The Star Entertainment Group was penalised in the Federal Court on Wednesday, four years after financial intelligence agency AUSTRAC launched legal action against the company.
The agency previously argued a $400 million penalty was necessary to punish what it said were "manifest failures" at Star.
But the stockmarket-listed company, which has a market value of $763 million, argued any penalty over $100 million would send it into liquidation.
Justice Cameron Moore determined a $260 million penalty was appropriate for the significant harm Star's conduct has caused.
"In effect, Star put profit ahead of compliance and did so on a large scale," the judge said.
Star will have 19 months to pay the fine in four equal instalments, with the first payment to be made within 28 days of judgment.
The watchdog's chief executive Brendan Thomas said the penalty reflected the severity of the breaches.
"AUSTRAC will not tolerate companies putting profit over their obligations to the Australian community," he said in a statement following the judgement.
Mr Thomas said Star exposed Australia's financial system to potential harm by allowing high-risk money to be pumped through its casinos.
The company's value has cratered since casino watchdogs began probing its operations in late 2021, when shares traded at $3.70.
Shares in the casino giant closed at 13 cents on Tuesday.
It is in a trading halt for up to two days to give management time to publicly address the fine's impact on the business.
The court previously heard one man was allowed, alongside many other high-risk gamblers, to funnel hundreds of millions of dollars through the casinos, despite his known criminal links.
These concerns fell on deaf ears of senior management who failed to impose adequate anti-money laundering and counter-terrorism-financing controls, it heard.
Swinburne governance expert Helen Bird said the giant fine was a good start for what accountability looks like after years of controversy.
"If you are susceptible to fines of that size, you need to ask yourself whether you can run the business without breaching the law," she told AAP.
"It's a little vexed, where you feel like the result is unsatisfactory because you've got the corporation, but you haven't gotten the major decision makers."
She also questioned whether Australia's market was large enough for two major casino chains operating - after Crown was fined $450 million in 2023 for similar breaches.
Justice Moore said there were significant differences between both cases and that it was not useful to compare.
Star had already been sanctioned through licence suspensions and other penalties for offending over the same period, the judge said.
"It is not a case of business as usual for Star," Justice Moore said.
"Star has already paid a significant price for the contravening conduct."
US gaming giant Bally's Corp saved the business from administration in April 2025, allowing its chair Soo Kim to step up to the same position at Star.
Speaking at the group's annual general meeting on Tuesday, Mr Kim predicted that the "fire is out" and it was time for the company to start rebuilding.
The vast majority of customers weren't involved in malfeasance or unwanted behaviour and the company should welcome them, Mr Kim added.
Star's ex-head Matthias Beikir was fined $700,000 in June for failing to inform the company's board of suspicious conduct committed by Chinese junket operator Suncity in 2018 and 2019.
In the same month, Star Sydney was hit with $10 million in fines for regulatory breaches, including exceeding gaming time limits and failing to properly vet patrons for links to criminal and terrorist activity.
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