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Gambling titans roll the dice on Star Casino · The Front

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  Speaker 1: From The Australian. Here's what's on the front. I'm Kristinamiot.
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  Speaker 1: It's Tuesday, Marsha eleven, twenty twenty five. US President Donald
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  Speaker 1: Trump unleashed on former Prime Minister Malcolm Turnbull on Monday,
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  Speaker 1: Posting on his Truth social network, Trump said Turnbull was
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  Speaker 1: a weak, ineffective leader who led Australia from behind and
• 0:26
  Speaker 1: who failed to understand what was going on in China.
• 0:30
  Speaker 1: The president's lashing was in response to a TV interview
• 0:33
  Speaker 1: in which Malcolm Turnbull said the US was becoming an
• 0:35
  Speaker 1: increasingly unreliable ally. An energy provider backed by Greenpeace has
• 0:43
  Speaker 1: been accused of misleading and deceptive conduct to the tune
• 0:47
  Speaker 1: of more than one hundred million dollars. An audit of
• 0:50
  Speaker 1: Diamond Energy's operation has raised serious questions over its renewable
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  Speaker 1: energy claims. You can read that exclusive story right now
• 0:58
  Speaker 1: at The Australian dot Com dot com. Star Entertainment has
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  Speaker 1: been saved from failure by not one, but two eleventh
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  Speaker 1: hour takeover bids. The embattled gaming operator has a choice
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  Speaker 1: between a known quantity and an unbidden white night. That's
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  Speaker 1: today's episode.
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  Speaker 2: The first time I went to Bally's in twenty thirteen.
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  Speaker 2: It was a great experience stayed in the Garden Tower then,
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  Speaker 2: and I can remember the rooms being nice and big.
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  Speaker 1: This is a review of the Bally's Atlantic City Hotel
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  Speaker 1: and Casino written on the travel rating website trip Advisor
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  Speaker 1: back in twenty sixteen. We've used an AI voice generator
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  Speaker 1: to bring it to life.
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  Speaker 2: Stark difference now terrible service, terrible management, terrible maintenance or
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  Speaker 2: lack thereof, And I understand the company is being destroyed
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  Speaker 2: by bankruptcy.
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  Speaker 1: In twenty twenty, the iconic casino company Caesar's Entertainment offloaded
• 2:05
  Speaker 1: the embattled New Jersey establishment to another gaming outfit as
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  Speaker 1: part of a package deal with two other casinos. An
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  Speaker 1: Atlantic City casino will have new owners, a new look.
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  Speaker 3: And a new future.
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  Speaker 1: New Jersey gambling regulators gave approval to a Rhode Island
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  Speaker 1: company to operate Bally's casino. The former president and CEO
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  Speaker 1: of Bally's Corporation, George Papania, said he hoped his company
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  Speaker 1: would be able to restore Bally's Atlantic City, at the
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  Speaker 1: time the city's worst performing casino, to its former glory.
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  Speaker 1: Its acquisition was part of a multi year shopping spree
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  Speaker 1: for Bally's, which now operates nineteen casinos across the United
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  Speaker 1: States and has a pretty decent track record of turning
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  Speaker 1: around ailing establishments like the one in Atlantic City. But
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  Speaker 1: on Monday morning, the attention of Bally's bosses was trained
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  Speaker 1: not on America but on Australia. Star Casinos.
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  Speaker 4: But today cave a bombshell in the shape of US
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  Speaker 4: casino operate up bally It launched an unsolicited, non binding
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  Speaker 4: proposal to provide Star with additional funding.
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  Speaker 1: The Star casino is a twenty four hour a day,
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  Speaker 1: seven day a week operation. Its gaming floors rarely close,
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  Speaker 1: but while guests wined, dined, and placed bets on Friday night,
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  Speaker 1: its bosses were fighting for the Star's life. Without an
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  Speaker 1: urgent injection of funds, the gaming company could well have
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  Speaker 1: been in administration by Monday morning, leaving its nine thousand
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  Speaker 1: employees without a job. The fifty three million dollar lifeline
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  Speaker 1: came from Hong Kong investors, Far East Consortium International and
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  Speaker 1: Chow Tai Fook Enterprises. They offered Star the more than
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  Speaker 1: fifty million dollars in cash in exchange for its share
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  Speaker 1: in the brand spanking new Queen's Warf casino.
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  Speaker 5: It's a pretty radical proposal to try and save the company,
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  Speaker 5: which pretty much it was one minute to midnight for Star.
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  Speaker 1: Eric Johnston is an associate editor with The Australian.
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  Speaker 5: This transaction offered an immediate injection of a couple of
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  Speaker 5: million dollars into Star and also what it did it
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  Speaker 5: got Star out of its biggest problem, which was Brisbane.
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  Speaker 5: This was now becoming a real millstone for Star on
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  Speaker 5: its balance sheet. So while it's safe Star, it was
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  Speaker 5: still a bad deal in the sense that Star didn't
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  Speaker 5: have any options left. It had to make this deal,
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  Speaker 5: so in order to survive, it had to get rid
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  Speaker 5: of its most lucrative and asset that offers most upside.
