Star Entertainment posts $1.16 billion annual loss, considers asset sales amid regulatory and economic pressure

Star Entertainment reported an A$1.7 billion ($1.16 billion) annual loss, marking its second consecutive multi-billion-dollar decline as the Australian casino operator battles challenging trading conditions and regulatory changes. The company said it is considering asset sales to shore up cash reserves.

Star, Australia's second-largest casino operator, attributed the massive write-down to "challenging trading conditions" at its venues in Sydney, Brisbane, and the Gold Coast. The A$1.4 billion impairment comes amid mounting regulatory scrutiny, including a shift to mandatory cashless gambling, and broader economic headwinds such as rising energy costs and weakening consumer spending.

Star said it had secured a new debt facility to maintain operations, but the company has also earmarked A$300 million of non-core assets for potential sale to raise additional capital.

"We need to turn the business around, we need to arrest the current situation of negative EBITDA," said CEO Steve McCann during a call with analysts. "We're clearly running an inflated cost level, we're working hard to get that under control."

The company's financial struggles come after an Australian government inquiry raised concerns over Star’s governance, particularly at its Sydney venue. The inquiry's findings could lead to tighter regulatory oversight and potential fines.

The introduction of mandatory cashless gambling and a daily cash limit of A$5,000 in Sydney has exacerbated Star’s troubles, with the company reporting a 10.7% decline in daily average revenue since the new rules took effect. The measures were introduced as part of efforts to curb problem gambling.

McCann highlighted that the company has identified A$100 million in annual cost savings as part of efforts to reverse its negative earnings before interest, tax, depreciation, and amortization (EBITDA).

"This business has been clearly on its knees," McCann said, emphasizing the need for significant restructuring to stabilize operations.

Star’s shares were suspended from trading on the Australian Securities Exchange after the company missed the 60-day reporting deadline for its results, though McCann confirmed that trading is expected to resume on Friday.

Market analysts expressed concern over the company's outlook, especially as Australians face tighter financial conditions. "It will be a tough time ahead," said Jessica Amir, a market strategist at trading platform Moomoo, as per a Reuters report. "Australians have depleted their savings and the ratio of savings to net income has hit a new low."

Amir added that without the return of Chinese nationals, who once accounted for a large share of Star's revenue, the company could struggle to meet the terms of its newly secured debt facility, which she described as having a "junk bond interest rate."

Star did not issue a profit forecast.