A group of eight former directors and senior officers at SkyCity Entertainment are facing a legal challenge filed by a shareholder aiming to recover the AU$67 million ($43.55 million) penalty paid over serious anti-money laundering (AML) failures.
The case, lodged in the NSW Supreme Court, stems from compliance breaches uncovered during the Australian Transaction Reports and Analysis Centre (AUSTRAC) investigation into SkyCity Adelaide. The shareholder, Stephen Wright, is seeking court approval to launch a statutory derivative action on behalf of the company.
The defendants in the case include former CEOs Graeme Stephens and Michael Ahearne, ex-Deputy Chair Bruce Carter, and several former legal and compliance officers. They held key positions between December 2016 and December 2022, the period during which AUSTRAC found systemic failures in AML and counter-terrorism financing (CTF) compliance at the Adelaide casino.
AU$67 million penalty linked to AML failures
In December 2022, AUSTRAC issued a record AU$67 million fine against SkyCity Adelaide, citing “serious and systemic non-compliance” with AML/CTF laws. Investigators found the casino failed to monitor high-risk patrons, report suspicious transactions, and maintain a compliant risk framework. The breaches reportedly dated back several years and were part of a broader regulatory enforcement push initiated in 2019.
The lawsuit alleges that these former directors and officers breached their duties of care, diligence, and good faith under Australian corporate law. Wright’s legal team argues the defendants either contributed to or failed to prevent the compliance breakdowns that led to the AUSTRAC fine. If successful, any compensation recovered (after legal costs) would go directly to SkyCity, not the shareholder personally.
Additional penalties for SkyCity
The AU$67 million fine wasn’t the only hit to SkyCity’s bottom line. In October, the South Australian High Court ordered the casino to pay an additional AU$13.1 million in duty after a dispute over the treatment of loyalty points converted into gaming machine revenue. SkyCity Adelaide had argued that the converted loyalty points shouldn’t count toward casino duty. However, the Court of Appeal sided with the Treasurer of South Australia, ruling that the casino must pay.
Industry context: Star and Crown also under fire
SkyCity isn’t the only casino operator under scrutiny. AUSTRAC has taken similar enforcement actions against Crown Resorts and Star Entertainment, with both companies paying multi-million-dollar fines for AML failings. In fact, Star Entertainment has warned that any further major penalties could threaten its financial survival, stating its “ability to survive as a business is in serious doubt.
The SkyCity case marks a growing wave of investor-driven legal action targeting corporate governance failures in the gambling industry. Litigation Capital Management (LCM) is funding the lawsuit, reflecting the rising use of third-party litigation funders to hold executives accountable without direct financial risk to individual shareholders. The statutory derivative action is still in its preliminary stages, and no defence has yet been filed. If the court grants approval, the case could set a significant precedent for executive accountability in Australia’s regulated sectors.
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