An exclusive deal between The Star Sydney and an Asian gambling junket operator governing a private high-roller room was renewed despite the relationship being "wholly inappropriate", an inquiry into the casino has been told.
The NSW Independent Liquor & Gaming Authority is investigating whether The Star Sydney has been infiltrated by criminal activity, and if its casino licence should be stripped following highly critical media reports.
The inquiry was sparked by reports accusing the venue's owner, Star Entertainment Group, of enabling suspected money laundering, organised crime, fraud and foreign interference at its gaming facilities, including its Sydney casino.
On Friday, Star Entertainment Group compliance manager Graeme Stevens was grilled about what he knew of a private gaming room in the casino's Darling Hotel, known as Salon 95, that was controlled by the casino giant and exclusively accessed by Macau-based junket operator Suncity.
Despite Suncity being prohibited from handling cash in the room, a Suncity worker brought bags of money to its service desk, which was used as "an unlawful cage" in the salon over which Star had infact "very little control", the inquiry was told.
There was even a push by Suncity, the inquiry was told, to place its branded signage, ash trays, lighters and water bottles in the room, but they were stopped due to concerns it would look too much like "a Suncity casino, not The Star".
It was also told of "blind spots" in surveillance of the VIP room balcony, and moves by the casino to mislead the regulator about the installation of a "buy-in desk".
Even though the casino knew of "serious problems" at Salon 95, the relationship with Suncity continued via an "exclusive access right" that was extended in 2018, and Mr Stevens, in a report, marked Suncity's performance as "satisfactory".
"You'd agree with me that it was wholly inappropriate for that step to be taken and what should have happened is that the relationship should have terminated," counsel assisting Nicholas Condylis put to Mr Stevens.
"Correct," the witness replied.
Inside the salon, junket operators were issued with "non-negotiable" chips to players who, if they won, exchanged those chips for "premium chips", which were then exchanged back into non-negotiable chips, the inquiry was told.
Each junket was given one set of non-negotiable chips, which were offered in either Australian dollars or Hong Kong dollars.
The inquiry's focus on Salon 95 is part of the casino's so-called "international rebate business" - known as junkets - that involved huge marketing efforts to attract VIP patrons, many from mainland China, to gamble at The Star.
Earlier, Mr Stevens rejected a suggestion that he "deliberately set out to mislead the regulator about the use of the CUP (China Union Pay) card at The Star".
He said he was not trying to mislead the regulator by failing to disclose a casino "workaround" in relation to the CUP card at any time in 2013 or 2014, telling the inquiry he "did not deliberately choose not to disclose anything to them".
He testified being aware from 2014 that CUP put restrictions on its cards to stop the purchase of gaming chips, describing his previous evidence of only becoming aware much later as wrong, but not "deliberately untruthful".
The inquiry has previously been told how China Union Pay - a Chinese financial services company - prohibited gambling transactions, but that Star could disguise wagering on its debit cards as hotel accommodation charges.
Around $900 million was transacted on the CUP cards until terminals inside Star Entertainment casinos were disabled in 2020.
The inquiry continues on Monday.