Profiles
Gaming Gambling Crown Casino Crown Limited Tabcorp Holdings Echo Entertainment Star City Tatts Group Australia Media Man
Australian gambling companies are expected to report modest growth in earnings this reporting season as consumers rein in their discretionary spending and casino operators face tough competition from overseas.
"Gambling is part of discretionary expenditure, so I'm anticipating that gambling expenditure will be down," Morningstar gaming analyst Ross MacMillan said.
Earnings in the gambling sector may grow two or three per cent, but "It's going to be very subdued earnings growth if we see any at all," Mr MacMillan said.
The outlook for the current financial year was expected to be very cautious and limited in detail.
Mr MacMillan anticipated most companies would hold off providing guidance until their annual general meetings when they would have at least three months of performance under the belt.
The big issue for Tatts Group and Tabcorp would be the source of future growth, he said.
Tatts and Tabcorp hold a duopoly over poker machines in Victoria outside of the Crown casino in Melbourne. The Victorian poker machine licence expires in 2012.
Tabcorp was recently awarded a new wagering and betting licence in Victoria, winning it over Tatts. The wagering licence allows Tabcorp to offer wagering on thoroughbred, harness and greyhound racing and other sporting events.
Lower gambling expenditure would affect revenues, so gambling companies would have to look at cutting costs, Mr MacMillan said.
He said Tatts would be looking to strip out as many costs as possible from the NSW lottery business it acquired in March 2010.
Tatts also would think carefully about the South Australian lottery business, which is likely to come up for sale in the next 18 months.
Mr MacMillan said the main issue affecting the Tabcorp results would be the recent demerger of its casino operations - now known as Echo Entertainment Group - which would make Tabcorp's accounts "messy".
An issue facing casino operators Crown and Echo was the size of the capital expenditure needed to revamp their casinos so they could compete with big new casino-resorts in Singapore and attract more VIP gamblers (high rollers) from China.
"This is a real issue: whether it (capital expenditure) will continue in the future," Mr MacMillan said.
Fat Prophets gaming analyst Greg Fraser said consumer spending had been weak and was likely to be reflected in gaming results at the "grind end" of the market.
Mr Fraser said he expected a reasonable result from Tatts Group.
Although a larger proportion of Tatts' earnings now came from lotteries, gaming operations were likely to attract attention because that's where uncertainty lay.
"Having missed out on the Victorian wagering licence, it'll be interesting to see what they (Tatts) say about their future now and what their plans might be," Mr Fraser said.
Tabcorp also needed to detail its plans for the new Victorian wagering licence and explain how the company would replace gaming machine earnings once they disappear in 2012, he said.
Among the casino operators, Crown's result was likely to be stronger than that of Echo Entertainment, largely because Crown had spent its money on refurbishments and re-organising its gaming floors sooner and, arguably, more effectively than Echo.
Much of the Star City refurbishment was aimed at non-gaming activities, so the casino's success over the next year should be measured by the increase in visitation numbers.
"In that sense, it's the outlook statement for Echo this time that is perhaps more important than this year's financial result," Mr Fraser said.
Website Network
Media Man Int
Media Man
Media Man News
Media Man Entertainment
Casino News Media
Global Gaming Directory
