Star Entertainment cops ‘first strike’, incurs $27m loss in four months under new responsible gaming rules

Struggling casino operator The Star Entertainment Group has warned it is facing a “critical” liquidity challenge as it tries to stem major revenue losses flowing from the introduction of mandatory carded play and cash limits.

The warning came as shareholders at Star’s annual general meeting in Brisbane on Thursday protested the company’s dire year by delivering a “first strike” against its remuneration report.

The company, which has casinos in Sydney, Brisbane and the Gold Coast, disclosed an unaudited loss of $28 million before interest, tax, depreciation and amortisation for the first four months of the year, including $8m loss in October.

“We are at a critical point in our liquidity, with the business currently experiencing material negative cashflow on a monthly basis,” new chief executive Steve McCann told the meeting, citing a “significant” decline in revenue.

“This is attributable to the on going challenging consumer environment and changes in business practices which continue to weigh heavily on gaming, particularly in the premium player segment,” he said.

“Revenue has continued to decline significantly, while the costs of our transformation and the external advice and assistance we have required have continued to be at inflated levels.”

Mr McCann said the implementation in mid-August of legislated responsible gaming reforms in NSW, notably the introduction of mandatory playing cards for poker machines and $5000 cash limit, had slashed daily average revnue by 15.5 per cent.

The former Lend Lease boss appealed for patience from shareholders as he seeks to turn around the group while pushing home a cultural revamp and a remediation program imposed on Star in the wake of damning regulatory findings about its governance and management.

Last month, Mr McCann secured a $200m, two-tranche bailout from lenders to prevent a possible collapse of Star.

However, the company’s poor trading performance potentially it makes it more difficult to secure the $150m of additional external funding needed to trigger the payment of the second $100m tranche of the $200m loan.

“We have a difficult road ahead and the Star remains in an extremely challenging position,” Mr McCann told shareholders.

“To gain continued access to funding ... we need to turn around the trading performance of this business.”

In 2022, the NSW Independent Casino Commission fined Star $100m and suspended its Sydney casino licence after finding it failed to prevent money laundering and criminal activities.

A second review of Star earlier this year that found ongoing compliance breaches and concerns about management resulted in an additional $15m fine and cost the jobs of Star chairman David Foster and chief executive Robbie Cooke. It also gave Star until March 31 next year to prove its suitability to retain its licence.