The Star Entertainment Group (SGR) and its shareholders are bracing themselves for a $100 million fine for bad behaviour but will this be a buy sign for speculators? Why? Well, the punishment for what the NSW Independent Casino Commission (NICC) saw as “shocking” could have been a lot worse!

In September, the Bell Inquiry concluded that SGR was unsuitable to hold a licence for its Sydney casino. The inquiry heard allegations of money laundering, organised crime links and fraud at the Pyrmont-based casino.
Now a report from the NICC’s Phil Crawford exonerates most of Star’s staff but points the finger of blame at the board and its top management team.

“The report is, quite frankly, shocking. It provides evidence of an extensive compliance breakdown in key areas of The Star's business,” Mr Crawford said. “Not only were huge amounts of money disguised by the casino as hotel expenses, but vast sums of cash evaded anti-money laundering protocols in numerous situations, most alarmingly through Salon 95 — the secret room with a second cash cage.”

The business was happy to ply gamblers with alcohol, allow vulnerable gamblers to punt for 24 hours, showing no regard for the implications on these customers.

The new leadership at Star said it has taken “significant and urgent remedial steps”, including ceasing junkets and upgrading surveillance and has developed a comprehensive multi-year plan.
To be released today, this report coincides with the start of new CEO Robbie Cooke, who previously was the boss of Tyro Payments. “The business had lost its way in a number of areas, but I’m committed to rehabilitating it and restoring the group to suitability [to hold its casino licences],” Cooke told the SMH.

This fine being the maximum (and $20 million more than what Crown Resorts was forced to pay for similar bad behaviour in Victoria) is big but it’s better for shareholders than seeing the business lose its licence or forced to sell the company to private equity.

Interestingly, the analysts on FNArena expect an average 31% rise for the stock ahead but two out of five analysts see 40% plus rises.
I wonder if this fine, and the new rules the business will have to submit to, will change these forecasted share price rises? The stock market is expected to dive today because of continuing bad inflation news out of the US but if Star’s share price rises, it will be a sign that the company has got off lightly!