The Star Entertainment Group Ltd (ASX: SGR) share price will be under close scrutiny today as reports surface detailing final submissions made to an ongoing inquiry into the company.
Shares in the casino operator have dipped to 57 cents at the time of writing, down nearly 2% on the day. The selling pressure comes amidst potential concerns over its casino licence.
Let's take a look.
Licence concerns and recommendations
The Star Casino share price has been strong over the past month. It has lifted nearly 16% in that time.
But today's uncertainty follows a confidential submission made to The Bell inquiry reportedly suggesting Star should not hold a casino licence.
As a reminder, the NSW Independent Casino Commission (NICC) appointed Adam Bell SC to undertake a review of the Sydney Casino and Star Group in 2021.
Star's license was then suspended in 2022, and the NICC appointed an external manager for the group.
The Bell Inquiry was then established in February this year to assess whether the Casino should regain its licence or not.
Now the inquiry's lead counsel, Caspar Conde, has made final submissions, and the findings are scathing, The Australian reports.
Conde's 100-page submission details several breaches of internal control manuals by Star. These include a software error leading to a $3 million payout and accounting failures in the zone where employees handle cash for high-stakes gamblers.
As a result, the submission purportedly recommends that Star Casino should not be considered to hold a casino licence.
It also suggests extending the external manager's appointment indefinitely until the operator shows significant changes.
This process could take up to five years. In his submission, Conde stated:
There is no basis in the evidence… to discern a future time by which the inquiry can be satisfied that The Star and Star Entertainment will or are likely to become suitable.
Critically, despite these breaches, the submission found limited evidence of Star breaking NSW casino laws. Only its own internal controls.
Star's response
Star claims it's unaware of the Bell inquiry's recommendations. In a statement, according to The Australian, the company said:
The report prepared by Mr Adam Bell SC and submitted to the New South Wales Independent Casino Commission (the Report) has not yet been publicly released, and The Star has not received a copy of the Report or been advised of its contents.
Star's Chief Risk Officer also resigned on Wednesday, although there is no known correlation between these events.
Star Casino share price momentum
Before today's reports, Star Casino shares rallied over the past week. According to my colleague Mitch, this was due to speculation about potential takeover talks and the anticipated release of the Bell inquiry report.
Star's journey to regain its licence and restore investor confidence will be tough. The company needs to implement significant changes and adhere to stringent regulatory requirements.
Conde's submission emphasised that Star is "only six months down a transformational path" that could span three to five years.
Consequently, Star Entertainment is at a critical juncture.
