Markets react positively
A consortium led by Hard Rock International has expressed interest in acquiring struggling Australian casino company Star Entertainment. According to Australian Financial Review, Star’s Board of Directors has received the group’s proposal, though no official offer announcement has been made.
Hard Rock would rebrand Star and separate the casinos from the company. The venues would begin to focus more on non-gaming revenue streams like dining and entertainment. That’s not to say that places like Star Sydney wouldn’t still be gambling destinations, but that Hard Rock would aim to make the properties less depended on gambling revenue.
Star Entertainment has been in a world of hurt recently, with shares falling below AUD$0.40 last month, a 52-week low. The news of the interest from Hard Rock gave Star’s stock price a sizeable boost, launching it up 20% to AUD$0.54 on Monday.
Horribly run organization
In 2022, inquiries in both Queensland and New South Wales determined that Star was unsuitable to hold a gaming license in the respective states. Its casinos are still operational, but the specter of a shutdown continues to loom if the company does not fix its problems.
And it has yet to do so. Among a litany of issues, evidence just came out in April that the company flat-out ignored operational and customer protection problems. Nicholas Weeks, who was appointed by the NSW Independent Casino Commission to be Star’s special manager, testified that Star ignored a faulty ticket cashout machine to the point where it lost AUD$3.2 million over the course of six weeks last year. During that time, customers were able to reuse tickets to continually withdraw money. Even after becoming aware of the problem, the company did not fix the machine for two months.
In addition, staff at Star Sydney failed to conduct welfare checks on customers who were playing slot machines for more than three hours. This happened so often (or didn’t happen, depending on how you look at it) that another investigation was launched into Star’s other casinos. And on top of that, staff not only ignored welfare checks, but they also falsified documentation to make it look like the checks had been conducted. Thus, they were well aware that they were supposed to be done, but just didn’t care.
As the Australian Financial Review wrote, the first report from the 2022 inquiry said that “Star was unsuitable to hold its license, describing its operations as ‘a case study of unethical conduct and cultural failure’ that may have evaded taxes and facilitated $900 million of banned gambling transactions.”
The company still has a chance to turn things around, though it’s now possible that it could be under control of another entity altogether.
Image credit: Flickr.com / Lenny K Photography
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