(Bloomberg) — Star Entertainment Group Ltd.’s survival rests almost entirely on new Chief Executive Officer Steve McCann and his turnaround plan after the regulator said the biggest risk to the Australian casino operator is its precarious financial state. The embattled gaming group escaped serious punishment from its primary watchdog Thursday, six weeks after an inquiry found Star had breached the terms of its license several times, possessed questionable ethics, and remained unfit to run its flagship Sydney casino. Instead, Philip Crawford, chief commissioner of the New South Wales Independent Casino Commission, placed Star’s future squarely in the hands of McCann, weeks after he secured emergency funding for the company. “I have a lot of confidence that this guy can do it,” Crawford told reporters in Sydney. The scale of McCann’s challenge was laid bare last month as he delivered a sobering assessment of Star’s financial health. Barely three months into the job, McCann handed down a A$1.69 billion ($1.1 billion) annual loss, wrote down the value of all Star’s casinos, and revealed the company needs yet more capital in a deteriorating market. “Their biggest risk as we stand here today is their financial stability,” Crawford said Thursday. “They’re working hard to fix that, but they’re not out of the woods yet.” Star’s Sydney casino has been overseen by a government-appointed manager since a regulatory probe in 2022 found it had lax anti-money laundering controls, allowed patrons to flout China’s capital rules and encouraged problem gamblers. The most recent inquiry uncovered several additional license breaches in Sydney, including falsifying records. Crawford’s long-awaited response was to fine Star A$15 million and extend the term of the government supervisor until at least March next year. It’s at least the fourth such extension. In response, Star said Thursday it “looks forward to continuing its constructive engagement” with regulators in New South Wales and Queensland state, home to the Brisbane casino, as it “progresses a viable pathway toward suitability.” Star’s shares rose as much as 18% after the regulator handed down its penalty, which averted the worst-case scenario of losing the license. Still, the stock is down more than 40% this year and the company’s market value has been slashed to around A$825 million.    Crawford said stripping Star of its license would have unacceptable economic consequences, effectively acknowledging that the company was too big to fail. The entire group, including its new Brisbane gaming resort, would collapse, impacting more than 9,000 workers, he said.  “We are very heavily motivated by our perception of the public interest,” he said. “It would be a very, very final act to take the license away, particularly given the current economic times.” McCann appears to have made a significant impression on Crawford, who gave Star and its new boss yet more time to prove its financial and cultural integrity. In a press conference lasting less than 25 minutes, Crawford variously described McCann as open, frank, impressive, sensible, credible, competent and unique. McCann turned around Star’s main rival, Crown Resorts Ltd., after it found itself in similar difficulties, culminating in an A$8.9 billion sale to US private equity giant Blackstone Inc. Crawford said transparency and accountability at Star had vastly improved since McCann took the helm.  There’s not even a hard deadline for McCann to deliver. If he needs more time beyond March next year, Crawford said he’ll keep the government supervisor in Sydney in place “for a further couple of months, if that’s the right answer,” he said. “We’re trying to remain flexible.” Star’s immediate financial drains include funding day-to-day operations, given the current state of trading, and servicing newly arranged debt with an interest rate of 13.5%. There’s also a looming penalty from Australia’s financial crimes regulator for alleged breaches of anti-money laundering laws.  “They’ve got to get over their immediate financial crisis,” Crawford said. “But there’s a way forward, a pathway or a runway, call it what you like. McCann has to get a hold of this business and really give it a shake.”  (Adds Star’s response in eighth paragraph.) More stories like this are available on bloomberg.com Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess



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