The Star Entertainment Group Ltd (ASX: SGR) share price has gone from bad to worse.
At the time of writing, shares in the casino operator are trading for $3.20 – down 3.03%. Earlier in the session shares reached a new 52-week low of $3.14 each.
The negative price movement is the continuation of the selloff that began yesterday, after a joint investigation by the Sydney Morning Herald (SMH), The Age, and 60 Minutes aired explosive allegations of money laundering, facilitating organised crime, fraud, and foreign interference at its casinos.
Yesterday, shares plunged an astounding 22.9% to end the day at what was then their lowest point in 10 months. Today has seen a continuation of the selloff, with shares hitting a new 52-week low.
Let’s take a closer look.
The allegations against Star
The Nine Entertainment Co Holdings Ltd (ASX: NEC) outlets are alleging the company overlooked serious misconduct at its casinos for years.
They claim 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-influenced operations”.
Similar allegations against gaming compatriot (and one-time takeover target) Crown Resorts Ltd (ASX: CWN) saw that company refused a gaming licence in New South Wales. It also resulted in royal commissions in Victoria and Western Australia to examine whether it should still be allowed to operate in those states.
Investors are seemingly worried the regulatory eye will fall on Star in a similar way, at least judging by the falling Star share price over the last 2 days.
How did Star respond?
In a statement to the ASX released yesterday, Star said it was “concerned by a number of assertions within the media reports that it considers misleading”.
The company added it already operates in a heavily regulated industry and that they are subject to “ongoing regulatory oversight” such as compliance checks and periodical reviews. Finally, it added its support to the recommendations of the Bergin Inquiry into casino regulation.
This statement did not appease investors yesterday. Judging by the continuing fall in the Star share price, it isn’t making much of an impact today either.
Star share price snapshot
Over the past 12 months, the Star share price has decreased by 5.44%. However, on Friday, it had actually appreciated by 27%.
Star shares hit their 52-week high only 5 days ago, which goes to show nothing can be taken for granted when it comes to investing.