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Australia's Star City Gambles with High Rollers Market

"But Mr Wilson is undeterred. He argues that the removal of volatility associated with earnings from the premium-player division outweighs the risks associated with losing the business to other casinos

"…Premium players accounted for just 2 per cent of the $955.7 million revenue reported in the first half.

"…International players who visit Star City in the past received a rebate of 1.5 per cent on all wagers, regardless of whether they won, lost or broke even. This has been cut to 0.75 per cent.

"Tabcorp has been reviewing Star City's premium-player strategy since losses from this division, reportedly caused in part by a winning streak by one gambler, cost the company $13.2 million in net profit in the December half. It has already cut Star City's single-bet exposure from $200,000 to $100,000.

"Despite the attempt to remove some risk, some analysts see Mr Wilson's conservatism as risky.

"`You can't be conservative in this market,' said Burdett Buckeridge Young analyst Sean Monaghan. `Your objective is to maximise turnover. If Crown operated Star City, it would be operated aggressively. This business is not for the faint-hearted.'

"…Another analyst thought the change could help Tabcorp's share price if it reduced profit volatility…"

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