Star Entertainment Group, a leading Australian Casino group, is facing mounting financial troubles as new gambling restrictions contribute to a sharp decline in revenue. At its recent Annual General Meeting, CEO Steve McCann revealed that daily gambling revenue at Star's Sydney casino had dropped by 15.5% following the introduction of carded play requirements and AUD5,000 cash limits. The measures, first implemented in August and extended to the entire gaming floor in October, have added to the company’s liquidity challenges.
McCann reported an underlying loss of AUD27 million for the first four months of fiscal 2025 and described the company's financial position as precarious, citing “material negative cashflow” and critical liquidity concerns. Star’s leadership, including Chair Anne Ward, outlined measures to stabilise the business, such as cost-cutting initiatives, asset sales, and securing additional funding.
This follows Star Entertainment Group's staggering statutory loss of AUD1.69 billion for the fiscal year ending June 30, 2024, largely attributed to non-cash impairment charges and challenging trading conditions.
Regulatory and Financial Challenges
Star's troubles extend beyond its financial performance. The company remains under regulatory scrutiny following inquiries into its compliance failures, including anti-money laundering breaches. In New South Wales, Star’s casino licence remains suspended, with operations overseen by an appointed manager.
Further complicating the company’s outlook, AUSTRAC, Australia’s anti-money laundering regulator, is preparing to issue a fine that could reach hundreds of millions of dollars. Meanwhile, Star faces additional financial pressure from a $360 million budget blowout at its Brisbane casino and the need to service $1.3 billion in debt.
Star recently secured AUD200 million in debt funding at a steep 13.5% interest rate, contingent on meeting strict conditions. To unlock the second tranche of funding, the company must also raise an additional AUD150 million from investors. Analysts suggest that even with planned asset sales expected to generate AUD300 million, Star may need an additional AUD400 million to remain solvent.
Investor Confidence Wanes
The challenges have shaken investor confidence. Long-time shareholder Perpetual offloaded most of its shares in November, driving Star’s stock price to a record low of 20 cents. Analysts warn that the company's reliance on declining revenues, high borrowing costs, and increasing operational expenses puts it in a precarious position.
Macquarie Equities analysts have speculated that Star may need to sell assets at “fair and reasonable prices” to stabilise its finances. However, the company’s leadership remains cautiously optimistic, emphasising progress in regulatory compliance and ongoing efforts to recalibrate its revenue model.
Outlook Remains Uncertain
Despite Star’s efforts to navigate these challenges, its future remains uncertain. The company must balance its financial recovery with meeting stringent regulatory requirements, rebuilding investor trust, and maintaining operational stability. As McCann noted during the AGM, understanding the long-term impact of recent gambling restrictions will be critical to shaping Star’s revised business model across gaming and non-gaming sectors.
For now, Star Entertainment’s road to recovery hinges on successful asset sales, securing additional funding, and stabilising its revenue streams amid ongoing financial and regulatory pressures.
