The Star Entertainment’s Revenue Falls 10%, EBITDA Loss Narrows 71% in H1 FY26
The Star Entertainment Group reported a 10% drop in H1 FY26 revenue, offset by a 71% improvement in EBITDA, while navigating ongoing licence suspensions and a critical refinancing process.
- Normalised revenue declined 10% to $585 million due to regulatory impacts and casino closures
- EBITDA loss narrowed by 71% to $8 million, aided by cost reductions and operator fee increases
- Material uncertainty remains over going concern status amid AUSTRAC penalty and refinancing deadlines
- Strategic $300 million investment by Bally’s Corporation completed, reshaping ownership
- Ongoing efforts to exit Destination Brisbane Consortium joint venture and consolidate Gold Coast assets
Financial Performance Amid Regulatory Challenges
The Star Entertainment Group has released its H1 FY26 results, revealing a 10% decline in normalised revenue to $585 million. This downturn primarily reflects the continued impact of stringent regulatory reforms, including mandatory carded play and cash limits in New South Wales, as well as the closure of the Treasury Brisbane Casino in August 2024. Despite these headwinds, the Group managed to improve its EBITDA loss by 71%, narrowing it to $8 million, driven by lower corporate costs and an increased operator fee from The Star Brisbane.
Operating expenses remain elevated due to ongoing remediation and transformation efforts, particularly in risk management, compliance, and safer gaming initiatives. The Group anticipates that cost-out measures and the gradual roll-off of remediation costs over the next two years will support earnings improvement in the medium term.
Strategic Investment and Joint Venture Developments
A significant milestone during the period was the completion of a $300 million strategic investment by Bally’s Corporation and Investment Holdings. Following regulatory approvals, Bally’s now holds approximately 38% of The Star’s issued capital, with Investment Holdings holding about 23%. This investment not only injects liquidity but also brings new board representation, potentially influencing the Group’s strategic direction.
Meanwhile, The Star continues to work towards exiting its equity interest in the Destination Brisbane Consortium (DBC) joint venture. The transaction, which includes disposing of the Treasury Hotel and Car Park and consolidating Gold Coast assets, has faced delays due to unmet conditions precedent. The lenders have granted an interim extension of the DBC debt facility to March 31, 2026, but the risk of termination remains if conditions are not satisfied.
Licence Suspensions and Remediation Progress
The Group’s casino licences remain suspended or under special management, with The Star Sydney’s licence suspended until at least March 31, 2026, and The Star Gold Coast’s suspension deferred until September 30, 2026. The Star Brisbane is under external advisory until the same date. The reinstatement of these licences is critical for operational recovery and access to capital.
Significant progress has been made on the remediation plan, with over 450 milestones completed across key areas such as risk management, financial crime prevention, and safer gambling. However, the timing and certainty of licence reinstatement remain uncertain, continuing to weigh on the Group’s outlook.
Liquidity and Refinancing Efforts
Liquidity management remains a top priority. The Star secured covenant waivers for its debt facilities through December 2025 and February 2026, with conditions requiring a refinancing commitment by March 31, 2026, and execution by May 15, 2026. The Group has engaged WhiteHawk Capital Partners for a proposed refinancing that would restructure existing debt and provide incremental liquidity. While the term sheet has been executed, it is non-binding and subject to due diligence and customary conditions.
The Group’s net debt position improved to $110 million as of December 2025, down from $207 million six months earlier, supported by cash balances of $171 million. However, net funding costs increased due to higher average debt levels and interest rates, reflecting the cost of the strategic investment and refinancing activities.
Outlook Amid Uncertainties
The Star’s trading update for January 2026 showed soft conditions, particularly at The Star Sydney, though EBITDA improved slightly compared to the previous quarter. The Group continues to face material uncertainty regarding its ability to remain a going concern, hinging on the resolution of the AUSTRAC penalty, successful refinancing, and licence reinstatements.
Investors will be watching closely as The Star navigates these complex challenges, balancing regulatory compliance, strategic restructuring, and financial stability in a highly regulated and competitive market.
Bottom Line?
The Star’s path to recovery hinges on refinancing success and licence reinstatement amid ongoing regulatory scrutiny.
Questions in the middle?
- Will The Star secure binding refinancing agreements by the May 2026 deadline?
- How will the unresolved AUSTRAC penalty impact the Group’s financial and operational outlook?
- What is the timeline and likelihood for reinstatement of The Star’s suspended casino licences?
