The Star Entertainment Group faces AU$260m penalty after court finds AML breaches

The Federal Court of Australia has ordered The Star Entertainment Group to pay AU$260 million following findings that the casino operator breached the country's anti-money laundering and counter-terrorism financing laws. The decision concludes a significant civil enforcement case brought by the Australian Transaction Reports and Analysis Centre (AUSTRAC) and adds to the regulatory and financial pressures facing the company.

The ruling, delivered on 28 October 2026, concerns compliance failures associated with customer due diligence, source-of-funds verification and the monitoring of high-risk gambling activity. Although the penalty is substantial, the court has allowed the company to pay in instalments, providing additional time to meet its financial obligations while maintaining a significant financial consequence for the contraventions.

The court orders a AU$260 million penalty

The AU$260 million penalty comprises AU$195 million relating to The Star Sydney and AU$65 million relating to The Star Gold Coast. The proceedings arose from alleged deficiencies in the casino group's systems for identifying, assessing and managing money laundering and terrorism financing risks.

The penalty was lower than the AU$400 million sought by AUSTRAC but higher than the AU$100 million figure advocated by The Star. During the proceedings, the company had warned that a substantially larger financial penalty could jeopardise its future viability.

In determining the amount, the court considered the seriousness of the contraventions alongside the financial consequences of earlier regulatory action. The Star had already faced significant penalties and restrictions following separate casino inquiries in New South Wales and Queensland.

The decision therefore addresses both the need for meaningful enforcement and the financial circumstances of an operator that continues to work through a broader business recovery.

Compliance failures involved high-risk customers

The court found that The Star failed to maintain an adequate anti-money laundering and counter-terrorism financing program. Its findings also concerned the company's approach to verifying customer identities and financial information, establishing sources of funds and conducting appropriate ongoing checks.

More than 1,200 customers were able to gamble through channels associated with elevated money laundering and terrorism financing risks. These channels included arrangements involving limited transparency over the origins of funds, third-party transactions and cash deposits where information about the third parties was not properly recorded.

The proceedings also addressed junket operations and private gaming arrangements. According to the court's findings, these activities continued despite recognised risks and shortcomings in oversight and monitoring.

Such arrangements can create additional compliance challenges when casino operators cannot adequately establish who is providing funds, where the funds originated or whether customer activity warrants further investigation.

The findings highlight the importance of effective internal controls, clear management accountability and risk-based customer monitoring. For operators subject to Australia's financial crime laws, compliance requires more than documented policies. Systems must also function effectively in day-to-day operations, particularly when customers or transactions present elevated risks.

Revenue figures illustrate the scale of the exposure

The court considered revenue associated with junkets and high-risk customers when examining the commercial context of the contraventions.

Revenue from junkets exceeded AU$1.4 billion. Separately, revenue associated with high-risk customers was approximately AU$1.33 billion between November 2016 and November 2022, according to figures calculated by The Star.

These amounts are significant, but they should not be interpreted as a direct measurement of profits earned from unlawful activity or as the financial benefit attributable to the specific breaches. The court expressly distinguished the revenue figures from a calculation of benefits derived from the contraventions.

Instead, the figures helped illustrate the potential financial incentives that may arise when higher-risk business is accepted without sufficient scrutiny and effective controls.

For the wider casino industry, the case reinforces the importance of ensuring that commercial activity does not undermine statutory compliance obligations. It also demonstrates how customer due diligence and transaction monitoring can become central issues in assessing an operator's regulatory conduct.

Instalments provide additional time for payment

The court has permitted the penalty to be paid in four equal instalments over 19 months. This arrangement avoids requiring the entire amount to be paid immediately while ensuring that the financial consequences of the ruling remain substantial.

The payment schedule is particularly relevant given The Star's recent financial difficulties and its efforts to stabilise operations. The company has faced funding pressures, restructuring requirements and significant expenditure associated with regulatory remediation.

At its annual general meeting on 27 October, chairman Soo Kim outlined progress made under the group's turnaround programme. He referred to the refinancing of corporate debt, changes to the operating structure and improvements in the performance of the Sydney and Gold Coast properties. He also indicated that the group's financial position had improved compared with the circumstances faced by the business earlier in the year.

However, management's assessment of progress does not remove the obligations imposed by the court. The company must still meet the payment schedule while funding its operating requirements and continuing work on regulatory compliance.

The instalment arrangement provides time, but it does not remove the underlying financial commitment or guarantee that the company's recovery will proceed without further challenges.

