Sydney (Reuters) -The Australian state of Queensland will investigate whether to allow the country’s second-largest casino operator, Star Entertainment Group Ltd, to retain its gambling licence in light of money laundering concerns, casting doubt on the company’s primary development strategy.
After an investigation in a neighbouring state alleged that Star allowed violations of anti-money laundering measures at its Sydney resort, Queensland announced on Tuesday that it will also evaluate the company’s eligibility for a licence.
If this investigation determines Star to be unfit, the company’s proposal to develop a A$3.6 billion ($2.5 billion) casino complex in central Brisbane in 2023 will certainly be derailed.
A separate investigation into potential violations of anti-money laundering and counter-terrorism laws at the company’s Sydney, New South Wales (NSW) state capital casino has not yet issued its final findings. Star’s Matt Bekier resigned as CEO of Star in March amidst this probe.
The Attorney-General of Queensland, Shannon Fentiman, stated that previously reported investigations into The Star by the state’s police and casino regulator were ongoing, but “an independent expert review will also be conducted into The Star’s eligibility to retain its casino licence.”
Fentiman noted that the state would announce the scope of the review later.
The Star stated that it would “cooperate completely with any review.”
Since media articles in 2019 accused Star’s larger rival Crown Resorts Ltd of extensive misbehaviour, including failing to prevent money laundering by international criminals on its grounds, the Australian casino industry has been under increasing investigation.
Consequently, Crown was deemed ineligible for a licence in the three states in which it operates. It was permitted to continue accepting wagers, under government oversight, in the two states where it already operated casinos, but the 2020 opening of a new resort in Sydney prohibited it from accepting wagers.
The regulator in New South Wales initiated a separate investigation into Star after recent media stories accused the firm of compliance deficiencies, which it rejected.
Star’s profit is largely split between its casinos in Sydney, Brisbane, and the Gold Coast in Queensland.
Tuesday’s closing price for Star stock was 6% lower than the broader market’s fall of 3.8%.
(1 dollar equals 1.4422 Australian dollars).
($1 is equivalent to $1.4353 Australian dollars)