NSW authorities expressing apprehension over Bally's acquisition of The Star
The Star Entertainment Group, an Australian casino giant, is facing a new hurdle in its bailout deal with Bally's Corporation and Bruce Mathieson's Investment Holdings Pty Ltd. The NSW Independent Casino Commission, the regulatory body overseeing the casino industry in New South Wales, has reportedly expressed concerns about the deal.
The Commission is reportedly not convinced that a bailout deal with the current leadership would create the conditions for Star Entertainment Group to return to profitability and avoid future mismanagement. Bally's Corporation, on the other hand, has raised concerns that the deal could fall through if the company fails to maintain profitability.
The Commission's demand for evidence from Bally's is surprising, given the company's track record in turning around distressed assets. Bally's Corporation, known for its ability to transform distressed assets into winners, has not yet provided "clear and convincing evidence" to the NSW Independent Casino Commission that it can run a casino floor.
The regulator's examination of Star's financial circumstances and its demand for Bally's to outline its plans for the Star, including any changes in leadership and plans for the financial management of the business, underscores the Commission's concerns.
The potential fine imposed by AUSTRAC, the financial watchdog, could potentially impact Bally's Corporation's decision to proceed with the bailout deal for Star Entertainment Group. The fine could rival or exceed the fine imposed on rival Crown Resorts, adding to the financial pressure on Bally's.
The Chairman of Bally's Corporation, Soo Kim, has reaffirmed the company's commitment to making things right with Star Entertainment. Steve McCann has been appointed as Group CEO and Managing Director of Star Entertainment, signalling a change in leadership.
The NSW Independent Casino Commission Chairman, Philip Crawford, is reportedly "far from satisfied" with the current leadership in Star Entertainment. The Commission's doubts about Bally's ability to operate a casino license for the Star Entertainment Group are likely rooted in concerns around regulatory compliance, financial capability, or integrity issues.
As the situation develops, it will be interesting to see how Bally's addresses the Commission's concerns and whether the deal will proceed as planned.
The NSW Independent Casino Commission's concerns about the bailout deal might not be alleviated if Bally's Corporation fails to provide "clear and convincing evidence" of their ability to run a casino floor, given the industry's stringent regulations and financial scrutiny. The gambling business and finance of the Star Entertainment Group could experience a significant shift with the potential change in leadership and Bally's plans for the business, which the Commission is demanding to be outlined.
