Summary
- Concerns are growing in NSW about the future of Bally's takeover of Star.
- The regulator has doubts about whether Bally's has what it takes to successfully operate a casino.
- Bally’s has openly questioned its ability to move forward with the deal if faced with a hefty financial penalty.
Star Entertainment Group is navigating through challenging times. Just when they thought relief was within reach, Bally's and Bruce Mathieson's Investment Holdings Pty Ltd stepped in, offering a potential lifeline with a deal valued between AU$250 million and AU$300 million.
AFR sources cite regulatory hostility towards Bally’s rescue package
Shortly after, Bally's expressed concerns that the deal might collapse if it couldn't sustain its profitability. Now, as reported by the Australian Financial Review, a fresh challenge looms—not from Bally's internal issues but from the NSW Independent Casino Commission. Chairman Philip Crawford reportedly voiced serious doubts about the current leadership at Star Entertainment, expressing that he was far from satisfied. The underlying worry for the NSW Commission is clear: they're not convinced that a bailout under the current leadership will steer Star Entertainment Group back to stability, both in profitability and in preventing future mismanagement. Despite some leadership changes, including the appointment of Group CEO and Managing Director Steve McCann who has inspired some confidence, it seems that additional efforts may still be needed. Surprisingly, Chairman Crawford's skepticism isn't just about Star Entertainment. He also questions Bally's ability to manage a casino license effectively. The Australian Financial Review states that the regulator's Chairman has grave reservations about Bally's capabilities. The commission demands clear and convincing evidence to ensure the company can competently operate a casino. The commission plans to scrutinize Star’s financial standing and will require Bally's to present its strategic vision for Star, including potential leadership changes and the financial management strategies they plan to employ.
Bally’s has the track record to turn Star’s fortunes around – but can it prove it?
The comments are indeed unexpected, especially as Bally’s Chairman Soo Kim has restated the company's dedication to repairing its relationship with Star Entertainment. Bally’s is eager to leverage its experience in revitalizing struggling gambling properties and turning them into successes. Bally’s Corporation has shown time and again its knack for rescuing distressed assets and transforming them into profitable ventures. Yet, as AUSTRAC, the financial oversight agency, prepares to levy a potentially hefty fine on Star Entertainment—possibly surpassing the one Crown Resorts faced—Bally’s might reconsider its involvement. If such a penalty materializes, Bally’s could decide to withdraw from the partnership, concerned that its investment would be spent on covering liabilities instead of fostering a promising future for Star Entertainment Group.
