The Star Entertainment share price is trading around all-time lows of 40 cents: How low can it go?

I think the fate of Star shares rests on one factor…

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Distressed man at a casino puts his head in his hands, covering his face.

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As many ASX investors would be aware, the past few months have not been pleasant for anyone who's invested in the shares of ASX 200 gaming company Star Entertainment Group Ltd (ASX: SGR).

Star shares lave lurched from one problem to another. Currently, the company is trading at 40.5 cents a share, down a nasty 2.41%. That puts the Star share price down a painful 21.36% over 2024 to date. As well as down 65.51% over the past 12 months.

What about investors who had the misfortune of picking up Star shares back in October 2021? That was when the company was trading at around $3.80 a share. As such, those investors would now be nursing a horrid loss of almost 90%.

Earlier this month, Star went even lower, hitting a new all-time record low of 38 cents just last week.

The company has since rebounded off of those lows as of today's pricing. But even so, it would still be undoubtedly too low for comfort for any Star investors. So today, let's discuss if we've seen a bottom for Star. Or if the company is destined to explore even lower territory.

Just how low can Star shares go?

Unfortunately for Star, its shares have been under this enormous pressure for good reason. The company is in the midst of explaining to a New South Wales government inquiry why it should continue to have the right to operate a casino in the state.

This comes after the company was forced to defend its presence in the Queensland market, in which it owns two casino operations. Its Brisbane operations look to be secure, at least for now, following the appointment of 'special managers' to oversee its operations.

But Star's fate in NSW remains up in the air.

If NSW finds that Star is unsuitable to operate casinos in the state, it could face an existential crisis.

As such, the fate of the Star share price is likely to rest on the outcome of NSW's Bell Inquiry II. If the inquiry produces a favourable outcome for Star's future in the state, then I wouldn't be surprised to see Star shares begin to recover. The company faces a long road ahead of it. But some regulatory certainty would probably work wonders for investor confidence.

It might also halt the game of musical chairs that the company's management has been playing in recent months.

However, if the inquiry continues to suspend, or even cancel, Star's licensing, it could be catastrophic for the company's future and its share price. If this scenario comes to pass, I would expect Star shares to explore even lower pricing.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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