Aussie Casino Operator Forced to Raise Emergency Capital

That scandal was kicked off in 2021 by a report released by Australian media. It claimed the group had been given a warning that their anti-money laundering regulations were inadequate. Further, the report went on to claim that there were attempts made by management at Star to bring high rollers into the fold without vetting. It was also suggested that some were potentially connected with organised crime. The group would immediately release a response in which they described the reports as misleading. That was too late and the no-smoke-without-fire effect ensured that the damage was done. A number of shareholders began legal action and, most importantly, regulators in a number of Australian jurisdictions began investigations into the group’s conduct. This brings us to where we are today.

Star Entertainment Not Fit for Purpose

Following those investigations, in late 2022, the group was found by Sydney regulators to be unfit to hold casino licenses. This was a decision that sent shockwaves through the Australian casino world. The finding meant that they would have 14 days in which to respond to the ruling, before paying AU$100 million in fines and having their licenses suspended. As the company couldn’t respond adequately, their Sydney operations were ceased. The Star Casino in Pyrmont was immediately placed under new management in an attempt to find a workaround to allow the establishment to remain in use.

And that was just in Sydney. In Queensland, the findings were much the same. Another AU$100 million fine was levied against the company, as well as another suspension of licenses. The licenses for their venues in Brisbane and Gold Coast were to be suspended for 90 days. However, this has been pushed back to December of this year while the group attempts to put in place steps to restore order within the company, as well as confidence from outside of it. Altogether, this was a cataclysmic couple of years for Star Entertainment and one which it’s yet to be seen if it will recover from. The group’s casino venues are currently being overseen by a state-appointed supervisor. This is an attempt to ensure a smooth return to full functioning, including establishing rigorous anti-money laundering controls.

Star Not the First or Last to Fall Foul of Money Laundering Regulation

Regulations worldwide ensuring the iGaming and casino industry is in ship-shape condition have tightened. It’s unsurprising then to find that multiple companies have found themselves in hot water due to inadequate anti-money laundering provisions. Just in January of this year, a British iGaming company, Intouch Games Ltd. was fined USD$ 7.6 million. This was for not ensuring that there were restrictions in place to curb gaming from high-risk jurisdictions. Additionally it was not following its own internal procedures for acquiring information on players’ funding sources. This wasn’t Intouch’s first brush with UK regulators either.

The latest fine represented the third time since 2019 that the company’s practices had been called into question. That highlights the increasing importance of strict compliance, especially in jurisdictions such as the UK, where its previously extremely-liberal landscape is becoming much more tightly regulated.

AML fines

There’s no need to go any further back to find more examples, either. It may not be as high-profile and the fines may not be as heavy as the previous examples, but Estonia-based iGaming operator TonyBet’s run-in with UK regulators is a great indication of the level of scrutiny that those in the industry are currently under. The gambling firm received a half-a-million-pounds fine for their transgressions. Namely, a failure to apply the correct oversight on both winners and losers. Those withdrawing winnings would be asked for proof of identity. However, the same wasn’t required of those depositing and losing money. This posed a potential blindspot when it came to money laundering and the protection of vulnerable people.

While Star Entertainment will continue to be under a microscope, it’s expected that tighter regulation and higher taxes will form a major part of its recovery process. It will be interesting to see exactly how the company addresses its shortfalls. And while the industry continues to be the focus of increasing regulation, it’s unlikely that this will be the last big case that comes to the fore in the near future.