The Star will sack the equivalent of 500 full-time employees, freeze salaries and consider the fate of its flagship Sydney casino as regulatory and economic headwinds buffet the flailing gaming group.
The gambling company also announced on Wednesday that it was working with Barrenjoey Capital Partners to conduct a strategic review of The Star Sydney – Australia’s second largest casino – alongside the cost-cutting initiative.
The Star didn’t say what it hoped to achieve with the review into “strategic alternatives available to maximise value for the group’s shareholders” but a sale would be one possible outcome.
The cash-strapped group is progressing the sale of the Sheraton Grand Mirage Gold Coast, with indicative bids expected shortly.
It also plans to ask the NSW government, the Queensland government and regulator AUSTRAC for flexibility regarding payment terms for current and future penalties regarding its past money-laundering violations.
Both Queensland and NSW slapped the casino group with $100 million fines last year and Star has set aside $150 million for potential fines from AUSTRAC, the Australian Transaction Reports and Analysis Centre, which regulates compliance with money-laundering laws.
The board said Star is experiencing a “significant and rapid deterioration in operating conditions”, particularly at its Sydney and Gold Coast casinos, driven by regulatory restrictions and weaker consumer spending.
“The Star Sydney continues to operate in an uneven competitive environment as it relates to regulatory settings for complimentary services in its private gaming areas,” the company said in an announcement to the ASX, alluding to how regulators for now have forbidden it from serving free drinks to patrons.
The Star’s current earning performance is at “unprecedented low levels,” excluding the period during the COVID-19 pandemic, the company said.
In response, the board announced the staff reduction, which will affect 500 full-time equivalent positions across the group.
The Star has around 8000 employees, 4500 in Sydney and the remainder in the Gold Coast and Brisbane.
It will also cancel short-term and other incentives for the financial year and freeze salaries for employees not on an enterprise bargaining agreement.
The Star expects the initiatives to reduce more than $100 millions in operating expenditure for 2022/23.
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