In our view, the NSW government’s issue of the second casino license in Sydney stemmed from underinvestment and underperformance in The Star Sydney, depriving the state of taxation revenue. Star spent ~$500 million improving its Sydney facilities ahead of Crown Sydney’s opening however it was too little too late. We estimate that 30% of table revenue will be conceded to Crown Sydney within three years of the competitor’s operation. Star Entertainment has returned to its customary position in the loser's column after warning shareholders about the "material uncertainty" of their investment, something they should be all too aware about already.