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  Speaker 5: It wasn't a great deal, but Star was running out
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  Speaker 5: of money. It was running out of cash. It had
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  Speaker 5: to sign off and by doing that, it threw its
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  Speaker 5: best asset into the pot, into the mix. In order
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  Speaker 5: to do that, Star has now escaped the future obligations.
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  Speaker 5: So there's still a lot more money and debt sitting
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  Speaker 5: in this Brisbane complex that it was exposed to and
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  Speaker 5: that was a thing that was sinking it fifty three
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  Speaker 5: million to stay alive. Look, when you're in a corner,
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  Speaker 5: and then any lifeline is a lifeline, and Star survived
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  Speaker 5: yet again.
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  Speaker 1: After months of financial negotiations with investors and lenders around
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  Speaker 1: the globe, the Hong Kong deal appeared to be the
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  Speaker 1: best the Star could hope for, but the Queensland government
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  Speaker 1: didn't have time to consider approving it before Bally's swooped in,
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  Speaker 1: led by self described corporate fireman CEO su Kim on
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  Speaker 1: Monday morning.
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  Speaker 5: We all thought it was done in dustin. This is
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  Speaker 5: a story two years in the making and it's had
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  Speaker 5: so many twists and turns every part of the way.
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  Speaker 5: And right on que Monday morning, a year US casino
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  Speaker 5: operator bally It emerged out of nowhere and said, hey,
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  Speaker 5: we've been following staff for a little while. We've done
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  Speaker 5: our own numbers. They sent a letter to Stars chairman
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  Speaker 5: and ward on Monday and said, look, we've got a
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  Speaker 5: rival proposal. Rather than you take all this financing under
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  Speaker 5: your deal that you did on Friday night, we'll off
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  Speaker 5: to tip in some money and work with you. We
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  Speaker 5: want you to be intact, hang on to Brisbane and
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  Speaker 5: we can find a way to move forward. So in
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  Speaker 5: a way that brings Star back to square one. It's
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  Speaker 5: two hundred and fifty million dollars. It's probably not enough
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  Speaker 5: to get Star where it needs to be at this moment.
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  Speaker 1: Why do you think this kind of struggling operation is
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  Speaker 1: attractive to a company like Bali's. This is arguably more
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  Speaker 1: of a gamble for them than the Hong Kong investors
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  Speaker 1: who already have a stake in the Queensland operation.
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  Speaker 5: It offers potential, So for any business operator, You're right,
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  Speaker 5: it is a gamble, but it does offer some upsides. Brisbane,
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  Speaker 5: You've got a brand new casino in one of Australia's
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  Speaker 5: fastest growing cities. This city is going to be hosting
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  Speaker 5: the Olympics at the end of the decade. It's going
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  Speaker 5: to be the center of the world. And here's an
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  Speaker 5: opportunity to get a really big stake in this on
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  Speaker 5: the ground floor at a really beaten down price, really
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  Speaker 5: cheap price. So why not? And what bally is offering
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  Speaker 5: is not much. If Bally's does go ahead, which is
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  Speaker 5: still a long way to go, and we think that
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  Speaker 5: Star would probably push back on it.
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  Speaker 1: Star insiders told the Australians Glen Norris, the big wigs
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  Speaker 1: are leaning towards the Hong Kong investor deal. So what
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  Speaker 1: happens next.
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  Speaker 5: We don't know, because every time we thought we'd come
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  Speaker 5: to a conclusion with Star, it certainly has had the
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  Speaker 5: capacity to surprise and come out with something else. At
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  Speaker 5: this stage, there is a determination by Star to keep
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  Speaker 5: pushing ahead with the deal that are sorted out on
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  Speaker 5: Friday night, so it really wants to get rid of Brisbane.
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  Speaker 5: You can't see a way forward with all this financing obligations.
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  Speaker 5: It fears that the further costs might blow out. It
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  Speaker 5: was budgeted at three billion, it fears it could be
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  Speaker 5: going up to four billion, maybe even more. The initial
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  Speaker 5: activity in Brisbane has just been underwhelming, so it's not
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  Speaker 5: making enough money at the moment to pay even the
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  Speaker 5: interest rate bills that Star has on its obligations are.
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  Speaker 5: It hasn't got final sign off from regulators, although it
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  Speaker 5: has received in principal support from Queensland. There's still a
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  Speaker 5: lot of hoops for it to go through. It's bankers
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  Speaker 5: which are really running the process. They haven't approved so
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  Speaker 5: they might come up with a better deal with Bali.
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  Speaker 5: There's a lot of twists and turns yet to play
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  Speaker 5: out on this one, and I don't think we've seen
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  Speaker 5: the end of it yet.
• 9:01
  Speaker 1: Coming up where Star Casino's money troubles started. Star Entertainment
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  Speaker 1: Group is in the spotlight again tonight with a new
• 9:29
  Speaker 1: inquiry announced to determine if it's suitable to hold a
• 9:32
  Speaker 1: casino license. If you had to pick one, this would
• 9:36
  Speaker 1: probably be the moment things started to go south for
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  Speaker 1: Star Entertainment. In twenty twenty one, the New South Wales
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  Speaker 1: Independent Casino Commission ordered Esteemed Sydney silk Adam Bell to
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  Speaker 1: look under the hood of the company's Sydney operation. Across
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  Speaker 1: two inquiries carried out over several years, he found evidence
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  Speaker 1: of fraud, money laundering, compliance breaches and a company culture
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  Speaker 1: in dire Straits.
