A day after disclosing a second consecutive multibillion-dollar annual loss from a write-down in the value of its venues, Star Entertainment, Australia’s second-largest casino operator, saw its shares plummet over 50%. When trading reopened on Friday, the shares reached a record low.
The business wrote off A$1.4 billion in the value of its Gold Coast, Sydney, and Brisbane casinos. This decision was prompted by tough trading conditions and changes in regulations, including the requirement for cashless gaming.
For the year ending June 30, the statutory net loss after tax decreased to A$1.69 billion ($1.16 billion) from A$2.44 billion the previous year.
“The earnings collapse is worse than we expected,” Morningstar wrote in a note, slashing the company’s projected earnings by a third for 2025.
“We also lower our longer-term earnings as Star looks much less profitable given the current tighter regulatory regime.”
By 00:32 GMT, the stock had fallen 54.4% to A$0.205, making it the worst performer on the ASX 200 benchmark index.
On September 2nd, the Australian market operator banned trading in Star shares. This action followed the company’s failure to submit its annual report for fiscal 2024 by the stipulated deadline.
Star stated in its results, released on Thursday, that it may sell assets. This decision comes four weeks after the reporting deadline and aims to fund ongoing restructuring efforts and address outflows related to regulatory issues.
Star and its bigger competitor Crown Resorts have been the subject of numerous investigations regarding possible anti-money laundering offenses in recent years.
A government-ordered investigation produced a negative report about Star’s governance at its Sydney location. This could lead to harsher regulatory scrutiny and penalties.
After trade hours on Friday, Star responded to the show-cause notice from the New South Wales casino regulator. The company argued, among other things, about Star Sydney’s eligibility to hold a casino license.
Requests for more information from Reuters were not immediately answered by Star or the regulator.
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