The Australian casino industry is in chaos as allegations of poor anti-money laundering controls spread from Crown to its major competitor, Star Entertainment, and it’s an escalation that could jeopardise any merger between the two gambling giants.
Star’s share price dived almost 20 per cent soon after the market opened on Monday, reflecting investor concerns about its licence and the risk that it could be unable to play kingmaker in the consolidation of the casino market in Australia.
The Star in Sydney: Allegations against the group mirror those levelled at its rival, Crown Resorts.Credit:Louise Kennerley
The casino operator had previously proposed making an offer (mostly scrip) for Crown — one which had been withdrawn pending the outcome of the Victorian royal commission into Crown, which will decide the future of the James Packer-backed group.
To make financial sense of that strategy Star would need a strong share price and a clean image. So, it comes as no surprise that Crown’s share price responded negatively to questions about Star’s probity.
A damning report by Nine Entertainment media outlets, which will bring further scrutiny on Star from AUSTRAC and the NSW gaming regulator, comes only days before the report from Victoria’s royal commission on Crown is handed to the state government.
The report is expected to find Crown unsuitable to hold a licence in Victoria, but it remains to be seen whether the license is revoked.
The best-case scenario for Crown is that it becomes subject to stricter regulatory controls and/or is granted a provisional licence until it completes an overhaul of its practices, including those concerned with responsible gaming and money laundering.
The fresh allegations made by Nine that Star had courted questionable clients and junket operators mirror the criticisms made of Crown – many of which have been confirmed during NSW’s commission of inquiry and Victoria’s royal commission into Crown.
Over the past 18 months, Star has taken the high ground as a cleaner skin than Crown in relation to anti-money laundering, watching from the wings as its rival was eviscerated by the evidence produced by the damning public inquiries.
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