Star Entertainment will survive the storm as regulator pulls it punches

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Over the last decade, the large casino companies in Australia have been masters at rebranding their businesses as “integrated casinos” – holistic entertainment establishments with hotels, restaurants, theatres, retail shops and convention centres – rather than enormous barns full of gaming machines for mass-market players and a series of suites for VIP players.

The regulator has been disingenuous in mislabelling big casinos as part of the state’s tourism infrastructure.

Casinos are not roads, schools or hospitals. What the casino inquiries, undertaken over the past couple of years, have demonstrated is that the casinos have been a vital part of the infrastructure for organised crime.

The Bell review into Star delivered a damning picture of the casino, which had allowed itself to be infiltrated by organised crime gangs, avoided regulatory rules and deliberately misled the regulator and its bankers over the “inherently deceptive and unethical process” of the China UnionPay card. Additionally, it allowed junket operator Suncity to do business at the casino despite allegations of criminality.

This litany of misconduct and regulatory non-compliance was uncovered by this masthead. So profound were the abuses uncovered that regulators in NSW and Queensland had little choice but to undertake royal commission-style public inquiries into Star.

The earlier exposé on Crown prompted the Victorian and NSW regulators to take similar measures. But despite the public inquiries, the regulators and the state governments can hardly take credit for cleaning up the casino industry.

The second reason given for Star’s licence reprieve is that its chairman, Ben Heap, has apologised and “acknowledged the serious wrongdoing that has occurred”.

Phil Crawford, chief commissioner of the NSW Independent Casino Commission, says Star shows genuine contrition.

Chairman of the NSW Independent Casino Commission Phil Crawford said the current board understood the gravity of the Bell inquiry findings and had demonstrated a change in attitude.

I am not suggesting that Heap and the new board would have sanctioned the previous goings-on inside Star, but they would have been acutely aware that a plea deal, involving admitting to previous misconduct and an apology, was a better course of action than mounting an argument.

The good news for Star is that the sweeping regulatory and operational changes, a clean-skin management and a refreshed board, should help with its rehabilitation process.

The $100 million fine may not be the end of the financial penalties that Star will face. AUSTRAC has already initiated a civil action against Crown, and Star shareholders would be bracing for a similar action.

But despite copping a hefty financial penalty, Star has managed to avert an existential crisis.

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