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  Speaker 3: Australia's second biggest casino operator, has been found unfit to
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  Speaker 3: hold a casino license in Sydney. The state's Independent Casino Commissioner,
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  Speaker 3: Philip Crawford, called the resulting report shocking.
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  Speaker 4: The institutional arrogance of this company's boonebreadth tychy and their
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  Speaker 4: willingness to take risks of pursuing financial goals as born appalling.
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  Speaker 1: The Star's license was spared at the conclusion of the
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  Speaker 1: second Bell inquiry in twenty twenty four, but it was
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  Speaker 1: slapped with a record fine and a slew of sanctions.
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  Speaker 1: Its former CEO Robbie Cook and chair David Foster left
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  Speaker 1: the company in the fallout. Jobs were slashed and assets
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  Speaker 1: sold off after Star Entertainment posted a staggering one point
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  Speaker 1: seven billion dollar loss. By January, the company had less
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  Speaker 1: than one hundred million dollars in the bank and no
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  Speaker 1: cards left to play. Here's Eric Johnston.
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  Speaker 5: There's an old saying, when you go to casino, there's
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  Speaker 5: no point because the house always wins. How casino lose money?
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  Speaker 5: How could casino be sitting on the brink of administration.
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  Speaker 5: It's a fairly sad story. But Star in itself is
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  Speaker 5: its own worst enemy, as well as the fact that
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  Speaker 5: it's been caught in a perfect storm. It signed off
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  Speaker 5: on this really big, ambitious, three billion dollar Brisbane project.
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  Speaker 5: This was before COVID and this was signed off in
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  Speaker 5: the time when Australian casinos, including Crown which operates in
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  Speaker 5: Melbourne and Perth, were out there encouraging high rollers from
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  Speaker 5: Asia all across Asia, including China, to come to the
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  Speaker 5: casino and gamble big dollars.
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  Speaker 2: It was a really.
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  Speaker 5: Lucrative trade anything meant in the casinos, and since then
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  Speaker 5: there's been a lot of focus on the way that
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  Speaker 5: the casinos behaved or didn't behave, which was trying to
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  Speaker 5: keep the bad elements out of their operations. Star just
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  Speaker 5: has not been able to get ahead. Now it's been
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  Speaker 5: at loggerheads with the New South Wales regulatory as well.
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  Speaker 5: Then what we've seen is that it's drifted off the
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  Speaker 5: track in terms of its finances, and then this Brisbane
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  Speaker 5: issue suddenly turned into a very big and very real issue,
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  Speaker 5: the cost blowouts on the building project. It had to
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  Speaker 5: keep tipping more money in. So there's all this in
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  Speaker 5: New South Wales and we had a move to cashless
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  Speaker 5: gaming and you've just seen activity in Stars Sydney casino
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  Speaker 5: just fall off a cliff. At the same time as
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  Speaker 5: all the pubs and clubs which aren't regulated by cashless gaming,
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  Speaker 5: you've seen their activity starting to boom because everyone's just
• 12:34
  Speaker 5: going across there. Stars having cash flow problems here in Sydney,
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  Speaker 5: it's paying all these bills in Queensland. It can't fix itself.
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  Speaker 5: So suddenly you've seen it in a very bad spot
• 12:47
  Speaker 5: until it's had this cash crunch and now it's in
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  Speaker 5: a really bad spot.
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  Speaker 1: Why does it matter if the Star survives or doesn't survive.
• 12:55
  Speaker 5: It's a good question. It does employ a lot of people,
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  Speaker 5: nine thousand people across two states Southwells and Queensland. There's
• 13:01
  Speaker 5: one hundreds, maybe even thousands of suppliers, just even small
• 13:05
  Speaker 5: local suppliers, restaurants. There's the assets, tourism assets because they
• 13:09
  Speaker 5: operate big hotels, so tourism does rely on these things.
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  Speaker 5: If it did go under, an administrator would just come in.
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  Speaker 5: There is a risk that it might think this business
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  Speaker 5: hasn't got a future, We're just going to shut it down.
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  Speaker 5: They have to look at it really ruthlessly. They might
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  Speaker 5: just carve it up. Then certainly you're going to have
• 13:25
  Speaker 5: all these other new casino operators which have to pass
• 13:29
  Speaker 5: their own probity test. So it does come with a
• 13:32
  Speaker 5: lot of unknowns in terms of administration, but mostly those
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  Speaker 5: nine thousand workers that turn up every day, that's a
• 13:39
  Speaker 5: big sort of risk for them.
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  Speaker 1: Eric Johnston is an associate editor with The Australian. You
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  Speaker 1: can read all the latest on Star Entertainment's future, as
• 13:51
  Speaker 1: well as all the nation's best business news right now
• 13:54
  Speaker 1: at The Australian Dot com dot au,