Star’s Risky Junket Strategy Could Lead to Massive Fine

Star Entertainment pursued a high-risk strategy focused on junket operations that generated over $1 billion across 5 years. Now the company is facing severe financial strain and a potential $400 million fine due to failures in preventing money laundering. It has appealed to the federal court for leniency, warning that even a $100 million penalty could cause significant financial damage.

The company, which operates casinos in Sydney, Brisbane and the Gold Coast, revealed that 14% of its total revenue between 2018 and 2021 came from junket activity deemed high-risk for money laundering and terrorism financing. This figure amounts to around $1.18 billion. Star made this disclosure in legal filings with Australia's financial crime authority. The agency claims Star failed to implement systems to monitor the origin of funds that entered through these channels.

Star gave certain junket operators access to its venues without properly assessing or managing risks associated with their operations. One of these operators, who had ties to organised crime, was found running a private cash cage and an unregistered gambling room inside Star facilities. Investigators discovered these issues during a regulatory probe. A separate review by New South Wales authorities previously declared Star unsuitable to hold a casino licence due to repeated violations and involvement in $900 million worth of illegal transactions.

These developments have increased pressure on Star as it fights to survive financially. The company narrowly avoided collapse after securing a $300 million rescue package from US-based Bally’s Corporation, which may eventually become the controlling stakeholder. Despite this support, the company remains in a fragile position. Its stock price has fallen 77% over the past year while regulators continue to press for substantial penalties.

AUSTRAC argues that Star knowingly placed profit ahead of legal compliance, even when its executives were aware of the risks. The agency asserts this approach was designed to work around Chinese capital restrictions and preserve a high volume of foreign cash flowing into the business, consequently putting Australia's financial systems in jeopardy.

Source: Australian Financial Review, Casino.org, ASGAM, iGaming Business