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Aristocrat Leisure expects to grow after strong 2018

Fri, Mar 1, 10:02am by Staff Writer

Australian gambling machine manufacturer Aristocrat Leisure expects to maintain its market leading share positions across key segments in the Asia-Pacific region in 2019.

That is the sentiment taken away from chief executive Trevor Croker’s commentary to shareholders for the firm’s annual general meeting held in Sydney on Thursday.

Mr Croker noted that in the 2018 financial year, ending on September 30 2018, the international segment – including casino slot machines supplied in Macau and other Asia-Pacific markets – had some volatility in its financial performance.

He stated: “International Class III revenue and profit decreased six per cent and 11 per cent respectively to A$202 million (US$144.6 million) and A$100 million compared to the prior calendar year.”

The international segment for land-based machines and slot machines linked with a jackpot system are becoming increasingly popular according to Mr Croker.

“Underlying performance remained strong across the segment, driven by ongoing penetration of Lightning Link across the Asia-Pacific region, where the business is continuing to focus on floor optimisation strategies in line with market maturity,” he said.

According to GGR Asia, Aristocrat Leisure has recently looked to expand its digital online business to provide recurring revenue and stable returns for shareholders in the absence of bricks and mortar casino expansion.

Mr Croker noted in his lookahead commentary at the AGM that: “we anticipate lifting design and development investment across our band-based and digital portfolio – in absolute dollar terms – while remaining broadly in line with the prior calendar period as a percentage of sales.”

Player sues Big Fish Games in Washington state

He did not touch on a player lawsuit taking place in Washington state and the concern surrounding the implications for Big Fish Games, which Aristocrat acquired in January 2018.

The complaint, filed by Manasa Thimmegowda, claimed, “that certain games Big Fish Games offers for play are games of chance that are prohibited by Washington Law.”

Thimmegowda was a Big Fish Casino player who reportedly lost over $3,000 after “regularly paying real money to purchase virtual chips,” according to The Sydney Morning Herald.

She is seeking “to recover her losses and to obtain the appropriate relief” for herself “a class of similarly situated individuals”.

Thimmegowda’s lawsuit comes less than a year after the Ninth Circuit of the US Court of Appeals ruled that Big Fish’s free-to-play online games such as virtual blackjack, poker and slot machines, have been found to be “illegal online gambling” in the state of Washington.

In the ruling, the appeals court said Big Fish’s virtual chips, which are required to play in Big Fish’s suite of games, “extended the privilege of playing” in the company’s series of interactive social games, which means that it falls under the Washington state law’s definition of a “thing of value”.

In the original lawsuit that Cheryl Kater filed against Big Fish Games’ then parent company Churchill Downs, Kater claims that she bought – and lost – more than

$1,000 worth of Big Fish Casino virtual chips.

While they don’t have monetary value, the chips are required to play the games. If a player runs out of them, they will either need to purchase more or wait until the game offers free chips.

Kater wanted to recover the value of her lost chips, arguing that those chips represent “something of value”.

This latest lawsuit is not too dissimilar to what Kater’s grievance. In the appeals court ruling, the court said Big Fish’s virtual chips “extended the privilege of playing” and thus falls under the law’s definition of a “thing of value”.

Near 10 per cent revenue rise in 2018

Last November the Aristocrat group – which includes the US-based slot operation Aristocrat Technologies Inc reported a net profit after tax for the fiscal year increase of 9.6 per cent year-on-year.

Such profit was A$542.6 million compared to A$495.1 million in the prior year.

Mr Croker said at the time that 65 per cent of group revenues had come from recurring sources, including gaming operations and digital social casino.

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