CMA Finance Conference
Long Term Gaming Trend Analysis
Michael Alexander
Sales Operations Manager
Industry Data Online
Long Term Gaming Trend Analysis
What’s the future of gaming revenue?
 How long will the gaming income stream continue?
 What are the long-term risks associated with
Government legislation changes, ageing and
technology?
 Research based analysis of current and future trends
help you plan, organise, lead and control your club’s
financial future.
Current Trends
Club Gaming in NSW has been
growing at slightly above the CPI
CPI
Increase
2005-06
2006-07
2007-08
2008-09
Sydney
3.00
2.70
3.00
3.00
* Source: ABS Consumer Price Index
Australia
3.20
2.90
3.40
3.10
Club/Hotel Performance
since Smoking Ban introduction
Decline in number of people playing
Poker Machines
Trends and Benchmarks are changing rapidly
Game Type Analysis
Standard
Install %
Turnover %
Profit %
SAP
Install %
Turnover %
Profit %
Ante/Extra Bet
Install %
Turnover %
Profit %
Ante/Extra Bet-SAP
Install %
Turnover %
Profit %
Manufacture's Link
Install %
Turnover %
Profit %
Multi-Game
Install %
Turnover %
Profit %
Feb-10
Feb-08
2yr
Comparison
41.28%
32.41%
35.60%
51.07%
40.64%
44.74%
-9.79%
-8.23%
-9.14%
18.07%
20.74%
20.26%
10.83%
12.40%
11.83%
7.24%
8.33%
8.43%
10.51%
14.56%
13.66%
8.16%
10.63%
9.63%
2.36%
3.93%
4.03%
4.52%
5.04%
4.09%
3.46%
4.01%
3.26%
1.07%
1.03%
0.83%
23.51%
24.57%
23.94%
25.14%
30.27%
28.94%
-1.64%
-5.70%
-5.00%
2.07%
2.65%
2.43%
1.34%
2.03%
1.61%
0.73%
0.62%
0.83%
 Clubs have decreased
standard games to increase
SAP and Ante/extra Bet
product
 Players have moved away
from Links and towards SAP
and Ante/Extra Bet product
The Goal Posts have moved
Changes in the NSW Club Financial Model
Financial Modelling
– NSW Clubs
Previous
Model
New Financial Difference
Model
%
Revenue
100,000
141,243
41%
Business GP%
55.0%
49.7%
-10%
- Overheads
30.0%
32.0%
7%
= EBITDARD %
25.0%
17.70%
-29%
= EBITDARD $
25,000
25,000
0%
Future Trends
Where does our Financial
model need to be?
Needs
Improvement
12%
24%
12%
KPIs
Excellent
EBITDARD
Wages
AEMP
25%
18%
6%
$120
Daily Profit / EGM
$180
6%
Gaming Promo
6%
Gaming Wages
55%
Bar GP
24%
Bar Wages
55%
Catering GP
50%
Catering Wages
35%
Overheads
Source: DWS / PKF LCA Presentation May 2010
4%
4%
64%
20%
62%
42%
25%
Ageing Population
Can you capitalise on a larger older generation?
% of NSW Residents
Age Groups
that visit Clubs
18-24
46.30%
25-34
39.60%
35-49
43.10%
50+
50.00%
TOTAL 18+
45.70%
Source: 2004-2009 CDOL/Roy Morgan Research 2010
ABS “By 2056 Australia's population is projected to increase to between 31 and 43 million
people, with around 23% to 25% being 65 years or older.
In 2007 Australia's population was 21 million people, with 13% being 65 years or older.
Technology – Short Term

Smaller – Medium Clubs
–
–
Analysis tools on gaming purchasing and business efficiency
There are cheaper alternatives



Staff
Systems
Medium to Larger Clubs
–
–
Increased skills in using gaming purchasing and business efficiency
tools
Increased use of CRM systems and reporting tools

Invest wisely though
CDOL Gaming

What are the latest trends in the
Gaming Industry?

How do my Gaming KPIs compare to
Industry Benchmarks?

