Star Entertainment posts quarterly loss, pins hopes on Bally’s rescue deal

Star Entertainment Group reported a third-quarter operating loss and flagged material uncertainty over its ability to continue as a going concern, as declining casino traffic, regulatory tightening, and storm disruptions weighed on earnings.

The embattled Australian casino operator posted an EBITDA loss of A$21 million ($13.6 million) for the three months to March 31, swinging from a profit of A$38 million a year earlier. Quarterly revenue fell 35% year-on-year to A$271 million, and was down 9% from the December quarter.

The company cited weaker consumer demand, tougher gambling restrictions, and the impact of Tropical Cyclone Alfred, which forced temporary closures at its Gold Coast and Brisbane properties. The Brisbane disruption alone resulted in a A$1 million EBITDA loss, the company said.

Star’s flagship Sydney casino reported a 17% decline in daily revenue since mid-August 2024 and an 8% quarter-on-quarter drop, exacerbated by a reduction in individual cash limits from A$5000 to A$1000 introduced last August.

Amid mounting financial pressure, Star reiterated that it faces "material uncertainty" around its ability to meet obligations without immediate liquidity support. It emphasized the urgency of ongoing strategic initiatives.

Earlier this month, Star reached a deal with Bally’s Corporation and the Mathieson family, its largest shareholder, for a combined A$300 million ($191 million) capital injection. The proposed deal includes A$250 million from Bally’s via subordinated convertible notes, which would convert to a 50.1% stake in Star. An additional A$50 million from Bruce Mathieson is contingent on the transaction’s completion.

Under the terms, Bally’s would hold a 56.7% controlling stake, pending shareholder approval in June. Bally’s chairman Soo Kim said the company is “very open” to expanding the transaction further.

The rescue package follows Star’s failed A$940 million refinancing attempt with Salter Brothers Capital, which fell through due to the absence of a binding commitment.

Star identified the completion of the Bally’s investment, the sale of its Sydney Event Centre, and its exit from the DBC joint venture as near-term priorities to stabilize its balance sheet.