Cashless gaming unstoppable, says Aristocrat as it caps off epic year
ASX-listed gaming giant Aristocrat has been developing the technology that will allow pokies to become cashless – a change it says is coming regardless of who wins the NSW election.
Cashless gaming is coming regardless of who wins NSW’s state election, according to Neil Chatfield and Trevor Croker, the respective chair and chief executive of ASX-listed poker machine maker Aristocrat.
The policy has become the centrepiece of Dominic Perroret’s so-called “pokies revolution”, which aims to slash the $7bn in annual losses from NSW poker machines and is likely to set the tone of gaming reform in Australia’s other states and territories.
NSW is one of the world’s biggest pokies markets with more than 100,000 machines — almost the combined tally in Australia’s other states and territories. But going cashless has not been easy, with NSW Labor saying it will complete another trial rather than match the Liberals’ policy – a move that’s been criticised by responsible-gaming advocates.
For Aristocrat, which has a market value of more than $23.4bn, it has spent millions of dollars on cashless technology and launched a trial with the NSW government last October.
It caps off a big year for the company, after its $3.9bn bid for British gaming software giant Playtech failed, prompting it to embark on its own “build and buy” strategy to capitalise on the $US83bn virtual gaming market. And it relocated hundreds of its designers in Ukraine to safety away from the Russia invasion.
Mr Chatfield and Mr Croker are yet to see the results of the NSW cashless trial but they say the message is already clear.
“We actually proposed a trial of cashless gaming to the NSW government back in 2020, so it’s been part of an ongoing program of responsible gameplay initiatives that Aristocrat’s been doing,” Mr Croker said.
“It’s not something that’s popped up as a consequence of a political conversation. It’s been a longstanding piece of work.”
Mr Chatfield is more blunt. “We don’t get involved in politics. We leave politics to the politicians,” he said.
“All industries are driven by what their customers are telling them. And governments and oppositions are driven by what the community tells them.
“We’ve made a very deliberate statement that we want to be the leader in responsible gaming and bringing innovations.
“We’ve spent millions of dollars on this particular trial and we work with governments, regulators and our customer base to bring that to market.”
The new plan will roll out cashless cards to gamblers, who will need to impose their own daily loss limit which can only be changed after seven days. The daily limit can be whatever the user sets it as but is in place to stop people spending more than originally planned when playing the pokies.
Gamblers will only be able to use money from their own bank accounts and money from credit cards will no longer allowed.
At its core will be technology that Aristocrat has developed, maintaining its relevance and dominance well into the 21st century.
Mr Chatfield and Mr Croker face investors on Friday at the company’s annual meeting, where shareholder activist Stephen Mayne will make an attempt to gain a seat on Aristocrat’s board.
But the pair have been used to staring down challenges.
Twelve months to the day earlier, Vladimir Putin invaded Ukraine where Aristocrat employed about 1000 people in its Pixel United division. The move came after weeks of threats from the Russian President, and Aristocrat was prepared – largely in part from what it learned from Covid-19 than geopolitics.
It began relocating hundreds of staff to other parts of Ukraine and to neighbouring counties, including Poland.
“We had already mobilised a number of our teams during Covid in 2020, and it was crisis after crisis with Covid as it travelled around the world, so we were really well prepared,” Mr Chatfield said.
Aristocrat has opened five new game design studios in Poland, Spain and Canada, maintaining the same levels of productivity before the war. “It’s been a terribly stressful period of time,” Mr Croker said. “We’re staying connected to our people, giving them a purpose, working with them and being flexible as well”.
Then weeks before the invasion, Aristocrat failed in its $3.9bn bid to take over British software group Playtech after a bloc of investors — led by Hong Kong-based former Playtech boss Tom Hall — voted against the deal.
Playtech was a key plank in Aristocrat’s dive into the virtual gaming market. Analysts had praised the potential acquisition as “transformational” when Aristocrat lobbed the bid in October 2021, saying it would position the company to capitalise on the $US83bn global real money market, with buying rather than building reducing execution risks.
But the bid’s failure meant Aristocrat had to start largely building its own RMG platform, with the company pivoting quickly to talk up its research and development capabilities.
“It’s a capability we have been building for some time. We have mentioned the fact that we are in the R&D business and we are looking to accelerate our scale,” Mr Croker said at the time.
It has been gaining traction steadily in what it calls its build and buy strategy. Last week it struck a deal with BetMGM — a partnership between MGM and Entain — to provide gaming content on BetMGM’s online casino, giving it a vote of confidence to its virtual expertise.
It came a month after it finalised its takeover of British iGaming content supplier Roxor.
“BetMGM is one of the largest platforms in North America and we will be going live with them soon and there are other announcements to come, so that’s the first phase in our build strategy,” Mr Croker said.
“As part of the buyer’s journey, we closed the Roxor acquisition in late January, which was an RGS, or remote game server, which is the aggregator technology that allows us to have access into North America and Europe.
“So we’re making progress and we can still see the opportunities in the iGaming market, given that there’s only seven (US) states that are open.”
Mr Chatfield and Mr Croker are mindful of not looking too far back on the Playtech bid. “I don’t think it necessarily set us back,” Mr Chatfield said.
“I think we learned a lot from that and it crystallised our purposes and made us more deliberate and focused.”
Mr Chatfield and Mr Croker are yet to know if they have come out on top by advancing the build and buy strategy instead of buying ready-made Playtech for $3.9bn. It also spent up to $200m on bankers from Goldman Sachs and UBS who advised on the failed deal.
“You never know really,” Mr Chatfield said when asked if Aristocrat has saved money.
“When you make acquisitions though, it’s never like a glove. It doesn’t fit immediately.
“Playtech was obviously strong in Europe and Asia but not really in the US.
“The attraction was that we brought capability in the US, with our relationships with regulators and very strong relationships with customers.
“From the board’s point of view, we are really excited by the opportunity to take the best of everything and what we‘ve learnt and deliver something really special to the marketplace.”