Armed with knowledge of the latest
trends and your own gaming
benchmarks, what is the most suitable
product to buy for your gaming floor
NSW
Regular News articles
• Performance trends
• Gaming Machine replacement rate
• Retail trade trends
• Case Studies
• Other relevant articles
How do my Gaming KPIs compare to
Industry Benchmarks?
What are the levels of product on
the gaming floor of others?
What is the most suitable Game/
Manufacturer for my Gaming Floor
1. New Game report
2. Game Ranking
3. Linked Game Report
NSW
NSW
March 2010
March 2010
NSW
March 2010
Dynamic Reports
Filters are:
 State
 Performance Tier
- Top 25%
- Mid 50%
- Low 25%
 Region
- Metro
- Coastal
- Country
 Location
- Sydney (West, Nth West,
South, North, East)
- Central Coast
- Central West
- Newcastle/Hunter
- Sth Coast/Highlands
- Riverina
- Far Nth Coast
 Machine Size
- 0-50
- 101-200
- 301-400
- 51-100
- 201-300
- 401+
I look for flexibility with my purchase. What is
my next step if this game doesn't work?
Future – Gaming Analysis
Finding out more about our your gaming floor
Mar-10
Average Turnover/Day/EGM
($) Trend
Machine Distribution (%)
Trend
Mar-10
Average
Average
Turnover
Average
Machine
Profit/
Mar- Mar- Previous
Turnover
Denom
/
Return/ Feb-10
Install %
Profit %
Numbers
Day/
09
08
Year
%
Day/EGM
EGM (%)
EGM ($)
($)
1c
121
$1,255
$113
9.02% $1,251 $1,243 $1,129 1.0% 80.60% 73.19% 78.21%
2c
6
$1,520
$134
8.82% $1,550 $1,467 $1,323 3.6% 3.70% 4.07% 4.26%
5c
4
$1,583
$130
8.23% $1,620 $1,191 $1,170 32.9% 2.78% 3.25% 3.17%
10c
3
$1,685
$140
8.32% $1,654 $1,564 $1,278 7.7% 2.15% 2.62% 2.58%
20c
2
$1,655
$135
8.17% $1,566 $1,734 $1,436 -4.6% 1.25% 1.51% 1.46%
50c
2
$2,031
$149
7.32% $4,225 $3,142 $1,055 -35.4% 1.03% 1.49% 1.29%
$1
13
$2,226
$122
5.50% $2,246 $2,456 $1,962 -9.4% 8.49% 13.85% 9.02%
Feb-10 Mar-09 Mar-08
79.50%
3.59%
2.97%
2.16%
1.18%
1.35%
9.21%
Also applies to
 Manufacturers
 Product Type
 Game Type (SAP, Link, Standard, Ante Bet)
 Patrons (Overall, Beverage, Catering, Gaming)
81.09%
3.37%
1.92%
2.41%
1.14%
0.52%
9.52%
82.96%
2.71%
1.72%
2.88%
1.13%
0.25%
8.32%
Previou
s Year
-0.5%
0.3%
0.9%
-0.3%
0.1%
0.5%
-1.0%
Future – Patron Analysis
Finding out more about our patrons
Mar-10
Denom
Patron #'s
Males
Females
3,193
3,950
Patron
Split
Trending....
% of
Gaming Catering Beverag Total
Revenue Spend Spend e Spend Spend Feb-10 Mar-09 Mar-08
44.70% 47.15%
55.30% 52.85%
$24
$30
$20
$14
$13
$8
$56
$51
$ 27
$ 16
$ 10
$ 53
18-30
30-50
50- 65
65+
Gaming
Non- Gaming
TAB Punters
Bowlers
Total
7,143
100%
$382,043
Future – Catchment Analysis
Find out more about the player by linking the
Gaming, POS and loyalty data
Understand the games
manufacturers are making?
Changes in the maths of the games

“The games don’t pay like they used too..”
–
–
They don’t!!... The maths structure of games is
different
To give a $1,000 pay means the machine has
to generate $1,100 in turnover with no wins.
Understand the games
manufacturers are making?
Example of 3 x 90% return games
Prize Ave Prize
Symbol Amount
Jack
10c
Queen
$10
King
$100
Ace
$1,000
Hits / Total Prize pool
Line Hit Rate
Average Pay
Game #1
Game #2
Dribbler
Average Game
# of
Prize
Prizes
Pool
700,000 70,000
2,400 24,000
50
5,000
1
1,000
702,451 100,000
15.82
0.14
# of
Prizes
450,000
3,500
100
10
453,610
24.49
0.22
Prize
Pool
45,000
35,000
10,000
10,000
100,000
Game #3
Chasing the big
pays
# of
Prize
Prizes
Pool
200,000 20,000
1,000 10,000
300
30,000
40
40,000
201,340 100,000
55.19
0.50
Are volatile games good or bad?
That depends on your customer
Player Type
Driver
Game Type
Spend
Small Punter
Timewasters
/Entertainment
Looking for games with low volatility,
entertaining features
$20
Average Better
Feature / Prize
/Entartainment
Looking for ok run on machine,
occasional $100 win
$50 - $100
Looking for volatile games $300+ wins
$100 - $200
Looking for games with Very high
volatility, big paying features
$300+
Good Punter Link / Feature
Big Hitters





Status / big
prize
What Type of players do you have?
Do you have the Games that meet that market?
What are the games the Manufacturers are releasing?
Have we trained our staff in the latest gaming trends?
Future Benchmarking in this area may produce a game/player profile
You will need to know the right number
of games for your gaming floor

You should be looking at minimum $120 per day,
ideally $150 or more
–
–
You will have better control over your Hold %
This applies to 80% of your gaming floor, fine to have overflow
machines
Daily Turnover Guide
$1001 > $2001
$2000
< $1000
27%
60%
13%

Source: Club Data Online
– March 2010 NSW Gaming Benchmarks
You need to know the right level
–
–
–
What is your usage of all machines during key periods
What is your future need
QLD have started a leasing scheme
Catering
Does your food draw people into the club?
 Catering is still a good way to draw people to the club
–
–
–
Doesn’t currently work as well as previously but is still the key long
term
Get staff to upsell, especially receptionists
Diverse but efficient menu








Older clientele
Younger
Price
Rissole / Roast (Lower Quality)
Quick / Trendy / Healthy (Higher quality)
Good range
You need to know your market... Spicy Portuguese chicken?
Cafe style food/coffee has been a massive craze
Pull ideas, especially marketing ideas from wherever you can
It can be as simple as the best chips
Get Chefs and Contractors working for you
Out there future trends

Social Media
- Posting feature and game prize + Casino logo to Facebook
- Promoting your venue through blogs + photos of the great time they had
last Friday night.
- Listening to other managers it may not be your marketing manager
controlling this

GPS Technology
- “Michael, I have you favourite table/seat available tomorrow night. Would
you like me to place a booking and send Sarah a nice invitation for you??”
- “Your mates, Steve + Tom have just walked in, do you want me to put a
Corona on Ice for you?”

Download a Schooner?? Not sure about this one
Society Changes
From
To
Materialistic
Individuals
Progress + