STAR Entertainment Group shares plunged to a record low Tuesday after the New South Wales state gaming regulator launched a second inquiry that could see the embattled company stripped of the license to operate its flagship Sydney casino. 

The stock plunged as much as 26 per cent in Sydney trading, slicing the company’s value to A$1.3 billion (S$1.14 billion). 

An inquiry in 2022 found Star was unsuitable to run the Sydney casino after finding it had lax anti-money laundering controls, allowed patrons to flout China’s capital controls and encouraged problem gamblers. Since then, the casino has been under the supervision of an independent manager appointed by the regulator. 

On Monday, the regulator said that during the “prolonged period” of the managership, Star has not yet satisfied it that is suitable, or is it capable of becoming suitable, to hold a casino license.

It will now hold a second inquiry, due to report on May 31, on whether Star can retain the license. The stock was halted from trade yesterday. 

“There is much at stake for Star, so the NICC is giving the casino every chance it can to demonstrate whether it has the capacity and competence to achieve suitability,” the regulator’s Chief Commissioner Philip Crawford said in a statement on Monday. 

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The regulator’s doubts over the company’s ability to hold a license “is of considerable concern to us,” raising the possibility that Star may not be able regain it, Jefferies Group LLC analyst Simon Thackray wrote in a note. “We cannot exclude a domino effect for Star Queensland,” he added.

A similar inquiry in Queensland, where Star has casinos in the state capital Brisbane and the popular Gold Coast tourist destination, found it was also unfit to operate. 

Star said on Tuesday it won’t report its half-year earnings results on Wednesday as previously planned. BLOOMBERG