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Editorial – The waiting game

Ben Blaschke by Ben Blaschke
Wed 26 Feb 2025 at 14:56
Editorial – The waiting game
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Recent rumors suggesting that US private equity giant Blackstone could make a move to acquire Australia’s ailing Star Entertainment Group echo similar talk that has been doing the rounds across the industry over the past few months, particularly since Star revealed that it is on the brink of going bust.

Such an acquisition may have once seemed fanciful, but it is indeed looking increasingly likely – not only because of what would be a massively cut-price deal but also because it makes a lot of sense for all parties.

Recall that it was Blackstone who bailed out Crown Resorts back in 2022, and while that deal might not have quite worked out the way Blackstone envisioned it – not yet at least, given the substantial losses Crown continues to notch – the opportunity to take ownership of Australia’s two largest casino operators may be too good to refuse.

There are, of course, some questions to be answered, such as whether or not regulators in Sydney – home to The Star Sydney and Crown Sydney – would be happy to revert back to a monopoly ownership model, especially considering that increased competition was how the former state government originally sold the idea of a second Sydney casino license on issuing Crown’s a decade ago.

Yet the fact that Blackstone has already passed probity gives it a considerable head start, not to mention the allure of the group’s substantial resources at a time when many other companies may not have the financial clout to ride out any short-term pain.

From Blackstone’s point of view, and assuming it believes Star’s current run of negative cash flow can eventually be turned around (which is no certainty given current operating conditions), picking up the pieces of a fallen Star seems to make perfect sense.

One, it would undoubtedly acquire the company for cents on the dollar, which in itself may be seen as a low-risk opportunity. Two, by acquiring what’s left of Star rather than buying out the current existing entity, Blackstone would likely avoid having to pay any of Star’s impending regulatory fines, such as the one yet to be imposed by AML watchdog AUSTRAC. Remember that Blackstone has paid out more than US$300 million in fines and settlements in relation to Crown’s historical failures since assuming control two-and-a-half years ago.

And three, this may be the one avenue through which Crown can obtain a license to operate poker (slot) machines at its Sydney casino, given that The Star Sydney currently holds an exclusive license for their use (not including the state’s pubs and clubs).

It is, of course, no fait accompli that Star will bite the dust – right around the time of writing it was revealed that funds linked to Oaktree Capital Management had put forward a proposal to acquire the company’s debt from lenders, which could serve as a last-minute lifeline. But either way, expect Blackstone to be keeping a close eye on proceedings.

Tags: AustraliaCurrent IssueEditorialThe Star
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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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