Is Star Entertainment on the Brink of Collapse amid Cash Shortage?

The new Queens Wharf Tower and Star casino in Brisbane is just some of the luxury properties in iconic Australian locales that the company says could go under. (Image: Alexander Cimbal / Alamy)

Star Entertaiment Group announced Monday that it was running dangerously low on cash, which the company says could make it difficult to secure critical loans in the near future.

Star Entertainment owns and operates luxury casinos and hotel-resorts across Australia.

In a report to the Australian Securities Exchange, Star reported an A$8 million loss in the second quarter of the fiscal year, while also announcing a 15 percent decline in quarterly revenues. 

‘Material Uncertainty’ Over Company’s Future

That left Star with A$78 million in available cash at the end of December. 

While the company says it is looking at a number of options to improve its liquidity, it is limited in its resources to raise those funds, which it would need in order to secure an A$100 million bailout. If Star can’t secure that loan, its future as a company may be in question.

“There is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position,” Star said in its statement. “In the absence of one or more of those arrangements, there remains material uncertainty as to the Group’s ability to continue as a going concern.” 

Following the report, Star’s shares fell nearly 18 percent to A$0.115 in trading on the Australian Securities Exchange. 

Regulatory Issues, Debt Plague Star Casinos

Star Entertainment has seen itself hit with multiple scandals and financial issues in recent years. Troubles began in 2021, when the Sydney Morning Herald reported that money laundering and criminal activity had been occurring at Star’s properties in Sydney and Queensland for years. 

In 2022, Australian regulators deemed the company unfit to operate those casinos, with the licensed properties falling under government supervision. The company nearly lost its license in New South Wales (NSW), as further investigations found more regulatory breaches, including the use of junket operators linked to criminal groups. 

Since then, Star has seen its revenues decline significantly, both due to the bad publicity and the institution of new laws regarding mandatory limits for casino patrons and cashless play. At the same time, the company has struggled to repay debts from its developments in the Queen’s Wharf district of Brisbane, as well as an A$15 million fine from NSW regulators, of which it still owes A$10 million. Star is also waiting to learn the size of a separate fine from the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian money-laundering regulatory body.

That means that Star may need government assistance to stay afloat. But while some government officials remain open to the idea – if only to ensure that the facilities remain open and workers can keep their jobs – others say that there’s no more support available for the embattled firm.

“We did sit down with Star over a year ago and work out a rescue package,” NSW Premier Chris Minns told reporters. “We’ve got funding requests right across NSW, from roads to psychiatrists to nurses to the railways. I mean, I don’t have any money for casinos, I’m sorry.”