The Australian gambling industry was rocked by yet another major scandal this week. New South Wales gambling regulator has ruled that Star Entertainment is unfit to hold a license. This comes after a lengthy investigation into the company’s business practices. Among the findings are instances of accounting fraud and violations of anti-money laundering protocols.
Star Entertainment Group Found Unsuitable to Hold Licence
Back in June, the NSW Independent Casino Commission (NICC) announced they were wrapping up its investigation of Star Entertainment Group. The results became available to the public this week, and they are not good for the company. According to the report, there are significant “governance, risk, and cultural failure” at Star Casino Sydney.
Among the findings was evidence of blatant accounting fraud. The casino is guilty of expensing large amounts of cash, claiming they were “hotel expenses.” According to reports, the company expensed around AU$900 million in gambling proceeds.
One of the most damning findings for the casino was violations of anti-money laundering protocols. The majority of the illegal activity was done in a secret room in the casino. To further disguise the activities of the room, a separate casino cage was operated for that area. The company allegedly permitted known members of organised crime to gamble at the casino.
NICC Chief Commissioner Phillip Crawford spoke on the report, stating, “The report is, quite frankly, shocking. It provides evidence of an extensive compliance breakdown in key areas of (Star’s) business.”
Star May Lose Its NSW Casino License
If we go by past history, it is likely that Star Entertainment Group will have its license suspended following this report. Looking back to the saga of Crown Resorts, the company temporarily had its licence suspended following investigations into its operations. They were able to regain their licence after the casino was sold.
However, the situations at Star Entertainment Group and Crown Casino are vastly different. Star Entertainment Group has openly admitted that they committed violations. Also, they don’t have a major stockholder trying to secretly operate the casino.
The NICC may opt to suspend Star’s licence, or it may opt to go the route of probation. If the company goes on probation, it must prove that it can follow money-laundering guidelines and any other administrative requirements from by regulators.
Star Entertainment has 14 days to respond to the report from the NICC. After their response, the regulator will make its final determination.
Queensland Also Investigating Star Entertainment
Star’s legal issues will not be wrapping up with the NSW probe. Following the report from the NICC, Queensland will begin its investigation into Star’s operations in the region. Star operates Treasury Casino & Hotel and The Star Gold Coast. The company also operates Gold Coast Convention & Exhibition Center.
It is reasonable to assume that if Star Sydney was committing violations, then similar violations are also occurring in Queensland. Both AUSTRAC and the Office of Liquor and Gaming Regulation are investigating the casinos. Now the Attorney General’s office is joining them.
Queensland’s Attorney General Shannon Fentiman is ordering an investigation into Star Entertainment. This comes on the heels of the NSW report. Originally, Fentiman abstained from investigating the casinos. However, after the NSW report, she is opting to open the investigation.
In addition to the properties already managed, Star is currently working on a development in Queen’s Wharf. The company has considerable expenditures already invested into the property and stands to lose a significant sum should it lose its licence in Queensland.
If the Queensland investigation runs on a similar timetable as the NSW investigation, it may be early 2023 before we receive data on any wrongdoing by the casino.