Star’s Future in Doubt Again as AUSTRAC Seeks AU$400 Million Penalty
Earlier this year, Star Entertainment’s buyout deal sparked hopes of a turnaround. But those hopes may be short-lived as the embattled Australian casino operator now faces a massive AU$400 million fine from the country’s financial crimes watchdog.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has launched civil proceedings in federal court, raising serious concerns once more about Star’s long-term viability. The case is part of a sweeping investigation into alleged anti-money laundering (AML) breaches dating back several years.
Systemic Failures and Junket Dealings
AUSTRAC’s allegations stem from a lengthy investigation that began in 2021 and led to formal proceedings in 2022. Star is accused of numerous AML violations — including poor reporting protocols, a lack of risk-based controls, and managerial oversight failures.
A central figure in the case is the notorious Chinese-linked junket operator, Suncity Group, led by former chairman Alvin Chau. Chau, who is now serving an 18-year prison sentence in Macau for illegal gambling, was found to have facilitated undeclared bets totaling more than HK$8.25 billion (US$1 billion) — although he was acquitted of money laundering charges.
AU$70 Million Weekly Turnover and AU$400 Million Fine
According to the Australian Financial Review, AUSTRAC claimed that from 2016 to 2020, Suncity junkets generated over AU$70 million in weekly turnover at Star Sydney alone. While not approved in Queensland, Suncity operated 180 junkets for associated clients, contributing to more than $125 billion spent by international visitors at Star properties during the review period.
The regulator is now pushing for a AU$400 million penalty, slightly less than the AU$450 million levied on Crown Resorts in 2023. Star, which has teetered on the edge of collapse for nearly two years, has warned that even a AU$100 million fine could jeopardize its survival.
Closed-Door Proceedings and Risky Clients
The case took a dramatic turn as the court moved behind closed doors to allow the cross-examination of Star’s CFO, Frank Krile, who joined the company in December from Lendlease.
Among the key findings in AUSTRAC’s filing is that Star knowingly dealt with Suncity despite serious red flags. It allegedly identified one of the key funders—referred to as “customer one”—as having links to organized crime as early as 2016. Yet, Star continued its relationship with Suncity until Chau’s arrest in 2021.
Between 2018 and 2021, at least AU$1 billion in funds passed through junkets considered to pose high AML risks, according to Star’s own admissions.
“Appropriate risk-based controls were not in place… to understand the sources of money… or whether there was a risk that money was illicit,” the court documents stated.
Ongoing State-Level Issues
While the federal proceedings highlight national concerns, they also echo findings from various state-level inquiries that have rocked the company in recent years. Both of Star’s current casino licences are suspended, and its venues are being managed by external administrator Nicolas Weeks.
In New South Wales, Star Sydney has twice been declared unfit to hold a licence, with the most recent review in March extending the licence suspension until 30 September 2025. In Queensland, a 90-day suspension has been pending since 2022, also set to begin after the September deadline.
Star tried to stabilize its finances by divesting from the Brisbane-based Queen’s Wharf development, selling its 50% stake back to partners Chow Tai Fook and Far East Consortium. Simultaneously, it consolidated ownership of Star Gold Coast, which it considers a more sustainable asset.
Bally’s Takeover Faces Uncertainty
Complicating matters further is the April agreement between Star and US-based Bally’s Corporation and Australian billionaire Bruce Mathieson, who collectively proposed a AU$300 million takeover deal.
In January, Star warned it was burning through cash and urgently needed a capital injection. The Bally’s-Mathieson deal brought temporary relief, including a $100 million upfront payment, with a shareholder vote on the remaining $200 million scheduled for June 25.
However, Bally’s financial health has raised doubts. In Q1, the company had only $209 million in cash and carried a debt load of $3.5 billion while juggling major casino developments in Chicago, Las Vegas, and a bid for a New York licence.
A penalty of AU$400 million could pose a serious threat to the viability of the takeover — or demand further capital infusions that Bally’s may not be able to support.
Bleak Outlook for Star
As of publication, Star stock was trading at just AU$0.11, down more than 75% over the past year. The combination of mounting federal fines, licence suspensions, state investigations, and financial instability leaves the company’s future more uncertain than ever.
If AUSTRAC’s proposed penalty goes through, Star’s hopes for a successful rebound under new ownership may be nothing more than wishful thinking.