Star Entertainment Group has been found unsuitable to hold a casino licence in Queensland.
Attorney-General Shannon Fentiman made the finding and said the state's casino regulator will issue the company with a show cause notice as to why it should continue operating in Queensland.
It comes after the release of an independent review by former Court of Appeal Judge Robert Gotterson which made 12 recommendations, including that casino laws in Queensland be amended as a priority to allow for the appointment of a special manager to increase supervision and integrity of casino operations.
Ms Fentiman said the report highlighted "major failings" and made very serious findings that adversely affect Star's character, integrity and honesty.
"Mr Gotterson found Star was not forthcoming or transparent in its dealings with its banker or the regulator and its actions were indicative of a one-eyed focus on profit," she said.
Star Entertainment Group currently runs two casinos in Queensland – The Star Gold Coast and Treasury Brisbane – with its Brisbane license to transfer to the $3.6 billion Queen's Wharf casino development in Brisbane's CBD when it opens next year.
The inquiry looked into Star's operations in Queensland, its compliance with anti-money laundering responsibilities, junket operations, and the relationship with VIP patrons and high rollers.
The state casino regulator is still investigating organised crime links associated with a key backer of Queens Wharf casino following revelations by the ABC in August.
Ms Fentiman, who ordered the fresh investigation by the Office of Liquor and Gaming Regulation (OLGR) into Chow Tai Fook's suitability as a major shareholder in Star and Queens Wharf, has told the ABC she will release those findings.
In his report, Justice Gotterson said the attorney-general brought "to my attention allegations made in relation to Chow Tai Fook Enterprises (CTFE) published by the Australian Broadcasting Corporation … particular reference was made to the allegations that the founder of CTFE has links to known organised crime figures".
He said Ms Fentiman "requested that I consider the allegations against CTFE as a shareholder and close associate" of Star but he had "no compulsory powers" to investigate its suitability as part of the review.
The hearings revealed high-risk gamblers were "actively encouraged" – and even incentivised – to travel to Queensland to gamble at Star's casinos even though "red flags" were raised and they were banned from gambling at casinos in other states.
It also revealed Star allowed $55 million to be disguised as hotel expenses to be gambled using China UnionPay debit or credit card payments.
"They made a concerted effort to obscure the purpose of these transactions and deliberately mislead the regulator and their own banker," Ms Fentiman said.
The state government has accepted all of Mr Gotterson's recommendations in principle.
In an announcement to the ASX, Star Entertainment said it was "considering the report and the matters raised by Mr Gotterson and will continue to work cooperatively with OLGR".
The independent review was announced by Ms Fentiman in June this year after hearings in New South Wales from the Bell inquiry aired allegations of money laundering, fraud and criminal infiltration at Star casino in Sydney.
Recommendation to reduce gambling harm
The recommendations also includes the establishment of regular investigations into the suitability of all Queensland casinos, which would be paid for by casino operators, similar to laws in New South Wales.
Mr Gotterson also recommended improvements to gambling harm like mandatory carded play and limits on cash transactions.
Ms Fentiman said the recommendations would also see cashless gaming in Queensland casinos.
"The recommendations will ensure that Queensland casinos operate lawfully and transparently as we all expect them to do so," she said.
Mr Gotterson – who was with the attorney-general as she handed down his report – said after considering evidence from the Queensland hearings, the Bell inquiry in New South Wales and a preliminary report from the state's casino regulator, he was able to advise to the government that Star could be found unsuitable to hold a licence.
He said he found despite the state's casino regulator — the Office of Liquor and Gaming – pursuing matters relating to Star, the casino operator was often not forthcoming with information.
"From what I have seen, and from the preliminary investigation report that had been done, it showed a vigilance on the regulators part in attempting to pursue lines of inquiry that were appropriate," he said.
"The report also showed at times the Star was indifferent towards giving a full account of the factual situation, or even worse, misrepresenting it."
Star must prove suitability to hold licence
The show cause notice will now be prepared for Star Entertainment to prove their ongoing suitability to continue to hold a casino licence in Queensland, which the attorney-general said would take a few weeks to be issued.
Star Entertainment will then have 21 days to respond.
Ms Fentiman said there was a range of actions the state government could then take.
"That can range from directions, to censures, to fines, to potentially suspension or cancellation of a casino licence," she said.
"If Star are unsuitable to hold a licence, government will look at someone else to hold that licence.
"The recommendations, very sensibly, from Mr Gotterson would allow us to put in place a special manager.
"That's what we've seen in Victoria, we are yet to see what the outcome is in New South Wales after the Bell inquiry and Western Australia has also passed legislation allowing government to put in place special managers so that the casino can continue to have a licence."
The state government will also raise the maximum penalty that can be imposed on a casino to $100 million.
The acting chief executive officer of Star Geoff Hogg resigned last month after the Bell report found the company not suitable to hold casino license in Sydney.
Shadow Attorney-General Tim Nicholls has labelled the Gotterson review as "a missed opportunity" to look at all casino operators in the state, the links between the industry and state government, and at Queensland's casino regulator.
"There are a number of facets of this report that are I think disappointing," he said.
"Disappointing not in the sense of what Mr Gotterson has done or found, but disappointing in the sense that the terms of reference didn't allow him to go further.
"His focus was on looking forward, not how we got here in the first place."
