The Star Entertainment Group Ltd (ASX: SGR) share price is under increased scrutiny following the release of final submissions to an ongoing inquiry into the company's operations. The casino operator's shares have fallen to 57 cents, marking a nearly 2% decline for the day, amidst concerns about its casino licence.
Licence Concerns and Recommendations Despite a nearly 16% increase in share price over the past month, recent uncertainty has emerged for ASX consumer stock Star Entertainment Group due to a confidential submission to The Bell Inquiry, which has reportedly suggested that The Star should not hold a casino licence.
The NSW Independent Casino Commission (NICC) had appointed Adam Bell SC in 2021 to review the Sydney Casino and the Star Group. Following the suspension of Star’s licence in 2022, an external manager was appointed to oversee the company. The Bell Inquiry, established in February this year, was tasked with determining whether the casino should be allowed to regain its licence.
Lead counsel Caspar Conde's 100-page submission, as reported, includes findings of significant breaches in internal control manuals. Issues highlighted include a software error resulting in a $3 million payout and accounting failures in areas handling cash for high-stakes gamblers. The submission reportedly recommends that Star Casino should not be permitted to hold a casino licence and suggests extending the appointment of the external manager indefinitely until substantial improvements are demonstrated.
Conde's submission indicates that it is unlikely the inquiry will find Star suitable for licence reinstatement in the near future. Although breaches of internal controls were identified, there was limited evidence of violations of NSW casino laws.
Star's Response In response, Star Entertainment has stated it is unaware of the details of the Bell inquiry's recommendations. The company has noted that the report prepared by Adam Bell SC has not been publicly released, and they have not received a copy or been briefed on its contents. Additionally, the company’s Chief Risk Officer resigned on Wednesday, though no direct link to the current events has been established.
Share Price Momentum Prior to the latest developments, Star Casino shares had experienced a rally, fueled by speculation about potential takeover discussions and anticipation of the Bell inquiry's findings. The company faces a challenging path to regaining its licence and restoring investor confidence, with significant changes and stringent regulatory adherence required. The inquiry's submission highlighted that Star is "only six months down a transformational path," suggesting a lengthy process that could span three to five years.
As the company navigates these issues, it remains at a critical juncture in its efforts to address regulatory concerns and rebuild its standing in the industry.