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28-09-2024
BRISBANE/ SYDNEY: Shares in Australia’s no.2 casino operator Star Entertainment (SE), opens new tab slumped over 50% to a record low on Friday, as it resumed trading a day after posting a second straight multi-billion-dollar annual loss on a write-down in its venues’ value.
The company wiped AU$1.4 billion ($963.90 million) from the value of its casinos in Sydney, Brisbane and the Gold Coast because of “challenging trading conditions” and regulatory changes, including a switch to mandatory cashless gambling.
Statutory net loss after tax came in at AU$1.69 billion for the year ended June 30, from A$2.44 billion a year earlier.
“The earnings collapse is worse than we expected,” Morningstar said in a note and slashed its 2025 earnings forecast for the company by a third.
“We also lower our longer-term earnings as Star looks much less profitable given the current tighter regulatory regime.”
The stock dropped as much as 54.4% to AU$0.205 by 0032 GMT, becoming the worst performer on the ASX 200 benchmark index.
Trading in Star shares was suspended on Sept. 2 by the Australian bourse operator, after the company failed to lodge its annual report for fiscal 2024 by the required due date.
In its results posted four weeks after the reporting deadline on Thursday, Star said it might offload assets for ongoing restructuring activities and outflows regarding regulatory matters.
In recent years, Star and larger rival Crown Resorts have faced multiple inquiries into violations of anti-money laundering rules.
A government-ordered inquiry delivered an adverse finding regarding Star’s governance at its Sydney venue, which may bring tougher regulatory oversight and fines.
Star is also due to respond to the New South Wales gambling regulator’s show-cause notice by Friday, which related to a report that showed Star had been slow to address governance and cultural issues.
The casino commission in Australia’s biggest state said on Friday it may cancel Star Entertainment’s, opens new tab Sydney licence or fine it up to A$100 million ($67.2 million) after an inquiry found breaches of anti-money laundering protocols.
The New South Wales Independent Casino Commission (NICC) has served the casino giant a disciplinary notice that relates to four significant breaches detailed in a second report released on Aug. 30. Star is currently “considering the matters raised in the notice” and expects to respond to the regulator by Sept. 27, the casino operator said in a separate statement.
“The NICC has also requested information about the company’s current financial position and its proposed plans to address these issues on an ongoing basis.”
Earlier this year, the NICC launched a second investigation into Star on concerns that it had not sufficiently addressed its cultural shortcomings after being exposed for major anti-money laundering and counter-terrorism failures in 2022.
The breaches mentioned in the notice pertain to “a cash fraud against Star, a failure to run source of wealth checks on hundreds of members flagged as high risk, and fraudulent guest welfare entries that put already vulnerable customers at higher risk of harm,” the NICC said in a statement on Friday.
The regulator has given the company 14 days to respond to the ‘show cause’ notice.
Star Entertainment’s licence to operate its lucrative Sydney casino was already suspended in October 2022 after an enquiry found the company unsuitable to hold a licence and ordered it to pay a A$100 million fine. (Int’l Monitoring Desk)
