Rush for on-line betting

Business Asia, August 2, 1999

Forget blackjack and baccarat -- the most lucrative game in the future for Australia's casinos will not be on the floor but on-line.

Australia's largest casinos and gaming companies are rushing to establish on-line gambling sites to take advantage of a world market estimated to reach US$10 billion by 2001.

"The world-wide Internet gambling market looks set to boom," said Paul Facey, an analyst at Merrill Lynch.

"Following the expected ban on Internet gambling in the United States, Australian gambling companies appear well positioned to become dominant players in the industry."

Australia is one of the first countries to allow Internet gaming, giving companies access to more than 140 million people who are connected on-line.

Jupiters, Australia's largest casino company, wants to set up an on-line gambling business, along with Star City and Crown Casino, the country's two largest casinos.

They are now waiting for state government licences.

Any of the three has the potential to become a dominant player in the market, according to analysts.

Australia's attitude contrasts with that of the US, where on-line gambling is illegal, giving Australian operators the chance to steal the march on their larger US competitors.

In Australia, both Queensland and the Northern Territory have passed laws allowing companies to operate Internet gaming.

Other states, including New South Wales and Victoria, are expected to follow shortly.

In April, one of Australia's smallest casinos, Lasseters in Alice Springs, opened Australia's first regulated Internet casino -- believed to be the world's first physical casino to operate an on-line business.

Stuart Jackson, an analyst at Ord Minnett, said in a recent report that the focus of on-line operators would be on the larger international markets, with the government likely to encourage this through lower tax rates.

Jackson said the overall market would be large. However, assessing the potential for interactive gaming to increase share values was difficult to assess because of the high level of competition and low barriers to entry.

He said on-line operations would make losses for some time because of international marketing expenses.