Star Entertainment Group Ltd. shares plummeted to a record low on Tuesday after the New South Wales state gaming regulator launched a second investigation that could see the embattled company stripped of the license to operate its flagship casino in Sydney.
The stock plunged as much as 26% in Sydney trading, reducing the company’s value to 1.3 billion Australian dollars ($850 million).
An investigation in 2022 found Star was unfit to run the Sydney casino after finding it had lax anti-money laundering controls, allowed customers to circumvent China’s capital controls and encouraged problem gamblers. Since then, the casino has been under the supervision of an independent administrator appointed by the regulator.
On Monday, the regulator said that during the “prolonged period” of management, Star has not yet demonstrated whether it is fit or able to hold a casino license. It will now carry out a second investigation, the report of which will be published on May 31, into whether Star can retain the licence. The stock stopped trading yesterday.
“The stakes are high for Star, which is why the NICC is giving the casino every possible opportunity to demonstrate whether it has the capacity and competence to achieve suitability,” the regulator’s chief commissioner, Philip Crawford, said in a statement on Monday. .
The regulator’s doubts about the company’s ability to hold a license “concern us considerably,” raising the possibility that Star may not be able to recover it, Jefferies Group LLC analyst Simon Thackray wrote in a note. “We cannot exclude a domino effect for Star Queensland,” he added.
A similar investigation in Queensland, where Star has casinos in the state capital Brisbane and the popular tourist destination the Gold Coast, concluded it was also unfit to operate.
Star said Tuesday that it will not report its half-year earnings results on Wednesday as previously planned.
