The Star Entertainment Group is cutting 500 jobs as the embattled casino giant grapples with a rapid deterioration in operation and income.
The ASX-listed business will axe 500 full-time jobs across Australia, implement a salary freeze and cancel some incentives for this financial year.
The casino business – which operates in Sydney and on the Gold Coast – expects to earn between $280 million and $310 million this financial year. The Star posted nearly $1.3 billion in losses last financial year after the Sydney and Gold Coast casinos brought in $541 million and $276 million in gross revenue, respectively.
The amount of money people have to spend at casinos has had an impact on the downturn in earnings, the group said. It also noted regulatory operating restrictions had contributed.
Star Sydney has been embroiled in controversy after being fined $100 million and having its casino licence suspended late last year over anti-criminal activity failings. There have been two inquiries over criminal activity and money laundering in the casinos.
“The Group is experiencing a significant and rapid deterioration in operating conditions, particularly at The Star Sydney and The Star Gold Coast,” the company said in a statement to the ASX.
“The Star Sydney continues to operate in an uneven competitive environment as it relates to the regulatory settings for complimentary services in its private gaming areas.
“To put the operating environment into perspective, the Group’s current earnings performance is at unprecedented low levels (excluding the COVID-19 period).”
The job cuts will not impact the risk management or remediation sector.
A strategic review of the Sydney casino with Barrenjoey Capital Partner is underway to “consider any structural alternatives available to maximise value”.
The group is also speeding up its sale of the Sheraton Grand Mirage Resort on the Gold Coast.
“The Group is accelerating its previously foreshadowed plans to refinance its existing debt funding arrangements, with a focus on improving the Group’s liquidity position and separately increasing covenant headroom in light of the Group’s current earnings environment,” the group said.
“To help improve the Group’s liquidity position and maximise the prospects of a successful refinancing given the challenging operating environment, The Star intends to engage with the NSW Government, the Queensland Government and AUSTRAC in respect of casino duty rates and flexibility on payment terms in relation to any current and future penalties.”
The chief executive of the Sydney casino resigned at the start of April, just eight months after he was appointed.