Australia’s Star Plunges After $1.2 Billion Loss; Responds to Show-Cause Notice

Shares of Star Entertainment, Australia’s second-largest casino operator, plummeted over 50% to a record low on Friday following the resumption of trading after a two-day suspension. This decline came after the company reported a second consecutive multi-billion-dollar annual loss attributed to a significant write-down in the value of its properties.

Star Entertainment announced a reduction of A$1.4 billion in the value of its casinos located in Sydney, Brisbane, and the Gold Coast, citing “challenging trading conditions” and recent regulatory changes, including a move toward mandatory cashless gambling.

The company’s statutory net loss after tax for the year ending June 30 was A$1.69 billion (approximately $1.16 billion), down from A$2.44 billion in the previous year.

Morningstar described the earnings collapse as “worse than we expected,” subsequently cutting its earnings forecast for 2025 by a third. The firm also highlighted a decline in long-term earnings potential for Star, attributing this to the tightening regulatory environment.

The stock price fell as much as 54.4% to A$0.205, marking it as the poorest performer on the benchmark index. Trading of Star shares had been suspended on September 2 due to the company’s failure to submit its annual report for fiscal 2024 by the deadline.

In its delayed report, released four weeks past the due date, Star indicated it may sell off assets as part of ongoing restructuring efforts and to address regulatory challenges.

In recent years, both Star and its larger competitor, Crown Resorts, have faced multiple investigations for potential breaches of anti-money laundering regulations. A government-initiated inquiry raised significant concerns about Star’s governance at its Sydney casino, signaling potential for stricter regulatory oversight and financial penalties.

Following the adverse findings, Star submitted its response to the New South Wales casino regulator’s show-cause notice, addressing issues related to its Sydney casino’s suitability for holding a license, among other matters.

As of now, neither Star Entertainment nor the regulator has provided immediate comments regarding further inquiries.