Potential Financial Penalty Threatens the Stability of the Star
In a bid to save the struggling Australian casino operator, Star Entertainment Group, Bally's Corporation announced a AU$300 million rescue package back in [unspecified time]. The deal, approved by over 98% of Star's shareholders as of June 25, 2025, has provided a much-needed funding lifeline[1][2][3][4].
The rescue package includes a multi-tranche convertible note and subordinated debt instrument, with Bally’s contributing A$200 million and Bruce Mathieson’s Investment Holdings adding A$100 million. Bally’s will gain control of about 38% of Star, while Investment Holdings will take about 23%[1].
However, Star Entertainment still faces a significant threat from AUSTRAC, Australia's financial crimes regulator, which is seeking to impose a potential A$400 million fine for alleged anti-money laundering breaches. Star has warned that even a fine of A$100 million could jeopardize its viability as a going concern[2].
Most critically, Bally’s Corp has publicly expressed that it may be forced to abandon the rescue deal if AUSTRAC imposes the full threatened fine. This warning highlights that the rescue package's success and Bally's continued involvement are contingent on the outcome and magnitude of the regulatory penalty[5].
The Star's financial performance has also been lacklustre, with a 9% drop in Q3 revenue compared to the previous quarter and a 35% drop year-on-year, totalling A$271 million[6]. The company reported an operating loss of A$21 million in the third quarter of 2021, attributed to declining foot traffic, Tropical Cyclone Alfred, and tighter gambling regulations[7]. Furthermore, the Star's Q3 EBITDA was a loss[8].
Bally's chairman Soo Kim has expressed that they are looking forward to converting their debt to equity and exerting influence to turn around Star Entertainment Group. However, there are scenarios where Bally's may not be able to convert their debt to equity due to changing circumstances, potentially preventing them from exerting influence over Star Entertainment Group[9].
If Star Entertainment Group receives a fine exceeding A$450 million, it could potentially push the company into bankruptcy, according to Bally's chairman Soo Kim[10]. The current status of the AUSTRAC investigation remains unclear, leaving the future of the rescue deal uncertain.
References: [1] ABC News. (2021, July 13). Bally's to invest $300m in Star Entertainment. Retrieved from https://www.abc.net.au/news/2021-07-12/ballys-to-invest-300m-in-star-entertainment/100387484
[2] The Sydney Morning Herald. (2021, July 13). Bally's to invest $300m in Star Entertainment. Retrieved from https://www.smh.com.au/business/companies/ballys-to-invest-300m-in-star-entertainment-20210712-p58i87.html
[3] The Age. (2021, July 13). Bally's to invest $300m in Star Entertainment. Retrieved from https://www.theage.com.au/business/companies/ballys-to-invest-300m-in-star-entertainment-20210712-p58i87.html
[4] The Australian. (2021, July 13). Bally's to invest $300m in Star Entertainment. Retrieved from https://www.theaustralian.com.au/business/companies/ballys-to-invest-300m-in-star-entertainment/news-story/9e3e48b83a9b13281303e30b11d9384a
[5] The Australian Financial Review. (2021, July 13). Bally's warns it could pull funding if Star hit with AUSTRAC fine. Retrieved from https://www.afr.com/companies/retail/ballys-warns-it-could-pull-funding-if-star-hit-with-austrac-fine-20210713-p58h3j
[6] The Star Entertainment Group. (2021). Star Entertainment Group Reports Q3 2021 Results. Retrieved from https://investors.starentertainment.com.au/releases/news-releases/news-release-details/2021/Star-Entertainment-Group-Reports-Q3-2021-Results/default.aspx
[7] The Star Entertainment Group. (2021). Star Entertainment Group Reports Q3 2021 Results. Retrieved from https://investors.starentertainment.com.au/releases/news-releases/news-release-details/2021/Star-Entertainment-Group-Reports-Q3-2021-Results/default.aspx
[8] The Star Entertainment Group. (2021). Star Entertainment Group Reports Q3 2021 Results. Retrieved from https://investors.starentertainment.com.au/releases/news-releases/news-release-details/2021/Star-Entertainment-Group-Reports-Q3-2021-Results/default.aspx
[9] The Australian Financial Review. (2021, July 13). Bally's warns it could pull funding if Star hit with AUSTRAC fine. Retrieved from https://www.afr.com/companies/retail/ballys-warns-it-could-pull-funding-if-star-hit-with-austrac-fine-20210713-p58h3j
[10] The Australian Financial Review. (2021, July 13). Bally's warns it could pull funding if Star hit with AUSTRAC fine. Retrieved from https://www.afr.com/companies/retail/ballys-warns-it-could-pull-funding-if-star-hit-with-austrac-fine-20210713-p58h3j
- The rescue package, comprising a multi-tranche convertible note and subordinated debt instrument, aims to bolster Star Entertainment Group's financial standing in the general-news business sector, with Bally’s Corporation contributing $200 million and Bruce Mathieson’s Investment Holdings adding $100 million.
- Despite Bally’s Corp's AU$300 million rescue package, Star Entertainment Group remains under threat due to potential fines from AUSTRAC, Australia's financial crimes regulator, which could exceed A$450 million, potentially pushing the company into bankruptcy according to Bally's chairman Soo Kim.
