Star Entertainment Posts Deeper-Than-Expected Loss as AML Costs and Regulatory Pressure Mount

Australia's troubled casino operator Star Entertainment has reported a significantly larger-than-expected first-half loss, as costs tied to anti-money laundering (AML) remediation efforts continue to strain the company’s finances, despite a recent rescue plan now in motion.

The casino group, which has been at the center of multiple regulatory investigations into potential breaches of AML and counter-terrorism financing laws, revealed on Tuesday a net loss of A$302 million (US$191.92 million) for the six months ending December 31. The results, disclosed in a filing to the Australian Securities Exchange (ASX), also showed a revenue slump of A$216 million, bringing the half-year total to A$650 million.

Star's shares, which have been suspended from trading since February due to the company’s failure to submit its financial results on time, are set to resume trading on Wednesday.

CEO Steve McCann addressed the dire financial situation during an investor call, attributing the company’s worsening performance to a tough market environment. “Clearly our performance continues to be very challenged as we navigate through a very difficult trading environment, we have been working very hard on establishing additional liquidity to allow the company to continue trading through,” McCann said.

The decline has been exacerbated by regulatory changes, particularly in New South Wales, where new laws now prohibit the use of cash in casinos to combat money laundering — a measure not extended to pubs and clubs. McCann said the change had a major impact on Star’s earnings. “The ongoing impact of regulatory reforms … and our loss of market share across the Sydney and Gold Coast properties has had a material impact on the business and we are continuing to operating in very challenging conditions,” he said.

Just last week, Star secured an A$300 million rescue deal with U.S.-based casino group Bally’s and the Mathieson family, one of the company's major shareholders. The refinancing proposal comes after a previous loan arrangement with Salter Brothers Capital collapsed earlier this month.

As part of the agreement, Bally’s is poised to take control of 56.7% of Star, pending shareholder approval. A vote is scheduled for June, and Star’s board has recommended that investors back the deal, provided no better offer emerges. Bally’s Chairman Soo Kim told Reuters on Monday that the company took the opportunity to step in as Star began liquidating assets to stay afloat.

Star also reported continued revenue declines into the third quarter, citing reduced gaming patronage and severe weather conditions. Its Sydney casino posted an 8% revenue drop compared to the second quarter, while the Gold Coast operation suffered from a five-day closure due to Cyclone Alfred. The cyclone is expected to have impacted EBITDA by roughly A$3 million.

Since 2021, Star has been under intense scrutiny, facing multiple governmental probes related to suspected violations of AML and counter-terrorism regulations — an ongoing saga that continues to overshadow the company’s financial recovery efforts.

By fLEXI tEAM