(Reuters) -Australian troubled casino operator Star Entertainment reversed its course to drop on Friday as trading resumed a day after New South Wales gaming regulator said the embattled firm would be able to keep its Sydney casino open.

The New South Wales Independent Casino Commission on Thursday decided not to revoke the firm's license to operate in Sydney, but allowed it to keep running with a minor penalty of A$15 million ($10.04 million) instead.

Shares of the firm, which jumped as much as 5.2% to A$0.305 in early trade, have reversed to fall 3.5% to A$0.28.

The debt-laden gaming firm has been in the eye of a perfect storm that has hit the Australian casino operators for years, with Star and Blackstone-owned larger rival Crown Resorts being engulfed with multiple regulatory inquiries amid muted tourist visits and long closures.

"Star still needs to prove suitability to operate its casinos, a substantial fine from AUSTRAC is looming, and the recovery of earnings is highly uncertain," Morningstar equity analyst Angus Hewitt said.

Under the changes required by Philip Crawford, the Independent Casino Commissioner, the firm will have to shake up its board and provide financial updates at regular intervals while being under the control of a government-appointed manager at least until the end of March.

Over the recent past, Star's board and management team have been hit with two Bell inquiries, lost its CEO and chairman and has almost gone broke. However, the firm, last month, secured a debt lifeline of up to A$200 million ($133.92 million) to revamp its operations.

The state of New South Wales began its first inquiry into Star two years ago and found that the firm had misled its bankers and the regulator. A subsequent inquiry undertaken by Adam Bell, SC revealed how the company had a deteriorating relationship between the board and several stakeholders.

($1 = 1.4934 Australian dollars)