The New South Wales (NSW) state gambling regulator has fined The Star Entertainment Group’s Sydney casino a record A$100m ($61m) and suspended its licence following an operational review, but the casino will remain open under an external manager.
The NSW Independent Casino Commission (NICC) said on Monday (October 17) that it had imposed the maximum fine, suspension and manager arrangement in light of the Bell review’s lacerating findings into years of misconduct at The Star in Sydney.
The suspension commences this Friday, at which time manager Nicholas Weeks, NICC advisor and director of Wexted Advisors, will serve as Star manager for 90 days, subject to regulatory extension.
“The NICC has resolved that it is no longer in the public interest that The Star should remain in control of that licence, and that The Star is not currently suitable to be the holder of the licence,” NICC chief commissioner Philip Crawford said in a statement.
“The appointment of Mr Weeks will allow casino operations to continue and his primary focus will be to ensure a robust root cause analysis and review of the casino’s culture is undertaken.”
Crawford later told reporters a remediation plan presented by Star Entertainment following the release of the Bell report “did not make much sense without the leadership of a competent and experienced CEO”.
“Star’s new CEO, Robbie Cooke, commences at Star today,” Crawford said. “We have met with Mr Cooke and he presents to us as someone who is absolutely capable of providing the strong leadership required at The Star.”
The NICC’s decision was also made in light of the certainty that thousands of employees would lose their jobs “overnight”, Crawford said.
“At this point, the commission did not consider this to be in the public interest.”
Crawford warned that the appointment of a special manager should not be read as a signal that Star Entertainment will necessarily achieve suitability.
“It does not mean that the NICC believes that the Star is suitable to hold a casino licence. At this point, the NICC considers that there is a possibility that The Star could remediate its business with a view to becoming suitable to hold a casino licence.”
Star Entertainment said in a statement that temporary manager Weeks "will have full control of and responsibility for the Sydney casino business".
"However, it is expected he will work closely with management of [Star Entertainment] to manage the operations of the Sydney casino as a going concern with regards to the matters identified in the Bell Report."
It also noted that Star Entertainment and The Star casino "agreed to provide an indemnity" to Weeks "with respect to his role".
Crawford said a letter published by interim Star chairman Ben Heap on September 15 had demonstrated to the NICC that “not only was Star aware of the gravity of the findings of the Bell review, but that The Star would work transparently with the regulator in remediating its operations”.
He said that if Star had not published this letter, there would “very likely” have been a more punitive outcome than the measures announced today.
The introduction of a special manager follows similar arrangements in Victoria and Western Australia states for casino operator Crown Resorts, and likely for Star Entertainment in Queensland state, where the government has introduced legislation including special manager powers.
David Green, principal of gambling regulation consultancy Newpage Consulting, told VIXIO GamblingCompliance on Monday that the dual suspension-operation arrangement in NSW “is a nuance done to differentiate it from Victoria — that is, 'we make the tough calls in NSW'”.
“But it may have unintended consequences, such as inducing a loan covenant breach, or requiring an impairment charge against the P&L [profit and loss statement] on account of a potential write down of the carrying value of the licence to zero,” he said.
“That will depend on how long the suspension is in effect,” he added.
However, Green said, “NSW is likely the only regulated jurisdiction on the planet with both its licensees concurrently unsuitable to hold a licence, yet trading anyway".
“I would have preferred to see a punitive suspension of trading operations, say for 90 days, within which time the company would need to re-jig all of its operations and governance.
“That would have been unequivocal, and understood by all stakeholders.”
Star Entertainment is also under new formal pressure in Queensland state, where the legislature on Friday (October 14) passed an amendment bill that increases fines for non-compliant casino operators to A$100m, allows the appointment of a special manager to supervise casino operations and mandates a transition to cashless gaming.