The Star Entertainment Group Ltd (ASX: SGR) share price is down around 6% at the time of writing despite the embattled casino operator reporting a return to positive quarterly EBITDA, and offering investors a rare sign of progress after a prolonged period of losses, regulatory pressure, and balance sheet strain.
The December quarter delivered a sharp swing from losses, helped by stronger trading at its Gold Coast property and a higher operator fee from the Brisbane property.
What did Star Entertainment report?
For the three months ended 31 December 2025 (Q2 FY26), Star reported revenue of $301 million, up 6% on the previous quarter, and positive group EBITDA of $6 million, compared with an EBITDA loss of $13 million in Q1.
That is welcome news, but there is a notable caveat because all the EBITDA figures disclosed are before adjusting for significant items, which will be detailed separately when the company releases its half-year results.
The results reflected varied performance levels across the group's properties. The Gold Coast property delivered EBITDA of $10 million, benefiting from seasonally stronger gaming and hospitality volumes. Star Brisbane posted EBITDA of $4 million, driven by operator fee revenue under its casino management agreement, including a one-off true-up related to earlier periods.
By contrast, The Star Sydney remained loss-making, with negative EBITDA of $8 million, reflecting the ongoing impact of mandatory carded play and cash limits in NSW. Management noted that while trading in Sydney has stabilised, revenue levels remain well below historical levels.
What else do investors need to know?
While the return to positive EBITDA is encouraging, it does not signal a clean recovery. Operating conditions remain challenging across all properties due to tighter regulations and ongoing compliance requirements.
Liquidity is also a key issue. Star reported available cash of $130 million at the end of December, but management reiterated that the company's ability to continue as a going concern depends on resolving several material uncertainties. These include refinancing discussions with lenders ahead of upcoming covenant testing, and the timing and quantum of the still-pending AUSTRAC judgment.
The company is currently engaging with existing and potential lenders on a refinancing process, though it cautioned there is no certainty around the outcome or timing.
What comes next?
Star said significant items will be disclosed when it releases its half-year results, which will provide a clearer picture of its underlying profitability and balance sheet position.
Investors will also be watching for updates on refinancing, regulatory outcomes, and whether EBITDA improvements can be sustained beyond seasonal factors.
Foolish bottom line
Returning to positive quarterly EBITDA is an important milestone for Star Entertainment, but the result comes before significant items, and major risks remain around regulation, funding, and compliance. That could be part of the reason why shares are sinking lower today.
Another potential reason could be investors simply taking some recent gains off the table, as Star Entertainment shares had risen 33% over the last year prior to today's announcement.
For investors, this quarter looks more like a step away from the brink than a full turnaround. The half-year results will be critical in determining whether Star is genuinely stabilising or simply enjoying a temporary reprieve.
