The Star Entertainment Group Ltd (ASX: SGR) share price has fallen 18% after a report alleged the business enabled “suspected money laundering, organised crime, large-scale fraud and foreign interference within its Australian casinos for years”.
In an announcement released to the ASX, Star considers a number of the assertions made in the report to be misleading.
SGR share price
What was reported?
The report by The Age, The Sydney Morning Herald and 60 Minutes alleged the following as well as other things:
- In 2018, Big 4 accounting firm KPMG provided two reports to the Star board outlining a “profound failing” to combat the risk of money laundering, terrorism financing and corruption in Sydney and Gold Coast
- Between 2014 to 2021, Star cultivated high-roller gamblers who allegedly had criminal or foreign influence operations
- Gamblers banned from Crown Melbourne and The Star Sydney were permitted to gamble at The Star Gold Coast
- Provided incentives such as luxury goods and free hotel rooms to gamblers accused of drug trafficking, tax cheating and fraud
- Used special Chinese debit and credit cards to disguise gambling activities as hotel expenses
The report exposes further misdoings regarding certain individuals.
“Senior management pushed back when we pointed out [the criminal connections of one man], because he was such a big gambler.” – A Star insider
The Sydney Morning Herald will reveal further details on “Star’s dirty secrets” tomorrow.
What is Star’s response?
Star is “concerned” by several assertions that it considers “misleading”.
The company cannot discuss specific individuals contained in the article.
“We will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities” – Star Entertainment
How will this impact the Star Entertainment share price?
The report is a blow for Star, given it positioned itself as the better behaved sibling compared to rival Crown Resorts Ltd (ASX: CWN).
Any chance of potentially taking over Crown’s operations is likely now over.
Additionally, the report comes at a terrible time. On September 14, the New South Wales regulator announced its regular 5-year review of the business.
Expect the news to weigh on the Star share price for the foreseeable future.
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