Star Entertainment narrows EBITDA losses by 71% in H1 FY26
The Star Entertainment Group (ASX: SGR) has reduced its half-year EBITDA loss to -$7.6 million, a 71% improvement from the -$26.4 million loss recorded in the prior corresponding period. Despite normalised revenue declining 10% to $584.9 million, the casino operator’s cost management initiatives are beginning to deliver underlying improvements as the company navigates mandatory carded play restrictions and regulatory headwinds.
The statutory net loss after tax for H1 FY26 came in at -$109.7 million, representing a 64% improvement from the -$301.9 million loss in H1 FY25. Operating expenses decreased 11.2% to $463.6 million, driven by volume-related reductions, the closure of Treasury Brisbane Casino in August 2024, and lower corporate costs. The company continues to work towards a potential debt refinancing solution with WhiteHawk Capital Partners, targeting binding commitment by 31 March 2026.
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What is an EBITDA turnaround and why it matters for investors
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) measures a company’s operating performance before accounting for financing and accounting decisions. When a company is unprofitable, investors often focus on whether losses are narrowing rather than absolute profitability, as this signals operational progress and a path towards break-even.
In Star Entertainment’s case, the 71% reduction in EBITDA losses demonstrates that management’s cost-cutting measures are taking effect despite challenging trading conditions. The company achieved this by reducing corporate overhead, consolidating operations, and controlling volume-related expenses. For investors, a narrowing loss trajectory indicates the business is moving closer to sustainable operations, even before factoring in potential revenue recovery from regulatory stabilisation and licence reinstatements.
Operating expense reductions driving improvement
Star Entertainment’s operating expenses fell 11.2% to $463.6 million in H1 FY26, reflecting three key drivers:
- Volume-related expense reductions tied to lower gaming activity
- Closure of Treasury Brisbane Casino in August 2024, which eliminated property-level costs
- Lower corporate costs following streamlining initiatives and workforce reductions
Gaming taxes and levies also decreased 16.4% to $128.9 million, primarily reflecting the lower revenue base. However, remediation and transformation costs remain elevated as the company continues investing in enhanced risk, compliance, and safer gambling functions. Management expects these elevated costs to roll off over the next 24 months, which should support further margin improvement.
WhiteHawk refinancing proposal progresses towards March deadline
Star Entertainment executed a non-binding term sheet with WhiteHawk Capital Partners on 26 February 2026 for a proposed refinancing of the Group’s existing debt. The proposal provides refinancing of current debt obligations plus incremental liquidity. Under the terms of a covenant waiver received from existing Senior Facility Agreement (SFA) lenders, the company must deliver a binding refinancing commitment letter by 31 March 2026 and execute the refinancing by 15 May 2026 to avoid default.
The company holds $130 million of available cash as at 31 December 2025, down from $234 million at 30 June 2025. Cash and cash equivalents stood at $171 million, including $41 million of cage cash. Importantly, the determination of the AUSTRAC penalty case is not a condition to completing the refinancing proposal, reducing one potential obstacle to debt restructuring.
Balance sheet snapshot
| Metric | Dec 2025 | Jun 2025 | Change |
|---|---|---|---|
| Available cash | $130m | $234m | -$104m |
| Cash and cash equivalents | $171m | $267m | -$96m |
| Net debt | $110m | $207m | -$97m |
| Current interest bearing liabilities | $351m | $7.8m | Reclassified |
Net debt decreased $97 million from June 2025 to $110 million at 31 December 2025, reflecting debt repayments and proceeds from the strategic investment. The reclassification of $341 million of bank loans to current liabilities highlights the urgency of the refinancing process.
Bally’s and Investment Holdings complete strategic investment
The $300 million strategic investment from Bally’s Corporation and Investment Holdings Pty Ltd has now been fully received and converted to equity following regulatory approvals from the NSW Independent Casino Commission and Queensland Office of Liquor and Gaming Regulation in November 2025. Bally’s holds approximately 38% of Star Entertainment’s issued capital, whilst Investment Holdings holds approximately 23%.
The investment was structured as a multi-tranche convertible note and subordinated debt instrument, with $233 million received before 30 June 2025 and the final $67 million instalment received from Bally’s in October 2025. The conversion to equity enabled the appointment of nominee directors to The Star Board, bringing both capital and strategic governance alignment from committed major shareholders during the turnaround phase.
DBC exit and Gold Coast consolidation update
Star Entertainment entered into binding documentation on 12 August 2025 with joint venture partners Chow Tai Fook and Far East Consortium to exit its equity interest in Destination Brisbane Consortium (DBC) and consolidate its Gold Coast assets. Whilst progress has been made on satisfying conditions precedent, the original sunset date of 30 November 2025 was not met. DBC lenders extended the facility to 31 March 2026, and Star’s parent guarantee of approximately $0.7 billion of DBC debt remains in place until completion.
Star Brisbane delivered $40.2 million in operator fee revenue during H1 FY26, up from $14.4 million in H1 FY25. Following the August 2025 restructuring, the operator fee moved to a fixed $5 million per month arrangement from March 2025. The H1 FY26 figure includes a $10.2 million true-up of amounts not previously recognised.
January 2026 trading shows continued improvement
Star Entertainment Group reported revenue of $98.3 million for January 2026 with EBITDA of $4.2 million, demonstrating further operational progress. This represents an improvement on the Q2 FY26 monthly average and signals that cost initiatives are gaining traction across properties.
Star Sydney achieved a near break-even EBITDA result in January 2026, with variable cost reductions and cost-out initiatives offsetting a revenue decline. Star Gold Coast delivered $6.2 million in EBITDA for January 2026, benefiting from seasonally stronger gaming volumes. Gold Coast revenue was in line with the prior corresponding period and 11% higher than the Q2 FY26 monthly average.
Available cash stood at $128 million as at 31 January 2026. Maintaining positive monthly EBITDA through H2 FY26 remains critical to the investment case, particularly as the company navigates the March refinancing deadline and works towards licence reinstatement.
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Path to licence reinstatement remains critical
Casino licence restrictions continue to represent the single largest barrier to operational normalisation and revenue recovery. Star Sydney’s casino licence remains suspended, with the Manager’s term currently set until 31 March 2026. The suspension of Star Gold Coast’s casino licence has been deferred until 30 September 2026, as has the External Adviser appointment at Star Brisbane.
As at 31 January 2026, Star Entertainment has completed 457 milestones from the original remediation plan. Of these, 436 have been submitted for review, with 391 accepted by the Manager, Special Manager, or External Adviser. Significant progress has been made across all 14 workstreams, including priority remediation areas of Risk Management, Compliance, Financial Crime, and Safer Gambling.
Investment Implication
Licence reinstatement is essential for customer retention, talent acquisition, and ongoing access to capital. Without regulatory approval to resume normal operations, the company’s ability to compete for premium customers and attract experienced staff remains constrained, limiting revenue recovery potential regardless of cost improvements.
The regulatory pathway and timeline for full licence restoration remains uncertain, representing ongoing execution risk for the turnaround thesis.
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