Earlier this year Crown, in which James Packer holds a 37 per cent stake, was found unsuitable by the NSW Bergin Inquiry to open its Sydney casino, and a Victorian Royal Commission this week said that it should be found unsuitable to operate its Melbourne casino.

“To date, The Star has had limited engagement with Crown on its proposal,” Star said in a statement to the ASX.

“Also, issues raised at Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown, including whether it retains its licence to operate its Melbourne casino or the conditions under which its licence is retained.

“We continue to believe substantial benefits could be unlocked by the merger however, the uncertainty surrounding Crown is such that Star is unable to continue at the present time with its proposal in the form as announced on May 10.

“The Star remains open to exploring the potential value enhancing opportunities with Crown. The Star will continue to closely monitor the Victorian Royal Commission and Perth Royal Commission, with final findings expected later this year.”

Crown said it was also willing to engage with The Star and that its board was committed to maximising value for its shareholders.

“Crown is continuing its reform agenda. Crown will also continue to fully co-operate in relation to the various regulatory processes,” the company said.

Star’s shares rose 1 per cent on the news, but Crown’s shares were down more than 3 per cent.