Shares of Star Entertainment Group, one of Australia's largest gaming companies, took a nose dive after it was accused of tolerating and allowing illegal activities - including money laundering - at its gaming businesses for years.
The company has rejected the claims made by against it by three news outlets. The company said it would address all allegations made against it, including claims that its anti-money laundering controls were inadequate.
The Sydney Morning Herald, the Age, and television program 60 Minutes claimed that Star Entertainment targeted high-rolling gamblers with criminal or foreign-influence ties. The outlets alleged that the company also knowingly allowed illegal activities to proliferate within its establishments.
Following the release of the reports, Star Entertainment's share prices plummeted by nearly 23% on Monday. This effectively wiped out nearly $1 billion off the company's market valuation.
In 2010, the same news outlets alleged that Crown Resorts had been involved in a wide-scale money laundering and corruption scheme. The allegations, which were made public two years ago, have since left the firm in doubt.
The New South Wales Gaming Authority determined in February that Crown was unfit to operate its Sydney casinos due to its involvement in money laundering. The Australian Competition and Consumer Commission ruled that Crown could no longer operate its casinos in Sydney due to the scandal.
Regulators are due to release their findings into Crown's suitability to run a casino in Melbourne. A separate inquiry is also being conducted in the company's planned casino in Perth.
Regulators said they will be launching new investigations into the allegations made against Star Entertainment in private, instead of conducting a public inquiry as it did with Crown Resorts. Gaming authority chairman, Philip Crawford, noted that holding a public hearing would have been a logistical and cost-intensive process.
The Australian Securities and Investment Commission has already launched an inquiry into Star Entertainment's operations following reports that it had been inflating its financial statements.
As part of its investigation, which is already underway, the agency has promised to be transparent. However, it has not yet received evidence to suggest that wrongdoing has occurred.
Crawford said he did not know about the allegations against Star until after the media outlets contacted him. He said that the inquiry would look into how money laundering and the infiltration of organized crime groups played out in the company's operations.
