Star Entertainment Suspends Trading Amid Rumor of Impending License Suspension
Posted on: September 12, 2022, 01:03h.
Last updated on: September 13, 2022, 03:12h.
Star Entertainment continues to face heightened scrutiny in Australia after admitting it failed to follow the rules. New South Wales (NSW) is close to wrapping up its inquiry, but the fallout is already hitting, as Star suspended trading its shares.
The casino operator announced the suspension today. It followed a report in The Australian this weekend that NSW might consider revoking its state license, calling Star an “unfit” company.
Star requested that the Australian Securities Exchange halt its trading. It added that it could resume on Wednesday or when NSW publishes its final recommendations.
Attorney Adam Bell, who oversaw the Crown Resorts investigation, led the inquiry and already suggested the company should lose its license.
Path to Salvation
When NSW concluded its inquiry into Crown, it suspended the operator’s gaming license, but only temporarily. Crown opened the gaming floor at Crown Sydney a few months ago, almost a year-and-a-half after the property opened.
Star could be given other options Crown received elsewhere. Probation is a viable and logical possibility, although it must demonstrate that it can follow anti-money laundering (AML) and administrative rules.
Star didn’t provide any additional details about its decision. It acknowledged that it’s aware the report is coming but says it doesn’t know what it contains. Star added that it knows that suspension of its license is on the table. NSW could present its final decision as early as Tuesday. Star faces similar investigations elsewhere in the country and is also the subject of an inquiry by the Australian Transaction Reports and Analysis Centre.
Star has acknowledged that it violated AML rules on several occasions. It also admitted that it hid as much as AU$900 million (US$620.1 million) in customer gambling payments. It disguised the money as payments for accommodations and other services.
Even though Crown and Star have received several massive fines for their failings, no individual has faced prosecution. The companies became revolving doors at the executive level as they shook up boards and top-ranking managers. However, the old crew has left or is leaving without as much as a slap on the wrist.
The troubles haven’t phased Blackstone either, as confirmed by its willingness to spend AU$8.8 billion (US$6.6 billion) to acquire Crown. The casino company’s founder and former CEO, James Packer, laughed all the way to the bank with the $2.3 billion he earned by involuntarily selling his 37% stake in the company.
The inquiries haven’t hurt Star too much, either. Its stock price dropped considerably in 2020. But that was because of COVID-19. By October 2021, it had found its footing, trading at AU$4.28 (US$2.95) from a bottom of AU$1.62 (US$1.12) in March 2020.
The stock last traded at AU$2.66 (US$1.83) before the suspension. Even if NSW suspends its license, this won’t likely seriously impact the price of its shares.
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