Casino Queen has fallen from a $2bn valuation to $1.6bn after it reported a $1bn loss in the second quarter, according to a report from Reuters.
The online gambling giant reported a loss of $3.6m in the period ending June 30, after adjusting for currency fluctuations.
Casino Queen’s shares closed at $1,966.50 in morning trading on Wednesday, down 2.6 per cent on the day.
The company has also posted a loss for the first time in six years.
It has been under intense scrutiny from US regulators in recent years.
In November last year, it was forced to shut down after regulators raised concerns about its compliance with anti-money laundering regulations.
Casino King was also forced to close in November after regulators from the US Financial Crimes Enforcement Network (FinCEN) found it had not been adequately investigating money laundering allegations against its clients.
The Financial Crimes Task Force said the company had not complied with US laws, but casino king has since appealed the decision.
The casino was the largest online gambling company in the world until it was acquired by a rival, online gambling firm Frontier.
Casino King had been expected to report results on Wednesday.
In a statement, the company said: “This is a disappointing result for Casino King, and a reminder that online gambling is still in its infancy.
We remain confident in our long-term prospects, and are confident in the strength of our business and our ability to grow.”
The Australian Securities Exchange (ASX) has been warning of potential regulatory fallout after it became the first major US company to take a public position on the gambling industry.
Last year, the US Securities and Exchange Commission (SEC) issued a report that called online gambling the “largest threat to investor confidence”.
It warned that the lack of regulation and accountability for online gambling platforms was “an important obstacle” to their growth and “could put consumers at risk”.
In July, the ASX warned that “significant systemic risks” to online gambling could exist and said that “an investment in the future of online gambling, in particular, should not be viewed as an investment in a new industry”.
It said: ‘There is no certainty that the SEC will be able to take action against any major online gambling provider in the US.
‘The fact that there is a regulatory vacuum for the next several years could have an impact on the regulatory environment, especially if the SEC were to issue an order requiring a change in governance or regulatory standards.
‘As a result, any action taken by the SEC to require compliance with regulatory requirements would be highly unlikely to be effective and could result in a costly regulatory burden for the industry.
‘Regulators are unlikely to take any action in the near term as the industry continues to grow, and there are currently a number of large online gambling operators operating in the market that are likely to remain largely unregulated in the foreseeable future.
‘Although the market is growing, regulatory and financial risk remains.’