The Star Entertainment Group Ltd (ASX: SGR) share price is having a sensational day on Friday.
At the time of writing, the casino operator's shares are up a massive 24% to $1.22.
Why is the Star Entertainment share price shooting higher?
Investors have been scrambling to buy the company's shares after it announced an agreement with the New South Wales Treasurer.
In the lead-up to the NSW 2023 election, the former state treasurer announced a proposed increase in NSW casino duty rates originally intended to take effect from 1 July 2023.
The Star advised that it consistently maintained that the former treasurer's proposed duty increase was flawed in its design and not sustainable. It also felt that if implemented as originally proposed, it would significantly challenge the economic viability of its Sydney business. This would put the jobs of thousands of team members in jeopardy.
What's the latest?
The good news is that the company has reached an in-principle agreement with the new NSW Treasurer, Daniel Mookhey.
According to the release, the agreement will amend the company's duty arrangements with the state. And once formalised, the amendments are designed to deliver a sustainable outcome for The Star and protect the jobs of thousands of team members.
The process to complete long-form binding agreements will now commence with the Treasury to fully document the duty arrangements and ancillary matters.
Star CEO and managing director Robbie Cooke said:
The formal consultative and structured approach implemented by the Government has enabled an in-principle agreement to be reached which protects our Sydney team's jobs and the viability of The Star Sydney.
While the in-principle agreement will result in an uplift in duties payable to the State, it has due regard to the circumstances of our Sydney business and as such helps to create a sustainable path forward for The Star Sydney.
The expected additional duty payable in FY24 is circa $10 million. It is also designed to provide employment certainty for team members in arrangements agreed with the United Workers Union. In addition, it will see The Star Sydney introduce a trial of its cashless gaming machine technology in October this year on 50 gaming machines and 8 gaming tables.
The arrangements enable us to continue working at pace to implement the significant reforms required to restore The Star Sydney to suitability, earn back the trust of the community, and ensure we remain a valuable contributor to the NSW economy.
The Star Entertainment share price remains down over 50% despite today's impressive gain.