The Star Entertainment Group Ltd (ASX: SGR) share price is tumbling after the casino operator responded to damning media reports.
In a joint investigation reminiscent of that which preceded the Bergin Inquiry into Crown Resorts Ltd (ASX: CWN), Nine Entertainment Co Holdings Ltd‘s (ASX: NEC) The Age, the Sydney Morning Herald (SMH), and 60 Minutes launched allegations against Star last night.
They accused Star of allowing suspected money laundering, organised crime, fraud, and foreign interference in its casinos.
Star hit back against the accusations in a release to the ASX this morning. The company stated the reports are misleading and it will be addressing each allegation with regulators. It also said, “there are constraints on publicly discussing specific individuals.”
However, the company’s recognition of the reports hasn’t been enough to save its share price.
At the time of writing, the Star share price is $3.46, 19.16% lower than its previous close.
Let’s take a closer look at the disturbing allegations against Star.
Star share price slides amid media storm
The Star share price is sliding today amid allegations the company overlooked serious misconduct at its casinos.
The outlets claim that, despite a report by global audit firm KPMG warning Star it wasn’t doing enough to combat money laundering, terrorism financing, and exploitation, Star continued to overlook such activities.
They also allege that rather than ending its relationship with gamblers who showed “red flags”, Star provided them with incentives. In fact, the publications claim Star “cultivated” punters who were “allegedly associated with criminal or foreign-influence operations”.
One such red flag was reportedly one of the company’s biggest pokies players; a “mostly unemployed” person who allegedly cashed out $18 million over 6 years and sometimes gambled in 9-hour sittings. New South Wales police reportedly arrested the person for importing cocaine earlier this year.
Additionally, the publications claim Star allowed people banned from casinos in Melbourne and Sydney to gamble at its Gold Coast casino.
Further, The Age, SMH, and 60 Minutes claim Star let big betters use problematic Chinese debit and credit cards to withdraw money in a way that masked gambling as general spending.
Finally, the publications claim Star kept links with the same Chinese organised crime figures that spurred numerous investigations and Royal Commissions into Crown Resorts. They allege Star failed to do basic research into the figures and, therefore, overlooked their criminal pasts.
And the Star share price looks like it could face even more trouble soon.
The Age and the SMH ended their reports promising to release more damning allegations today, stating:
Law enforcement and regulatory sources said Austrac was building a strong case against Star, and Star would face significant penalties next year, putting further pressure on senior management and the board.