Star shares drop after media allegations spark fears ahead of licence renewal
Despite its Sydney casino re-opening, today hasn’t been a good day for shareholders of Star Entertainment Group (ASX:SGR).
Its shares have dropped over 15% this morning following media reports alleging the company of enabling criminal activity including money laundering.
The exposé came at a critical time for the company, as it faces a NSW government review into its Sydney casino operations.
While it is standard practice that a casino operator in NSW faces inquiry every five years, the investigation still looks to have provoked investor fears that it may not be granted a licence.
The scrutiny of SGR followed Crown (ASX:CWN) being deemed unsuitable to operate its $2.2 billion hotel on the other side of Darling Harbour.
Star’s ASX shares dropped nearly 20% this morning.
It has been a rough two years for the company with COVID-19 border closures and lockdowns robbing it of clientele.
The company’s shares grew 24% in the first three quarters of 2021 but today’s drop wiped out those gains.
While the final decision will not be handed down until January 2022, SGR released a statement to its ASX shareholders this morning.
The company said it would take steps to address some of the allegations and would work with authorities – including inquiry head Adam Bell – but was concerned that some were misleading.
“We will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities,” it said.
“The Star operates in a heavily regulated industry. We are subject to thorough and ongoing regulatory oversight including compliance checks and reviews across the company’s operations in NSW and Queensland.”
“The Star also notes the recommendations of the Bergin Inquiry, which were supported by the NSW government on 18 August 2021. These recommendations will impact the regulation of casinos in NSW and are supported by The Star.”
In a surprising piece of good news – just in time for the re-opening of its Sydney Casino – NSW’s Independent Liquor and Gaming Authority extended The Star’s interim liquor licences by nine months. These were due to expire at the end of this month but these will now expire on June 30 next year.”
But ILGA chair Philip Crawford warned this should not be taken as a preview as to its decision on its gaming operations.
“ILGA’s position on Crown Sydney’s gaming operations has not changed, with the Authority still monitoring and assessing Crown’s responses to the issues arising from the Bergin Report,” he said.
“These issues are complex, and Crown is required to undertake significant change to satisfy the Authority that it is on a pathway to become suitable to hold a gaming licence.
“It will take further time for Crown to fully implement that change and for the Authority to give it proper consideration before making its determination.”