydney cash-generating unit, requiring an impairment of $988.4 million to be recognised on 31 December 2022.”
Robbie Cooke, the managing director has previously said the group was “transforming” its culture and business. Meanwhile domestic revenue for The Star Gold Coast is up 30%, a record for the venue, and Treasury Brisbane, a subsidiary of Star Group, posted a 9% increase on the same measure.
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