Star Entertainment Faces Regulatory Scrutiny Amid Misconduct Allegations

The Star Entertainment Group, operator of the Star casino in Sydney, is facing intense regulatory scrutiny and allegations of financial misconduct, as revealed by an ongoing inquiry in New South Wales. The inquiry has uncovered a range of issues, including executive disputes, compliance failures, and a gaming machine glitch that allowed patrons to withdraw millions in unearned funds.

The inquiry heard that Star had a backlog of over 32,000 high-risk customers who needed enhanced due diligence checks, but this process was fast-tracked, excluding critical source of wealth verifications. Star's chief control officer, Rav Townsend, admitted the company did not check the source of wealth for over 22,000 of these customers, despite assuring the regulator that the checks were complete "up to 25,000 source of wealth checks were incomplete due to inability to find customer contact details."

Allegations also surfaced that Star's former chief financial officer was asked to alter financial records, and the company prioritized raising capital over its cultural remediation program. Two Star executives have resigned since the start of the inquiry, and the company's chairman has temporarily stepped down from other board positions.

Why this matters: The Star Entertainment Group is one of Australia's largest casino operators, and the outcome of this inquiry could have significant implications for the company's license to operate in New South Wales. If found unsuitable, Star's Sydney casino license could be permanently revoked, affecting thousands of jobs and the broader gaming industry in Australia.

The inquiry further revealed that a gaming machine glitch allowed patrons to withdraw $3.2 million in unearned funds over a 13-day period. The casino's interim chief operating officer admitted that the fraud could have been discovered sooner if proper procedures had been followed. Concerns were also raised about the suitability of the casino's leadership, with questions over the interim chief operating officer's knowledge of prohibited transactions.

Multiple former Star executives have resigned due to disillusionment with the company's senior leadership. Jessica Mellor, the CEO of Star's Gold Coast casino, is the latest senior staff member to depart. The company's share price has plummeted since the start of the public hearings, as the inquiry continues to uncover lapses in Star's operations and management. The NSW Independent Casino Commission is conducting a thorough investigation to determine if Star Entertainment remains suitable to hold a casino license in Sydney.

Key Takeaways

• Star casino faces intense regulatory scrutiny over financial misconduct
• Inquiry uncovered issues like compliance failures, gaming machine glitches
• Star failed to verify source of wealth for over 22,000 high-risk customers
• Allegations of financial record alteration and prioritizing capital over culture
• Inquiry could lead to revocation of Star's Sydney casino license