Blackstone May Be Mulling Star Entertainment Buy — With a Catch

Posted on: February 4, 2025, 09:20h. 

Last updated on: February 5, 2025, 10:00h.

Private equity behemoth Blackstone (NYSE: BX) is reportedly considering a run at ailing Star Entertainment, but the US investor could wait until the Australian casino operator is put into administration.

Star Sydney, blackmail
The Star Sydney. Rumors surfaced Blackstone could be interested in bidding for Star. (Image: Star Entertainment)

The mention of Blackstone, which has a long track record in the gaming industry, is the latest in a series of rumors centering around Star. Last week, speculation surfaced that Cerberus Capital Management is in talks with Star’s creditors to acquire some of the operator’s AU$400 million in debt, a sum the lenders believe has little chance of being repaid.

Although Star reaped $37.5 million in the recent sale of The Star Sydney Event Centre and related assets to Foundation Theatres, some analysts believe the casino giant’s cash burn rate implies it has enough capital to survive a matter of weeks.

Should the operator become insolvent, it would voluntarily place itself into administration overseen by the Australian government. Then Blackstone could pounce, according to press reports.

Potential Hurdle for Blackstone Could Evaporate

Blackstone is the majority owner of Crown Resorts, which operates casino hotels in Melbourne, Perth, and Sydney. Under normal circumstances, that could be a hurdle to the asset manager buying Star because the New South Wales (NSW) government opposes one licensee running both casinos in the province.

It’s believed that with Star on the brink of collapse, New South Wales lawmakers could soften their stance. Star’s holdings include its flagship, namesake property in Sydney as well The Star Brisbane and the Star Gold Coast.

Blackstone has another card to play, as well. It’s rumored the private equity firm’s true interest in Star centers more around the operator’s thousands of electronic gaming machines (EGM) that are found in bars and taverns across Australia. Crown previously attempted to acquire rights to the devices and related licenses, but no deal materialized.

Blackstone hasn’t commented to this effect, but the company could assuage skittish regulators by agreeing to sell one or more of Star’s brick-and-mortar casinos while taking control of the gaming machine business.

Blackstone a Familiar Name in Casino Biz

Blackstone is a familiar name for investors focusing on the US gaming arena. While the financial services firm doesn’t directly operate gaming venues in this country, it previously owned and managed Cosmopolitan on the Las Vegas Strip before selling the operating rights to MGM Resorts International (NYSE: MGM).

The firm’s Blackstone Real Estate Income Trust (BREIT) still owns most of Cosmopolitan’s real estate as well as a majority position in the property assets associated with Bellagio, which is also operated by MGM.

In July 2021, Blackstone and MGM struck an agreement in which the former paid the latter $3.89 billion in cash for the property assets of the Aria and Vdara casino hotels on the Strip.