Bell Two Spells Disaster for Star Entertainment

Things have gone from bad to worse for Star Entertainment after the first week of hearings for the Bell Two inquiry unearthed several damaging revelations about the company’s remediation efforts, or lack thereof. The future of Star Sydney, or perhaps the company overall, now hangs in the balance.

Bell Two Spells Disaster for Star Entertainment

February 19 news broke that the New South Wales Independent Casino Commission (NICC) was launching a second regulatory inquiry—known as Bell Two—into the suitability of Star Entertainment to hold its casino license for Star Sydney,  a stunning blow for a company that has already been through a gauntlet of fines, revocations and executive departures since the first investigation less than two years earlier.

Unfortunately for Star, things have only gotten worse following last week’s proceedings.

In a public hearing April 15, prosecutors laid out several communications between Star Chairman David Foster and former CEO Robbie Cooke outlining their desire to oust Nicholas Weeks, who had been appointed as a third-party manager by the NICC in 2022 to oversee the company’s remediation efforts. The duo also discussed the possibility of pursuing legal action against Weeks and the NICC itself.

On January 31, one day before Weeks was set to meet with the NICC, Foster pondered to Cooke that it might be possible to establish grounds “for a class action from shareholders against Nick Weeks or NICC,” to which Cooke replied that they would broach the topic with the company’s lawyers.

According to Inside Asian Gaming, Weeks was shocked when told about the messages during the hearing, and said that on the surface, the company appeared to have been “working cooperatively to address deficiencies that they need to address.”

He also asserted that if Cooke and Foster knew about the meeting at all, they likely accessed his calendar without his knowledge. “I expect that somehow they have accessed my diary ahead of the 1 February meeting,” he lamented, per IAG.

Perhaps most shocking were other messages pertaining to that meeting in which Foster alleged that Weeks and the NICC were “prepping for war,” and that the company had “better do the same.” Cooke answered in the affirmative.

“To suggest that they want to ‘go to war’ with the regulator and me in circumstances where their license is suspended and there is a decision about that suspension that has already been scheduled to occur in June this year is extraordinary,” Weeks said in response to the messages, per IAG.

Another surprising revelation to come from the hearing was that Star Sydney had failed to notice for nearly two months last summer that a TICO machine (ticket in, cash out) was defective; patrons who inserted two tickets were paid the combined amount, but one ticket was returned, meaning that they could keep reusing tickets and pocketing the extra money.

According to the Sydney Morning Herald, this basic lack of oversight cost the casino AU$3.2 million (US$2 million).

“This incident identified deep cultural problems in relation to the level of rigour through which controls are followed and the level of care in which work is conducted… I was also concerned about the control environment because I anticipated that balancing the books and counting money was something I anticipated the casino would be very good at,” Weeks said, per the Herald.

With regard to harm minimization, it was also discovered that Star falsified records outlining its responsible gaming obligations—under state regulations, anytime a patron plays at a gaming machine for three consecutive hours, they are supposed to receive a wellness check from staff, who are then obligated to submit records for such checks.

But based on observations from Liquor & Gaming NSW officers, Star was not doing so, despite recording that they were; surveillance videos verified these suspicions.

“That identification by Liquor & Gaming NSW initiated a broader investigation by Star and it became evident reasonably quickly that a practice of falsification of records, of interactions with patrons by gaming support officers and potentially others, was endemic within that team,” Weeks said, per IAG. “It appeared to be occurring very often and that a large proportion of the team were involved in that conduct.”

In the next hearing on April 18, business consultant Dr. Attracta Lagan went into great detail about how Star’s efforts were different from those of fellow operator Crown Resorts, given that she worked intimately with both.

Even though both companies have suffered much of the same fate with regard to regulatory sanctions and financial difficulties, Lagan said that Crown has done a much better job in implementing real change and forming a better culture.

“Star never listened,” Lagan said, according to IAG. “Robbie Cooke was too busy raising funds. There was no feedback loop. They spent a fortune on consultants but never built an organization from within and never hired someone to help manage any cultural change.”

Crown, which was purchased by U.S.-based investment firm Blackstone Group in mid-2022, was granted full suitability for its Crown Melbourne casino on March 26, and has committed hundreds of millions to organizational initiatives.

Lagan said during the hearing that Crown was very committed to working together toward a common goal, whereas Star fostered a culture of “low accountability,” with an us-versus-them mentality.

“There was a low-cost strategy using key internal influencers but that wasn’t done well,” she said, per IAG. “That would have been a good strategy had it been executed effectively.”

If all that wasn’t enough for one week, Star then announced April 19 that Jessica Mellor, CEO of the company’s Gold Coast casino, was stepping down after six months in the role, effective May 24.

Mellor previously served as COO of the casino since 2019 before being promoted to CEO last October. In a statement, Foster said that Mellor “has decided the time is right to move on and she leaves with both the Board’s and my personal thanks for her tireless efforts as CEO of The Star Gold Coast.”