Australian Land-Based Casinos Hit Hard – Losses Due to Fines and Regulatory Action

Hefty Casino Losses: Australian land-based casinos hit hard with financial penalties and regulatory charges. (Image courtesy of Towfiqu barbhuiya at pexels.com )

If you’ve been keeping a close eye on the Australian land-based casino scene over the past few years, you’ll know that it’s been a wild ride for the industry. With allegations of money laundering, fraud, and links to organized crime swirling around both Crown Resorts and The Star Entertainment Group, the scandal has rocked the gambling world to its core.

But the drama doesn’t stop there. Two recent updates have revealed the extent of the damage caused by regulatory fines and other fallout from the investigations, with both companies taking massive hits to their bottom lines.

The Star Entertainment Group just reported first-half losses of a whopping AU$1.26 billion for 2023, while Crown Resorts isn’t far behind with losses of AU$1 billion for 2022. The stakes have never been higher in the world of Australian gambling, and it looks like the drama is far from over.

Star Entertainment Group Hit for AU$1.26B Following Money Laundering Investigation

After a year of significant losses and fines, The Star Entertainment Group has become the first Australian land-based operator in the post-pandemic era to announce losses for the first half of the 2023 fiscal year.

According to recent reports filed with the Australian Securities Exchange (ASX), the company’s half-yearly results show a staggering AU$1.26 billion loss for the period, a sharp increase from the AU$74 million losses posted during the same period in 2022. Of these losses, nearly AU$1 billion has been attributed to hefty fines, regulatory changes, taxes, and one-off costs associated with ongoing reviews and the development of new systems to prevent future problems.

In other The Star Entertainment News: In a bid to repair its reputation and win back the confidence of stakeholders and regulators, the company has appointed Scott Saunders as its new Chief Risk Officer. Although Saunders has already begun his role, his appointment is still subject to regulatory approval.

The Star Entertainment Group received AU$350 million in fines following breaches of anti-money laundering, fraud, and criminal activity at its land-based casinos in New South Wales and Queensland. The company has also had to fight to retain its licenses in the states. The Star lost its license in NSW but is still currently allowed to operate on the proviso that a new manager was installed at its Sydney Casino. As for its Queensland licensing, the company was given a year to demonstrate why it should not be suspended following a fine in 2022.

Revenue at its Sydney Casino has also been poor. It is down 14% compared to pre-pandemic levels. The company cites reasons for this, including restrictions under Sydney’s Casino Control Act and the opening of a rival casino, Crown Sydney.

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Crown Resorts Suffers Close to AU$1 Billion for 2022 Fiscal Year

Regulatory issues and financial penalties has hit hard the Australian gambling industry, affecting not only The Star Entertainment Group but also Crown Resorts. In the 2022 financial year, the latter posted an eye-watering net loss of AU$945.4 million, attributed to pandemic-related restrictions, compliance costs, and significant financial penalties due to anti-money laundering and fraud failures.

Despite an overall increase in revenue across all casinos, the company’s EBITDA dropped to a loss of AU$699.6 million. Crown Melbourne saw a substantial increase in revenue from AU$567.5 million to AU$923.8 million, while Crown Perth experienced a slight decrease to AU$731.1 million from AU$740.9 million. Unfortunately, Crown Sydney, the other Crown Resorts-owned casino, was closed throughout the year.

The major contributor to the losses in 2022 was the regulatory costs of AU$617.2 million, including financial penalties, legal costs, and investments in improving compliance systems. In fact, Crown Resorts received a record-breaking AU$120 million fine for responsible gambling failures at its Melbourne Casino, bringing the total penalties in the Victorian state to AU$200 million for the year.

Like The Star Entertainment Group, Crown Resorts is taking measures to restore its casinos’ reputation. Although it will be an uphill battle, if the company can prevent similar regulatory failures in the future, there may be a glimmer of hope for a brighter future.

Crown Resorts has since opened a new casino in Sydney. However, the company had to overhaul its board, management, and all procedures before a conditional license was approved for the Barangaroo Casino in Sydney.