The Federal Court is due to decide this week how large a penalty Star Entertainment should pay over repeated anti-money-laundering breaches, with the casino operator saying a prospective fine could pose an existential threat to its business.
Justice Cameron Moore is scheduled to deliver judgment on Wednesday morning, the day after Star’s annual meeting in Sydney. The case concerns misconduct that led to the suspension of Star’s casino licences in New South Wales and Queensland.
Star told investors that AUSTRAC had submitted that a $400 million penalty was appropriate. The company argued that any penalty above $100 million, if payable within 12 months of the hearing, would be difficult to absorb through its available liquidity options, including raising money in equity markets.
The difference between the positions is particularly significant for a business rescued from financial collapse last year through a $300 million package led by Bruce Mathieson Jnr and Bally’s. Bally’s took control of Star’s casino business, while the Mathieson family contributed $100 million and acquired a significant stake.
AUSTRAC’s underlying civil-penalty proceedings named The Star Pty Limited and The Star Entertainment QLD Limited, alleging serious and systemic failures to comply with anti-money-laundering and counter-terrorism-financing laws. Its investigation into The Star Pty began in June 2021, following an industry-wide compliance campaign launched in September 2019, and expanded in January 2022 to Star’s Queensland business and other group entities.
The regulator alleged poor governance, inadequate risk management, failures to maintain a compliant AML/CTF programme and inadequate ongoing customer due diligence over several years. It said the alleged control failures left Star vulnerable to criminal exploitation and exposed financial systems to money-laundering and terrorism-financing risks.
The case sits alongside Star’s unresolved licensing problems. New South Wales suspended The Star’s casino licence indefinitely in October 2022 after the Bell Review assessed its suitability to hold a licence and compliance with legal obligations. The NSW Independent Casino Commission also imposed a $100 million fine and appointed Nicholas Weeks as manager.
The commission has since said Star made substantial progress in addressing the matters behind the 2022 suspension, while warning that more recent allegations about governance, leadership and culture remained serious. In September, NSW extended the suspension of The Star Sydney’s licence to June 2027, as previously reported.
Star’s regulatory crisis began after 2021 investigations by The Age, The Sydney Morning Herald and 60 Minutes alleged the company had enabled suspected money laundering, organised crime, large-scale fraud and foreign interference in its casinos despite warnings about failing controls. Subsequent inquiries brought licence action, AUSTRAC litigation, falling gambling revenue and higher regulatory costs.
