Bally’s cautions it could exit Star deal over a potential new penalty

• Bally’s is optimistic about the future of Star Entertainment Group, but with a few caveats
• The AU$300m rescue package is based on the condition that the group remains solvent
• A looming AU$400m fine may see Bally’s quit the deal, citing "changed facts"

Bally’s Corp has gone ahead with a plan to help Star Entertainment Group steer out of its current predicament tied to the company’s performance and in the wake of a debilitating AUSTRAC-issued penalty.

Bally’s is confident in Star’s future, but a huge fine may change that

However, Bally’s Corp’s help is predicated on specific "facts," said company Chairman Soo Kim. Last week, Star Entertainment’s shareholders approved a joint bailout offer put forward by Bally’s and Bruce Mathieson’s Investment Holdings, totaling AU$300m or $195m.

Shortly after the package was approved by stakeholders, Inside Asia Gaming got on a call with Kim, to talk about the future of the company. Kim addressed the current situation and spoke about some of the most pressing issues, including the future of Star Entertainment’s Brisbane property.

Kim told the publication that the company would prefer not to offload the property but remained ambiguous on what the future may bring.

He similarly underscored that Bally’s has gone into the offer with the understanding that Star Entertainment would remain solvent and that Bally’s bailout package, along with the company’s proven expertise, would help steer Star towards better days.

However, this was contingent on Star Entertainment Group not incurring another financial penalty similar to the one issued to Crown Resorts in 2023 by the Australian financial regulator, AUSTRAC, which ordered the company to pay AU$450m.

These comments are not just a remark made in passing. At the beginning of June, it became known that AUSTRAC is indeed looking to impose a fine on the group and its operations. AUSTRAC has cited numerous alleged shortcomings when it comes to the group’s AML practices, tied to Chinese junket operators.

AUSTRAC’s rumored fine could see Bally’s sound retreat

As reported by the Australian Financial Review, AUSTRAC could be pushing for an AU$400m fine, which is still less than the fine issued to the company’s rival in 2023, but could put Star Entertainment in a very difficult spot.

If Star Entertainment can weather the oncoming storm, Bally’s could be able to "solve its problems," as Kim told Inside Asian Gaming. The problems faced by one property, he argued, are the same problems faced by all three.

"We are looking forward to getting involved and converting our debt to equity, exerting the influence that we believe this company needs to turn around, but there are scenarios where we are not going to be able to do that," Kim cautioned.

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