Star Entertainment Group was put on notice this week that it will have to prove why it should run casinos in Queensland, casting a shadow over its $3.6 billion Queen’s Wharf development in the heart of Brisbane.

A show-cause process will now get underway, with the state government to then decide how it will deal with Star.

It has raised a lot of questions about Star’s future in Queensland and what this all means for the expansive development in Brisbane’s CBD, due to partly open late next year.

Star already runs the Treasury Casino in George Street and its other operating casino is at Broadbeach on the Gold Coast.

Why is Star on notice?

On Friday, Attorney-General Shannon Fentiman found Star was unsuitable to hold a casino licence in Queensland after an independent review found “major failings” from the company.

Former judge Robert Gotterson concluded Star had serious deficiencies with its anti-money-laundering program for years, actively encouraged banned high rollers from other states to gamble in Queensland and was not forthcoming or transparent with its banker nor the regulator.

He made 12 recommendations, which the government will implement, and one gives a clue as to how the state government could manage Star Entertainment’s casino licence into the future.

Mr Gotterson said that, as a priority, casino laws in Queensland should be amended so that a special manager could be appointed to take over the licence of a casino.

So, what happens now?

The state government will issue Star Entertainment with a show-cause notice, but it will take some weeks for that to be prepared and formally given to the company.

From there, Star will have 21 days to respond and explain what changes it will make to prove it should be allowed to continue running its two casinos in Queensland.

Ms Fentiman will then be able to take a range of actions, including issuing directions, fines, suspending or cancelling Star’s licence.

The state also flagged it would be increasing the maximum penalty that can be imposed on casino operators to $100 million.

If the Attorney-General decides to suspend or cancel Star casino’s licence, then it’s most likely a special manager will be appointed to handle the licence on the company’s behalf.

How have other states handled this?

This has happened with Crown Resorts in Melbourne as a result of the Finkelstein inquiry, where the company was found unsuitable to hold a casino licence.

A special manager was appointed to monitor the company’s operations and provide updates to the state regulator about the reform work the company is undertaking to keep its licence.

The special manager will submit a final report late next year, so the Victorian government and regulator can decide if Crown is suitable to hold a licence again.

In New South Wales, Crown Resort has just been given the green light to open the casino in its luxury $2.2 billion dining and hotel development after being blocked from doing so by the regulator for more than a year after the damning Bergin inquiry.

Queensland is looking closely at what will happen to Star Entertainment in Sydney after the Bell inquiry also found it unsuitable to hold a casino licence.

The New South Wales government and casino regulator is currently considering Star’s response to a show-cause notice.

What does this mean for the Queen’s Wharf development?

Essentially it means little will change for the Queen’s Wharf development at this stage.

The $3.6 billion project is under construction and will include a casino, two residential towers, a commercial tower and luxury hotels across 26-hectares of the Brisbane CBD.

That precinct will include 1,000 premium hotel rooms, restaurants, up to 2,000 residential apartments, a dozen football fields of public space, and a foot bridge across the Brisbane River, which is half finished.

It is due to partly open later next year, after construction delays pushed the opening back several months.

The project is being delivered by the Destination Brisbane Consortium. Star is a 50 per cent backer and has partnered with Hong Kong companies the Far East Consortium and Chow Tai Fook Enterprises.

Star currently runs the Treasury Casino in Brisbane and The Star Gold Coast and plans to have its Treasury casino licence transferred to the Queen’s Wharf casino when it opens.

If the outcome is that a special manager is appointed to supervise Star, then it can still be involved in the project as it works to prove its suitability.

So, it’s unlikely Star will be booted from the project — and the state — altogether.

But there’s a cloud over another aspect of the project.

The state casino regulator is still investigating organised crime links associated with Chow Tai Fook, after revelations by the ABC in August. 

Ms Fentiman, who ordered the fresh investigation into Chow Tai Fook’s suitability as a major shareholder in Star and Queens Wharf, has told the ABC she will release those findings.