Excerpt From Star City's Testimony Before the Australian Gambling Inquiry

26 April 1999
Representing Star City:
Jim Hogget, General Manager Corporate Affairs
Peter Grimshaw, Media Director

Represending the Productivity Commission:
Mr. G. Banks, Presiding Commissioner
Mr. R. Fitzgeranld, Associate Commissioner

MR BANKS: Perhaps if we could have a bit of a discussion about the Internet. You may have heard earlier, in having some discussions about the Internet the point was made that, while people have some concerns about the Internet, in other respects it could be a more accountable and transparent mechanism and indeed the Internet providers could well be providing sort of monthly accounts back to their customers the way I presume Centrebet would do with people who are using ---


MR BANKS: Yes - Internet phone betting essentially through Alice Springs. What's your reaction to that? At one level it looks like motherhood - you know, you're in the entertainment business, your customers are spending money with you, you're providing in a sense a periodic account of how much they're spending. It is relevant in a sense more broadly to the extent that we are talking about a continuum when we're looking at problem gambling, and there are people who I suppose at some point are maybe in danger of moving in that direction and therefore information might be helpful. So a couple of questions. One is a general reaction to providing more information of that kind, and the second is how feasible it would be. A related point really is I suppose to what extent you've got your customers tracked in the sense of them using cards to allow you to monitor what they're doing.

MR HOGGETT: We do track a proportion of our customers, both in the slots area and in the table games area. It's obviously a minority of them. It's obviously in a sense our better customers, and in that sense I think a fairly large proportion of those, probably most of them, have a pretty good idea themselves what they're spending with us, because they meet thresholds to quantify. Indeed, our marketing program has recently been contracted from a widespread marketing program to a more targeted program to the people who are our best customers. So in that sense that sort of information is already partially with them in their qualifying for these programs. I wouldn't want to add much to what I said before about trying to spread that much more widely, because it is an expensive operation - one which we would find very expensive and one which the rest of the industry might find very expensive.

In relation to Internet, we've thought a lot about the Internet obviously. It's a potential competitor for us. It potentially impinges upon our exclusivity because you can offer electronic casino games on the Internet. There are lots of heads in the sand on Internet in various places, private and public. As you will be aware from your own investigations, it's here. People are playing on the Internet already, both with overseas and Australian providers. There are quite sophisticated casino games available through the Internet from overseas. The question you have to ask - and we haven't resolved it internally, so what you're hearing from me now is my opinion, "Does our state, does our country" - because a lot of the states are looking to the Commonwealth on this - "regulate this activity in some fashion?" To my mind it would be very silly to try to ban it in the way that some United States legislators have tried to do, because you can't. It's like banning foreign exchange transactions. That one got away from us 20 years ago. You are not going to ban transactions on the Internet.

You could in Australia ban providers and perhaps nail them, and then your population simply plays with overseas providers. That has hazards, because many of them may be unsupervised and you're not even offering them a safe alternative. It's a bit like encouraging people to undertake safe sex, I suppose. If you provide it in-house in the country, you can regulate at least your own providers, and then people have the option to use those providers, whom they know. If you leave it banned here, then people will do it anyway. The risks there are of course well-known ones of, "Who is it on the end of the terminal who's playing this game?" It's a high risk there that it could be someone whom you don't want playing, typically a minor who has got hold of the credit card somehow who has decided to have a bit of a flutter. So you have to put safeguards in there. I don't know what they are. We're still at an early stage. My view is, okay, regulate in some fashion in this country but don't seek to ban it, because it won't work.

MR BANKS: So Star City would potentially be looking at this as a business opportunity?

MR HOGGETT: We could be a provider. If you want a heavily regulated, highly probity checked provider, we're it. It's about the only plus that comes out of all that from our commercial point of view.

MR BANKS: We have heard that a lot of the providers offshore, a lot of them in the Cayman Islands and the Caribbean and so on, are actually not all that well regulated and that's sort of counting against them. Someone put it in another submission, adding an element of uncertainty to the inherent risk in gambling about whether you'll ever get your money back if you do, when I think most gamblers find that an unacceptable additional element of uncertainty.

MR HOGGETT: Eventually of course countries will allow it and so you will get well-regulated providers out of here, and then it becomes a question of, "Are you in this export market or aren't you?" Then it becomes almost an economic question.