Intense fight to lure high rollers

Business Asia, August 2, 1999

Sydney's Star City casino has increased its efforts to attract Asia's high rollers, increasing the rebates it pays to big bettors to as much as 1 per cent of turnover and opening new representative offices in the region.

Star City Holdings, the operator of the casino, said the increased rebate was no higher than any of Australia's other major casinos, including the one offered by its main rival, Crown Casino in Melbourne.

"We're certainly not offering more than the other major casinos," said a Star City spokesman.

"We're simply getting out there and competing with them now."

Australian casinos offer cash rebates and commissions on amounts bet by big gamblers to attract a larger share of the lucrative international high-roller market, most of whom come from Hong Kong, Singapore, Taiwan and Thailand.

Star City, the only casino in New South Wales, entered the high-roller business at the end of December last year, targeting wealthy Asian customers who spend at least A$75,000 in a single session. It competes chiefly with Melbourne's Crown and Perth's Burswood Casino.

The Star City spokesman said the casino's commission rate was initially set at a "very conservative rate".

"We've been in the business for six months and we're simply going out there with similar packages to the rest of the casinos so we can compete on a better footing," he said.

In April, Star City's first-quarter profit after tax was A$900,000, with a low win rate eroding gains from its high-roller business.

The spokesman said the casino won only 0.2 per cent of money gambled by high-stakes international players. He said the casino's high-roller business generated revenue of A$600 million before taxes and commission payments.

Turnover would probably be about A$450 million in the second quarter, A$600 million in the third and A$1.2 billion in the fourth.

In comparison, Crown Casino, Australia's largest, said it won 1.26 per cent of the money gambled in its international high-roller business.

Crown opened two years ago on the expectation that about 60 per cent of its earnings would come from high-stakes players.

That forecast was halved when most economies in Asia slowed dramatically because of the financial crisis. Star City has recently opened representative offices for its high-roller business in Bangkok and Taiwan, adding to the offices it already has in Singapore and Hong Kong.