"Star Entertainment says no deal yet over Brisbane casino with HK shareholders"

In the high-stakes world of casino gambling, Star Entertainment has found itself in a precarious position, teetering on the edge of financial collapse. The embattled casino operator, mired in scandals involving criminal infiltration and money laundering, has received several confidential, indicative, and non-binding proposals to buy its 50% stake in the Queen's Wharf casino development in Brisbane. However, the company has so far rejected these offers, citing attempts by its partners, Chow Tai Fook Enterprises (CTF) and Far East Consortium (FEC), to slash management fees. This fee, which could net the casino operator more than a billion dollars over 50 years, is a significant sticking point in the negotiations.

The Queen's Wharf precinct, which opened in Brisbane in August 2024, is a gleaming symbol of modern luxury and entertainment. However, the casino's future is shrouded in uncertainty, as Star Entertainment struggles to find a financial lifeline to stave off collapse. The company's partners, CTF and FEC, have offered to buy out its share, but Star has so far knocked them back over what sources said were attempts to slash management fees. This fee, which could net the casino operator more than a billion dollars over 50 years, is a significant sticking point in the negotiations.

The latest Chinese offer could involve CTF and FEC taking over almost $740 million in debt from Star and paying hundreds of millions to complete the Brisbane casino development. However, the deal is far from sealed, as it requires regulatory and probity requirements to be met. Gaming analyst Leo Partridge from stockbrokers Morgans noted that if the Chinese investors could meet these requirements, "this deal could provide Star with much-needed financial flexibility during a challenging period."

However, the deal is not without its risks. CTF, which owns 25% of Queen's Wharf, came under its own integrity cloud after the ABC revealed its business dealings with organized crime figures and associates. This triggered an investigation by Queensland's casino regulator, which found CTF failed to disclose its share in a Vietnam casino with disgraced junket operator Suncity and its founder Alvin Chau, who is now in jail. Despite this, the then-Palaszczuk government found CTF was still suitable to hold a casino license, arguing its lack of "candour and fulsomeness" with the regulator was due to "differences in cultural and organisational expectations."

The public's lack of confidence in a casino owner with links to organized crime could further complicate the negotiations and make it more challenging for CTF and FEC to secure regulatory approval for the takeover. Tim Costello, chief advocate of the Alliance for Gambling Reform, stated that the public could have "no confidence" in a casino owner that had failed to disclose business dealings with organized crime figures. He also emphasized that the Queensland government "should be ruling out up-front, clearly" the prospect of Chow Tai Fook lifting its stake in the Brisbane casino.

The Queensland government's stance on the potential takeover of Brisbane's casino by Chinese investors has significant implications for the ongoing negotiations between Star Entertainment and its partners. The government's primary focus is on ensuring frontline jobs remain secure regardless of the ownership of the company. This stance suggests that the government is more concerned with the economic stability and job security of the region rather than the specific ownership of the casino.

However, the government's position also highlights the regulatory and probity requirements that any potential takeover would need to meet. The government's previous investigation into CTF's business dealings with organized crime figures and its lack of candor with the regulator indicates a cautious approach towards approving any takeover by Chinese investors. This could influence the outcome of the negotiations by making it more difficult for CTF and FEC to acquire Star's stake in the Queen's Wharf casino development.

The public's lack of confidence in a casino owner with links to organized crime could further complicate the negotiations and make it more challenging for CTF and FEC to secure regulatory approval for the takeover. Tim Costello, chief advocate of the Alliance for Gambling Reform, stated that the public could have "no confidence" in a casino owner that had failed to disclose business dealings with organized crime figures. He also emphasized that the Queensland government "should be ruling out up-front, clearly" the prospect of Chow Tai Fook lifting its stake in the Brisbane casino.

In conclusion, while a deal with CTF and FEC could provide Star Entertainment with a much-needed financial lifeline and ensure operational continuity, the regulatory and reputational challenges, public opposition, and financial terms pose significant risks that need to be carefully managed. The Queensland government's stance on the potential takeover of Brisbane's casino by Chinese investors suggests a cautious approach towards approving any takeover, with a focus on ensuring job security and regulatory compliance. This could influence the outcome of the negotiations by making it more difficult for CTF and FEC to acquire Star's stake in the Queen's Wharf casino development, given the public's lack of confidence in Chinese investors and the regulatory hurdles that need to be overcome.