Regulatory Reforms and Liquidity Risks Cloud The Star’s Future
The Star Entertainment Group reported a statutory net loss of $471.5 million for FY25, impacted by regulatory reforms and remediation costs, while securing a $300 million strategic investment to bolster liquidity.
- FY25 net revenue of $1.188 billion with $77.1 million EBITDA loss
- Statutory net loss of $471.5 million after significant items
- Regulatory reforms and remediation program heavily impacted trading
- Secured $300 million strategic investment from Bally’s Corporation
- Material uncertainty remains over going concern status
Financial Performance Under Pressure
The Star Entertainment Group’s FY25 results reveal a company grappling with significant headwinds. Net revenue fell sharply to $1.188 billion, down 29% from the previous year, while the company recorded an EBITDA loss of $77.1 million before significant items. The statutory net loss ballooned to $471.5 million, reflecting a combination of regulatory reforms, remediation costs, and market share erosion.
The trading environment deteriorated notably due to mandatory carded play and cash limits imposed at The Star Sydney, alongside the ongoing implementation of the Group’s remediation program. The closure of Treasury Brisbane Casino and the phased opening of The Star Brisbane also contributed to the shifting revenue landscape.
Liquidity Measures and Strategic Investment
In response to these challenges, The Star has aggressively pursued liquidity enhancements. The Group accessed an additional $100 million tranche under its senior debt facility, completed asset sales including the Sydney Event Centre and Treasury Brisbane Casino building, and secured a $300 million strategic investment from Bally’s Corporation and Investment Holdings. To date, $233 million of this investment has been received, with the remaining $67 million expected by October 2025, pending regulatory approvals.
Cost reduction efforts have also been a focus, with The Star achieving $100 million in annualised savings and seeking further efficiencies in FY26. Despite these measures, available cash stood at $234 million as of June 30, 2025, declining to $189 million by late August after deferred tax payments.
Regulatory and Operational Uncertainties
The Star’s future remains clouded by material uncertainties. The timing and quantum of an anticipated AUSTRAC penalty, expected from September 2025 onwards, pose significant risk. Additionally, the Group’s ability to secure ongoing financial covenant waivers and complete the exit from the Destination Brisbane Consortium joint venture; critical to releasing $700 million in guarantees; are yet to be resolved.
Regulatory approval processes continue, with submissions made to the Office of Liquor and Gaming Regulation and the NSW Independent Casino Commission as part of the Group’s remediation plan. The company’s licence to operate hinges on demonstrating a viable financial future and satisfactory remediation progress.
Leadership Perspective and Outlook
Group CEO Steve McCann acknowledged the challenges but highlighted progress on remediation and regulatory compliance. He emphasised the importance of stakeholder support; from governments, regulators, lenders, and investors; to navigate the complex landscape ahead. The Star’s ability to restore market confidence and drive revenue growth while managing costs will be pivotal in shaping its trajectory.
With the final audited financial statements due by September 30, 2025, investors await clarity on the Group’s going concern status and the impact of ongoing regulatory developments.
Bottom Line?
The Star’s FY25 results underscore a critical juncture where regulatory hurdles and financial pressures demand decisive action and stakeholder backing to secure its future.
Questions in the middle?
- What will be the size and timing of the AUSTRAC penalty and its impact on The Star’s balance sheet?
- Can The Star secure the necessary covenant waivers and complete the DBC exit to alleviate liquidity pressures?
- How will ongoing regulatory scrutiny affect The Star’s casino licence and operational viability?
