New South Wales (NSW) and Queensland regulators appointed special managers to oversee the company’s operations after the scandals surrounding its risk management failures and unethical behaviors. The beleaguered operator has recorded substantial progress in remedying its deficiencies but must still convince authorities it is ready to resume control.

Both Regions Expect Swift Progress

In ASX filings on Friday, Star disclosed the extension of Nicholas Weeks’ term as Manager of The Star Sydney by nearly six months, lasting until 30 June 2024. Similar to NSW, the position of the Special Manager for The Star Gold Coast and Treasury Brisbane casinos in Queensland has been extended by 12 months to 8 December 2024. 

These extensions aim to demonstrate that Star is capable of the necessary remedial actions to regain suitability and resume gaming activities as per its casino license provisions in NSW and Queensland. This change necessitates Star to demonstrate its adherence to the ongoing remediation plans and regain suitability by summer 2024.

Queensland’s decision to extend its special management follows a recent decision by Attorney General Yvette D’Ath to alter the effective date of a 90-day casino license suspension from 1 December 2023 to 31 May 2024. Meanwhile, the NSW Independent Casino Commission (NICC) clarified that its extension will likely mark the final continuation of the Manager’s term, with the option to conclude the tenure earlier if deemed appropriate.

The Operator Faces Growing Pressures

Star Entertainment managing director and CEO Robbie Cooke commented on the recent developments, expressing satisfaction with the Remediation Plan’s approval in Queensland. He stressed the need for unwavering commitment, accountability, and diligence to implement the measures successfully and prove that Star Entertainment can operate without additional supervision.

Despite the operator’s steady progress towards compliance, it faces substantial financial issues. Recent casino duty rate increases threaten to undermine the company’s long road to profitability as its FY 2022/23 results reported an unpleasant full-year loss of $1.6 million. However, all revenue-related policies must wait until the company regains regulatory compliance.

We need to regain the trust and confidence of all our stakeholders and communities and continue to have an unwavering focus on transformation.

Robbie Cooke, Star Entertainment managing director

While Star Entertainment has recorded steady progress with its remedial measures, many industry experts express skepticism about whether the operator can salvage its influence and reputation. Even if the company regains the trust of regulators, it must still struggle with mounting losses and macroeconomic pressures, meaning a return to profitability may take years.

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Gaming technology and content supplier, Golden Matrix Group Inc. (GMGI), and MeridianBet Group announced an amendment to the definitive agreement reached at the beginning of the year.

Less Cash, More Stock

The Amended and Restated Purchase Agreement for the acquisition of MeridianBet Group and its related companies by GMGI extends the required closing date of the transaction and modifies some of the additional terms.

Las Vegas-based GMGI entered into a definitive agreement to acquire the Malta-headquartered online sports betting and gaming group that is active across 15 jurisdictions in Europe, Africa and South America for a total consideration of around $300 million.

The cash plus stock deal agreed in January stipulated that GMGI would pay $70 million in cash and issue 65.3 million common shares to MeridianBet shareholders at an agreed price of $3.50 per share.

The amended agreement decreased the cash payable upon transaction close from $50 million to $30 million, keeping the $20 million in non-contingent cash consideration due post-closing unchanged, and increased the stock component of the deal to 82,141,857 common shares due at closing.

Total Price Consideration Increases

Commenting on the amended agreement, GMGI’s chief executive officer Anthony Goodman outlined that “the revised cash and stock transaction now has a value of approximately $331 million, with the stock consideration priced at $3 per share,” representing a 38% premium to GMGI’s 30-day volume-weighted average price.

Further explaining the rationale behind the increased total price consideration, Goodman pointed to the increase in MeridianBet’s year-to-date revenues, stating that based on MeridianBet’s year-to-date financial statement and projections, “the acquisition is now projected to be approximately $31 million in Adjusted EBITDA and $139 million in revenues for the October 31, 2023 year.

“MeridianBet’s impressive performance thus far in 2023 gives us even greater confidence in the value of this acquisition, which is expected to bring significant benefits to GMGI from both a financial and operational standpoint, and our management team is confident it will drive long-term value for all our stakeholders,” Goodman concluded.

Shareholder Approval, Transaction Close

GMGI is considering ways to obtain the required financing to complete the transaction and is planning to file the required proxy statement for shareholder approval in the third business quarter of 2023. The acquisition of MeridianBet is expected to close in either the third or fourth quarter of the year, subject to various closing conditions.

MeridianBet Group is currently operating across new and fast-growing regulated B2C markets in Eastern Europe and the acquisition is expected to provide Nasdaq-listed GMGI with access to a market that is projected by Statista to grow to $895 million this year, and $1.23 billion by 2027.

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