The Star Entertainment Group has been judged unfit to maintain a gambling permit in New South Wales and has been given two weeks to respond to the conclusions before corrective measures are taken.
A report by legal counsel Adam Bell highlighted numerous shortcomings in anti-money laundering and social responsibility at The Star Sydney casino over an extended period, encompassing various areas and business practices.
The report examined these systematic failures, asserting that the conduct was “a consequence of inadequate risk management and administration. It is also a result of a culture that faltered in the events subject to this review, tolerated unethical behavior, prioritized commercial goals over adherence, pursued risk, and suppressed negative information.”
The catalog of operator misbehavior is not comprehensive, encompassing successful circumvention of Chinese capital flight regulations, deceptively reclassifying gambling outlays as lodging costs on China UnionPay (CUP) cards, misrepresenting these funds to financial institutions, permitting entities potentially connected to organized crime to run cage operations at the operator’s premier casino, and providing false information to and withholding documents from the state regulatory body, the Independent Liquor and Gaming Authority.
The newly formed New South Wales Independent Casino Commission (NICC) is accountable for deciding the character and style of disciplinary actions taken against casinos. The NICC is a newly established legal entity that has assumed the regulation of the casino industry from the ILGA.
NICC Chair and ILGA Chair Philip Crawford expressed his emotional reaction in a statement accompanying the report: “Frankly, this report is appalling. It presents evidence of a widespread breakdown of compliance in key areas of the Star’s business.
“Not only were the casinos concealing significant sums of money as lodging expenses, but substantial amounts of cash were escaping anti-money laundering protocols in numerous instances, most alarmingly through the Salon 95 – a clandestine room with a secondary cash cage.
“We are evaluating the contents of the report. There are a variety of consequences across the 30 recommendations that need to be addressed progressively.”
Upon Star Entertainment’s response to the notification, we will decide on the proper corrective measures,” Crawford stated.
Crawford also provided more details about recent changes that have granted the regulatory body the authority to take action based on the Bell Report.
“The New South Wales government’s recent changes have bolstered the regulatory framework to take action on the Bell Report, our options include license withdrawal, temporary closure, penalties, and/or the appointment of administrators.”
**Explanation Notice**
Alongside the report, the NSW Casino Control Authority also issued an “explanation” notice to Star Entertainment, a document outlining the alleged violations and demanding an explanation from the recipient. Star Entertainment has two weeks to respond to the claims before disciplinary action is taken.
While some form of enforcement action against the casino is likely – which could include reprimanding the operator, penalties of up to A$100 million (£59 million/$69.1 million/€69 million) and temporary closure or cancellation of the operator’s casino license under the Casino Control Act 1992 – the exact nature of this action is uncertain.
The notice states that, according to the report, “Star Entertainment is currently not deemed suitable to be involved in or associated with the management and operation of a casino in New South Wales.”
In the days leading up to the report’s release, Star Entertainment suspended trading on the ASX in response to media reports that the casino’s license was in jeopardy.
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