** Morningstar expects Tabcorp Holdings TAH.AX to be fined after regulator AUSTRAC commenced an investigation into co's compliance with anti-money laundering and terrorism financing obligations

** Wagering firm's stock fell nearly 35% over last two sessions following disclosure of regulatory scrutiny from financial crimes watchdog

** Morningstar notes investigation is at its early stages, with all options open including possibility for no further enforcement action

** But when AUSTRAC commences a high-profile investigation, it usually results in at least an undertaking, if not a fine - Morningstar

** Tabcorp Chairman Brett Chenoweth said last week the board and executive were committed to collaborating with the watchdog on uplifting co's money-laundering and terrorism-financing risk maturity

** Morningstar assumes an A$120 million base case penalty for Tabcorp

** Investment research firm cuts fair value estimate by 4% to A$0.96, says shares now screen as "undervalued"

** We think the lack of detail around the investigation has spooked the market, with share price fall implying an A$500 million fine - Morningstar

** Tabcorp down 23.7% YTD, as of last close