From the Super Mario Wiki
The Star Egg is an item won from Grate Guy after Mario wins "Look the Other Way" 100 times in Grate Guy's Casino, during the events of Super Mario RPG: Legend of the Seven Stars. The Star Egg does 100 damage to all enemies on the field by the inexplicable dancing of a Starslap and two Zeostars. A spotlight appears, the star dances a bit, and then a bird flies by; when the birds leave, enemies are dealt damage. If a character is equipped with the Quartz Charm and uses the egg, the damage output is upped to 150.
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