Star Sydney Wants More Pokies Amidst Pandemic Recovery

The Star Entertainment Group works with New South Wales Government to discuss adding up to 1,000 new poker machines to its Star Sydney casino. At the same time, the company reported its overall year-end financials for the period ending 30 June 2021. Recovery from the pandemic has been tougher than anticipated because of the longevity of the virus’ scope and subsequent restrictions. Nevertheless, Star reported some progress and hopes for the future.

Plea for Pokies

On 18 August, the Star Entertainment Group announced that it entered into formal negotiations with the NSW Government. The topic was a proposal from Star to increase the number of gaming machines at its Star Sydney casino.

The crux of Star’s argument is that Star has permission to operate 1,500 gaming machines. It proposes taking them from NSW clubs. However, that number is only 1.6% of the total number of pokies in the state overall. Crown Melbourne has 2,628 machines, Queen’s Wharf Brisbane has 2,500, and Crown Perth operates 2,500. The Star wants to accumulate more machines to better compete in the gambling market.

The transfer of machines to Star Sydney could happen under the recently-discussed NSW gaming machine reforms. As a part of ongoing reforms under 2018 proposals, NSW has tried to localize the pokies. According to changes in Local Impact Assessment (LIA), NSW is giving small clubs and pubs the chance to lease their pokies to larger clubs but still benefit from entitlements.

New NSW Commission to Consider

The Star’s request for pokies will be one of the first tasks for a new Independent Casino Commission. This will be a regulatory body comprised of representatives of NSW Liquor and Gaming, Treasury Department, and the Attorney General’s office. This commission was one of the strongest recommendations from former Supreme Court Judge Patricia Bergin, who authored the final report in the Crown Resorts inquiry earlier this year. She urged the NSW Government to put together a “dedicated, stand-alone, specialist casino regulator with the necessary framework to meet the extant and emerging risks for gaming and casinos.”

One of the first tasks of the Independent Casino Commission will be to examine the proposal from Star Entertainment. There are numerous components under consideration:

  • Star Sydney would forfeit one of its machines for every three it buys from a club or pub. The overall goal is to reduce the pokies in the entire NSW region by 500 in the long run.
  • Star Sydney could lease machines without forfeiting any. This, however, would require the casino to sign multi-year agreements with the clubs and pubs with an annual payment scheme.
  • Under a leasing or sale deal, clubs and pubs could opt in to be a part of the agreement. In return, they would invest in betterments for their communities.
  • Star Sydney would submit a proposal to develop and new theater and concert venue in Sydney.

Criticisms Came from Various Places

Clubs NSW has been at the forefront of the criticism of Star Sydney’s ideas for more pokies. As one of the most powerful lobbying organization in NSW, it represents more than 1,200 clubs and pubs regarding everything from taxation to regulations.

According to the Sydney Morning Herald, Clubs NSW Chief Executive Josh Landis called the proposal “crazy.” He claimed that Star Sydney wanted to increase its pokies capacity at the expense of regional clubs and pubs. “This will have a devastating effect on Sydney clubs,” he said, “impacting the social lives of millions of people and causing the loss of as many as 2,200 club jobs.”

Landis also called it a money grab, simply a way to increase revenue by up to $230M per year, per his best guess.

On the other hand, a typical critic of gambling moves seems to support this one. Reverend Tim Costello, the spokesperson and primary representative of the Alliance for Gambling Reform, did say that the move seemed odd, especially with regard to timing. On the other hand, Costello supports a decrease in pokies at clubs and pubs. “If the buyback allows pubs and clubs to invest in community assets, such as health and recreational facilities, then that is good.”

FY2021 Could Have Been Better

Star Entertainment’s past fiscal year began on 1 July 2020 and wrapped at the end of June 2021. It started in the middle of the pandemic lockdowns but hoped life would return to normal before the company finished its year. While there had been some improvements, it wasn’t what Crown executives had in mind. Lockdowns have persisted intermittently into 2021, creating an uneven picture and not a clean recovery.

For example, Star supported staff through shutdowns as much as possible through steady pay and then hardship payments. Board members and those in executive management positions accepted pay reductions. This means all FY2021 numbers are somewhat relative and all have asterisks.

Overall, there were some positive points:

  • Queensland properties increased EBITDA 48% for record annual earnings.
  • Gold Coast domestic revenue increased 18% in second half as compared to 2019.
  • Group slots and loyalty gaming revenue increased 4% (each) in second half on 2019.
  • Operating costs decreased 11% overall on pcp and 30% on 2019.
  • Net debt decreased by $211M.
  • Group normalized EBITDA margin improved 5.7%.

As restrictions ease, Star Entertainment expects growth for the group all around but especially in Queensland and eventually in Sydney.

Star FY2021 into the Numbers

Overall, in comparing statutory profit/loss numbers year-on-year, there were some highs and inevitable lows due to the pandemic.

  • Domestic gaming revenue up 9.6%
  • International VIP rebate revenue down 96.7%
  • Non-gaming revenue down 16.4%
  • Total gross revenue down 11% to $1,557,100,000
  • EBITDA up 51.3% to $426,700,000

The company’s balance sheet shows a progression of capital programs but the pandemic impacted business volume – obviously – and VIP debt improvising.

  • Total current assets down 53.5% to $163.7M
  • Total current liabilities down 49.4% to $297.3M
  • Total equity up nearly 5% to $3,624,000

With a focus on the positive, Star highlighted its sustainability and environmental successes. The company received a Green Star performance rating for its Sydney and Gold Coast properties. On the path to net zero carbon emissions by 2030, the company plans to achieve 30% of that reduction by 2023 via carbon emissions and water consumption. Star also signed on to the Global Compact Network Australia.

And in the realm of helping during the pandemic and via taxes, Star highlighted a few numbers:

  • Paid $470M in government taxes and levies in FY 2019 (not yet calculated for FY2021)
  • Donated 62 tonnes of food to foodbanks
  • Donated 32 tonnes of furniture, uniforms, etc. to charities

 

 

Rose Varrelli avatar
Rose Varrelli
Senior Casino & News Writer

Hi there! I’m Rose, and with nine years behind me in the iGaming industry, I craft engaging narratives at CasinoAus. My education in Communication across Europe has sharpened my skills in fintech, casino legislation, and digital marketing. Backed by a strong foundation in SEO, storytelling, and cross-cultural communication, I’m passionate about creating content that resonates globally and educates our audience.

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