The Star Entertainment Group Ltd (ASX: SGR) share price is frozen after the company requested a trading halt and the NSW Independent Casino Commission (NICC) announced a $15 million fine.
Star Entertainment shares closed at 26 cents yesterday and are down 52% in the year to date.
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Why is the Star Entertainment share price frozen?
The beleaguered casino operator requested the trading halt after receiving correspondence from the NICC regarding its regulatory response to the Bell Two Report.
Star requested that the halt remain in place until it has made an announcement or until the start of trading tomorrow.
Adam Bell SC conducted a second inquiry into Star's suitability as a casino licence holder this year.
The NICC announced today that after considering the report, it will fine Star Entertainment $15 million for "serious breaches" of four internal control manuals.
The NICC said the company's Sydney casino licence would remain suspended.
Additionally, a range of new measures will be imposed on the company.
These include extra financial and operational reporting requirements between now and March next year.
Also, proposed amendments to the Sydney casino's suspended licence to include more prescriptive requirements relating to the board's constitution and key management personnel.
The NICC has also requested some changes to the Casino Control Act in line with Bell's report.
NICC Chief Commissioner Philip Crawford said the second Bell inquiry identified continuing compliance failures and operations at The Star in Sydney.
Crawford said:
Despite more prescriptive supervision that prevented the type of misconduct seen in the first inquiry, numerous shortcomings in governance, regulatory compliance, technology and risk management remain, including in areas that The Star claimed it had remediated.
Reform in the systems, policies, processes and culture that support these areas cannot be understated in a business as complex as The Star's.
In a casino setting, compliance breaches can have serious consequences for the community, and the Bell Report illustrated how quickly weak controls can lead to criminal infiltration and gambling harm.
Crawford said transparency and accountability had improved since the appointment of The Star's new CEO, Steve McCann.
However, he said the company needed to do more before the NICC would consider reinstating its licence.
Crawford said:
We just regard it as a very final act and there's no coming back if you take the licence away.
If Sydney Star fails, the Star group will fail and that's a group that employs 9,000-plus people, and if you add onto that the huge number of suppliers to the business, it would effect the lives of a lot of people.
He added:
The NICC understands the many challenges The Star is facing and will continue to closely monitor The Star's progress in proving it is capable of regaining its casino licence.
The NICC-appointed manager, Nick Weeks, will continue overseeing casino operations until at least 31 March. The NICC will reassess The Star's suitability to regain its casino licence at this time.
