Star Entertainment Will Not Sell Sydney Casino Despite AU$2.4bn Impairment Charge

  • Star has had to accept an AU$2.48bn (US$1.6bn) impairment charge
  • The operator still saw revenue growth in the period, however, up 22%
  • Star CEO said the firm is now more stable following a deal with the government
  • The firm is awaiting an AUSTRAC verdict in relation to a financial penalty
Star Sydney
Star Entertainment has announced that it is no longer considering selling its Sydney casino. [Image:]

Back to stability

Embattled Australian casino operator Star Entertainment Group has confirmed that it does not intend to sell its flagship venue in Sydney. The operator was considering offloading The Star Sydney due to losses incurred over the past financial year, but the company has now decided that it is in a more stable position.

Star reported a 22% growth in revenue to AU$1.9bn (US$1.22bn) for the 2023 financial year

Despite having to accept an AU$2.48bn (US$1.6bn) impairment charge in 2023, Star reported a 22% growth in revenue to AU$1.9bn (US$1.22bn) for the financial year. Net debt actually declined about 47% to AU$596m (US$383.8m).

Robbie Cooke, Star CEO, said that a strategic review of the Sydney casino is “no longer necessary,” following a comprehensive review of the duty regime by the government. He noted an agreement made with the government, in which Star will not cut jobs at the Sydney casino in exchange for a tax reprieve. New South Wales Treasurer Daniel Mookhey has also deferred duty rates for poker machines until 2030.

A mixed bag

As seen in its full financial year results for 2023, Star had a difficult 2023 despite revenue growth. A $2.48bn (US$1.6bn) non-cash impairment of The Star Sydney, The Star Gold Coast, and Treasury Brisbane resulted from several issues, including the loss of two state casino licenses, four class action lawsuits, and a potential regulatory fine.

However, Cooke is adamant that the operator can soon get itself back on track. He ensured investors the business was stabilizing, highlighting specifically the return of complimentary drinks for VIP members. He said this “does bring back an uplift in some business as it attracts more people to our private gaming rooms.”

In addition to the growth in revenue year-on-year, 2023 brought a rise in earnings before interest, tax, depreciation, and amortization. This reached AU$317m (US$204.1m) for the year ending June 30, a growth of AU$79m (US$50.9m) from previous estimations. The Star Sydney generated revenue of AU$978m (US$629.8m) for the year, up 27% from 2022.

Awaiting legal outcome

Star is still awaiting the outcome of an investigation by the Australian Transaction Reports and Analysis Center (AUSTRAC). The regulatory body began probing Star in June 2021, investigating claims of anti-money laundering and anti-terrorism financing violations. AUSTRAC identified several potential non-compliance cases.

Star is prepared for a penalty of AU$150m (US$96.6m)

In a similar case involving Crown Resorts, AUSTRAC issued a fine of AU$450m (US$289.8m). The operator will pay the fine in installments after admitting that it failed to properly track and report suspicious transactions at its Melbourne and Perth casinos. Meanwhile, Star is prepared for a penalty of AU$150m (US$96.6m).

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