Management at Australian casino operator Star Entertainment Group Ltd says the company has not been approached by the New South Wales Independent Liquor and Gaming Authority (ILGA) regarding an investigation into junket operators and their links to the country’s gaming industry.
The ILGA announced last week that it was launching an investigation to probe the “change in state of affairs” of Australian casino operator Crown Resorts Ltd, “together with various matters raised in recent media reports” published by the Nine Network, the Sydney Morning Herald and the Melbourne Age relating to the gaming firm.
The accounts carried in Australian media since late July alleged Crown Resorts’ Australian casino business had been a conduit for money laundering and Chinese organised crime activities via high-roller gambling, linked to junket operators. Crown Resorts has denied any misconduct on its part and said it would “fully cooperate” in any inquiry.
The probe includes the US$1.2-billion bid from Melco Resorts and Entertainment Ltd to acquire a 19.99-percent stake in Crown Resorts. Melco Resorts said in a statement to GGRAsia last week that it would “participate in any probity review process and cooperate with any inquiry” conducted by Australian authorities.
On a conference call with analysts following the firm’s full-year results announcement on Friday, Star Entertainment’s chief executive Matt Bekier said: “As we understand it, the inquiry [by ILGA] is not set up as an industry-wide inquiry; it’s focused on Crown.”
He added: “We haven’t been contacted or approached by ILGA on that matter.”
The management of Star Entertainment explained on the conference call that the company operates “under two regimes” regarding its junket partners.
“In New South Wales, we have the delegations from ILGA to approve junkets under strict conditions that have provided operating procedures, and ILGA has visibility over that and monitors the compliance with those conditions. In Queensland, the regulator licenses junkets,” said the executive.
Star Entertainment owns and operates The Star Sydney casino hotel (pictured) in New South Wales, and two other gaming venues in the state of Queensland, the Star Gold Coast and the Treasury Casino and Hotel Brisbane.
The Australian Criminal Intelligence Commission, the country’s criminal intelligence body, has also announced a special investigation of gambling junket operators from overseas that partner with casino operators in Australia, looking at whether there are risks such business could be compromised by criminals.
SkyCity Entertainment Group Ltd, which also has a presence in the Australian casino market, has voiced concern that revenue from VIP gamblers may be negatively impacted by the announced official investigations in that country.
A report on Wednesday in the online edition of the Sydney Morning Herald quoted SkyCity Entertainment’s CEO Graeme Stephens as saying: “We’re not quite sure what’s going to happen in the world of junkets… it’s difficult to ignore the media and related responses in the case of Crown over the last few weeks.”
The outlook for Australian casinos’ VIP business has become difficult to predict. On Friday’s conference call Star Entertainment’s management said high-roller volumes were encouraging at the start of the new fiscal year but warned that the VIP business segment remained “volatile”.
On Friday, Star Entertainment said its turnover from foreign high rollers was nearly AUD42.4 billion (US$28.8 billion) for the 12 months to June 30, 30.7 percent less than in the prior-year period. International VIP revenue for the period was down 17.6 percent, to AUD586.0 million, said the company in a filing to the Australian Securities Exchange.
Star Entertainment’s reported net profit for the year to June 30 was nonetheless AUD198.0 million, up 33.7 percent compared to AUD148.1 million in the previous year.
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Credit rating agency Fitch Ratings