S&P/ASX 200 Index (ASX: XJO) casino operator Star Entertainment Group Ltd (ASX: SGR) has just flipped the calendar on a year to forget.
But 2023 could throw up some more headaches for the ASX 200 stock.
Why was the ASX 200 casino operator battered in 2022?
As you can see in the chart below, the Star Entertainment share price trended broadly lower throughout the year, with a final big fall in December.
By the time the smoke cleared, the ASX 200 casino operator's shares were down 52% in 2022.
Star faced various regulatory headwinds during the year, culminating when it was hit by yet another $100 million fine in December, this one courtesy of Queensland.
In announcing the penalty on 9 December, Queensland's Attorney-General and Justice Minister, Shannon Fentiman, said Star's operating practices in the state's casino had been found to be unsuitable.
"I was appalled at the extent of the actions of The Star in welcoming excluded persons to their casinos and the exorbitant incentives on offer for questionable gamblers," she said.
And if the ASX 200 casino operator needed more troubles (it didn't), the company received it from New South Wales just a week later.
That's when NSW treasurer Matt Kean announced the state's plan to increase taxes on gaming tables and poker machines at casinos. NSW hopes to raise $364 million over the next three years from the tax hike.
This led Goldman Sachs to cut its price target for the ASX 200 casino operator by 34% to $1.90.
"The NSW government's proposed casino tax reforms pose a significant earnings risk for SGR's Sydney casino," Goldman noted.
What other headaches could Star Entertainment face in 2023?
Clearly the ASX 200 casino operator is going to need to lift its game from a governance perspective.
If done correctly, that should put an end to the crushing fines and casino license suspensions.
However, increasing compliance to the level that ASIC demands will come at its own cost.
Commenting on ASIC's signal to Australia's casinos, Monash University gambling regulation expert Charles Livingstone said (quoted by The Australian Financial Review):
The signal is pretty clear. If you want to be on the board of a large gambling concern, then you need to be around all the regulatory concerns of the industry, which are many and varied.
Livingstone said this will take a lot more effort from directors, however, it's certainly achievable.
"It's not unenforceable, but it becomes a much less profitable business if you do it properly, and that's the issue."
Indeed, the ASX 200 casino operator could see its profits eroded as it closes the door on problem gamblers and questionable high rollers flush with cash.
According to Livingstone, this will see the casinos incur some "really significant losses".
