The twist to the tale is that if the federal judge determines Star behaviour warrants a $400 million fine, and the casino group financially fails, then the fine is likely never going to be paid. And that will ultimately be the federal government’s loss because that is where the money would have landed.
Given Star says that a financial penalty of as low as $100 million will place it under serious strain, while AUSTRAC reckons $400 million is a fair starting point – there’s clearly a yawning gap between the two parties.
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With their respective bargaining positions are so far apart, one would question whether Star and the regulator were ever in a position to reach a settlement. And Star might be better off chancing its luck with the judge, who might be willing to work out an instalment plan for the payment of the fine.
A fine of $400 million will certainly jeopardise Star’s current rescue plan – one which will see Bally’s and Australian hotelier Bruce Mathieson inject cash into the casino operator and become its largest shareholders.
Shareholders are yet to vote on this deal and it requires regulatory approvals.
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And while Crown’s owner Blackstone is a very large private equity group, Bally’s is a relatively small outfit with a number of second and third-tier casinos dotted mostly around the US. Whether Bally’s and Mathieson have the stomach and the resources to financially double down on their Star bet remains to be seen.
That said, both Bally’s and Mathieson knew the AUSTRAC action was coming so they were not blindsided. You would have to imagine they have a contingency plan.
Both the NSW and Queensland governments have been firm that they will not bail out the casino owners but could intervene and provide help to keep them open if Star goes under.
But after enjoying a brief moment of calm, the walls are closing in again for Star. The future of its Queensland and NSW casinos hang in the balance and the 8000 or so staff that work at the three properties endure another anxious wait.
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