Quarterly results indicate improving performance

The penalty follows the release of The Star's unaudited quarterly activities report for the three months ended 30 September 2026. The company reported group revenue of AU$284 million, representing a 2% increase compared with the corresponding quarter of the previous financial year.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) reached AU$12 million. That compared with an EBITDA loss of AU$13 million in the same period a year earlier, representing an improvement of AU$25 million.

Revenue at The Star Sydney and The Star Gold Coast combined reached AU$279 million, up 5% year on year and 9% from the preceding quarter. Their combined segment EBITDA was AU$35 million, compared with AU$14 million in the corresponding period last year.

These figures provide an indication of improving trading performance at the company's two principal owned casino properties. Nevertheless, quarterly earnings alone do not establish that the group has resolved its wider financial and regulatory challenges.

The Star reported AU$239 million in cash and cash equivalents at 30 September 2026. Its total cash and cash deposits stood at AU$319 million, including AU$80 million in restricted deposits that were not freely available for general use.

The company also acknowledged continuing material uncertainties that could affect its ability to remain a going concern. This qualification remains important when assessing the sustainability of its recent financial improvement and its capacity to meet future commitments.

Casino licence restrictions remain in place

Regulatory oversight continues to affect the company's operations despite the reported improvement in earnings.

The Star Sydney's casino licence remains suspended. A manager appointed under the New South Wales regulatory arrangements is authorised to oversee the casino's operations, with the manager's appointment extended to 30 June 2027 unless ended earlier.

At The Star Gold Coast, the deferral of the casino licence suspension and the Special Manager's appointment have both been extended to 31 March 2027. The Star Brisbane's External Adviser's appointment has also been extended to that date.

These arrangements reflect the continuing work required to address outstanding remediation priorities and demonstrate that the group's compliance, governance and operational controls meet the standards expected by regulators.

The company has reported progress on its remediation programme, including changes intended to improve accountability at property level. However, final regulatory decisions remain dependent on the relevant authorities' assessments rather than on financial performance alone.

Conclusion

The AU$260 million ruling represents an important development in The Star Entertainment Group's efforts to restore financial stability and regulatory standing. The court has imposed a substantial penalty for anti-money laundering and counter-terrorism financing contraventions while allowing the company to spread payments across four instalments.

Improving quarterly revenue and a return to positive group EBITDA provide evidence of better recent trading performance. However, those results must be considered alongside the company's continuing financial uncertainties, its payment commitments and the restrictions affecting its casino licences.

The next phase will depend on whether The Star can maintain its operating improvements, meet the court's requirements and demonstrate sustained progress in its compliance and remediation work. The ruling establishes a significant financial obligation, but the longer-term outcome will depend on the company's ability to manage that obligation while meeting the regulatory standards required for its operations.

FAQs

How much must Star Entertainment pay following the court ruling?
The Federal Court ordered a total AU$260 million penalty in proceedings concerning anti-money laundering and counter-terrorism financing compliance failures at the group's Sydney and Gold Coast casino operations.

Which regulator brought the proceedings against Star Entertainment?
The proceedings were brought by AUSTRAC, Australia's financial intelligence and anti-money laundering regulator, which is responsible for enforcing relevant obligations under the country's financial crime laws.

How is the AU$260 million penalty divided?
The penalty comprises AU$195 million relating to The Star Sydney and AU$65 million relating to The Star Gold Coast.

What compliance failures did the court identify?
The court found deficiencies involving customer due diligence, source-of-funds verification, risk management and the monitoring of high-risk customers and gambling activity.

How many high-risk customers were involved in the findings?
The court found that more than 1,200 customers were able to gamble through channels associated with elevated money laundering and terrorism financing risks.

Why did the court consider junket revenue?
Revenue from junkets and high-risk customers helped illustrate the commercial context and potential financial incentives associated with inadequate compliance. The figures were not treated as a direct measurement of profits attributable to the contraventions.

How long does Star Entertainment have to pay the penalty?
The penalty is payable in four equal instalments over 19 months, giving the company additional time to meet its financial obligations.

Did Star Entertainment report an improvement in its financial performance?
Yes. For the first quarter of FY27, the company reported AU$284 million in group revenue and positive EBITDA of AU$12 million, compared with an EBITDA loss of AU$13 million a year earlier.

Is The Star Sydney's casino licence active without restrictions?
No. The licence remains suspended, with the casino continuing to operate under regulatory management arrangements. The manager's appointment currently extends to 30 June 2027 unless terminated earlier.

What are the main challenges facing Star Entertainment after the ruling?
The company must meet its penalty payments, sustain its financial recovery and continue addressing outstanding compliance and remediation requirements while remaining under regulatory oversight.