Social casinos and online games propel poker machine giant Aristocrat to $1.3B profit

An Australian poker machine giant has recorded a $1.3bn profit by aggressively expanding its presence in the United States and shifting its focus to mobile video games and social casinos.

Aristocrat Leisure reported the profit for the 12 months to 30 September, up by 21% from the prior year, without adjustments for currency changes. The company was also hoping to capitalise on the legalisation of online gambling in many US states.

Aristocrat’s revenue increased to $6.3bn – a 13% jump – attributed in part to “exceptional gaming results” in the US, where is sells the vast majority of its machines.

But the company’s mobile gaming division – Pixel United, which produces games like Cashman Casino and Heart of Vegas – now accounts for 42% of that revenue.

The company’s online gambling subsidiary, Anaxi, has signed agreements with partners to cover more than 80% of the US market. Aristocrat’s chief executive, Trevor Croker, said Anaxi had “delivered on its initial market entry commitments and continued to establish solid foundations for growth”.

The growth of online gambling in the US has also attracted interest from NRL executives, who secured an opening round in Las Vegas next year. Some analysts believe the code wants to cash in on an “an absolute revolution” in US sports betting, with the legal market now worth about $30bn a year, despite being only five years old.

Aristocrat’s financials show profits from the sale of gaming machines increased by 22.5%. This was partially due to the sale of an extra 36,925 machines in the US. In Australia, traditional gaming sector profits fell by 3.7%.

“The growth that Aristocrat delivered over the period demonstrates the ongoing resilience, competitiveness and diversification of our portfolio, and sound fundamentals in the markets in which we operate,” Croker said. “At the same time, we have been able to accelerate investment behind our successful growth strategy.

“This was underpinned by an exceptional gaming performance, which more than offset an extended industry-wide moderation in mobile game demand, again highlighting diversification and scale as fundamental strengths of our business.”

A recent parliamentary inquiry into online gambling, which called for a total ban on wagering ads, warned social casinos were exposing children and young people to gambling.

Lauren Levin, the director of policy and campaigns at Financial Counselling Australia, has said evidence is mounting that virtual games can cause harm similar to conventional poker machines.

Pixel United mobile games accounted for six of the top 100 games in the US across multiple genres, although the global mobile games market declined by 5% over the year, the company said.

These games include so-called social casinos, such as Jackpot Magic Slots and Big Fish Casino, which require users to buy coins to keep virtual wheels spinning, but do not allow for cash to be withdrawn. In Australia, these games will soon be restricted to those aged over 18, but do not count as gambling and are less regulated.

The role-playing fantasy game Raid: Shadow Legends, which was developed by an Aristocrat subsidiary, Plarium Games, accounted for roughly a quarter of Pixel United’s revenue last year.

Aristocrat, the world’s largest poker machine manufacturer, is also hoping to cash in on a booming online gambling sector in the US. Online gambling is now legal in seven states, according to the company’s latest report, which said more states expected to relax laws in coming years.