Posted on: March 15, 2023, 01:28h.
Last updated on: March 15, 2023, 06:07h.
Embattled Australian casino operator Star Entertainment is in desperate need of cash. That’s after being subjected to considerable fines by state governments and being told that levies on gaming proceeds will increase considerably this year.
Seeking to increase tax receipts to benefit residents and businesses impacted by floods and wildfires in recent years, the New South Wales (NSW) government plans to significantly increase its tax rate on casinos beginning in July. Star Entertainment owns and operates its flagship property, The Star Sydney, in the eastern Australian state.
Star’s 2022 overhead was substantially higher than expected after state regulators in NSW and Queensland concluded that the casino giant failed to protect its casinos from being used by illicit organizations to launder money.
In September, the NSW Independent Casino Commission fined Star AU$100 million (US $66 million). In December, an independent commission in Queensland levied the same fine.
The Queensland commission also announced it would be suspending the gaming licenses for Star’s Gold Coast and Treasury Brisbane casinos for 90 days. The suspensions have been deferred until December 2023, as the commission agreed to give Star time to remediate its management and gaming operations.
Star Entertainment was targeted after state gaming regulators concluded that Crown Resorts, Star’s principal competitor Down Under, had looked the other way regarding money laundering and alleged criminal syndicates frequenting its casinos.
Star, the smaller of the two casino operators, is currently working to assure government regulators that its lackadaisical approach to gaming regulations is no more. But for the company to weather the approximately $132 million in fines and higher forthcoming taxes on Star Sydney’s operations — the firm’s most important property — the company needs to prop up its balance sheet.
To do so, Star announced this week that it will sell its stake in the Sheraton Grand Mirage Resort Gold Coast. The five-star luxury resort has 295 guestrooms, five restaurants, outdoor pools, meeting facilities, and beach access.
Star owns a 50% stake in the Sheraton Grand Mirage, with the other half shared by Hong Kong Stock Exchange-listed entities Far East Consortium and Chow Tai Fook. Marriott International leases the hotel’s operations from the ownership group.
The three investors in Sheraton Grand Mirage purchased the hotel in 2017 for AU$140 million. Star is hoping to turn a considerable profit on its investment, as the casino company is asking AU$200 million for its 50% stake.
The Sheraton Grand Mirage is located just south of SeaWorld Resort on the ocean side of SeaWorld Drive. The Star Gold Coast is about five miles south of the Sheraton.
Star’s lofty listing price for the Sheraton Grand Mirage isn’t scaring away potential buyers. That’s according to Steven King, who heads Colliers International’s Gold Coast commercial realty division.
There’s a lot of demand and nil supply,” King told Business News Australia. “We’ve already got about 20 people interested in the first two days after its listing.”
Star is seeking to raise AU$545 million. An AU$200 million sale of its Sheraton stake would go a long way in accomplishing that fundraising goal.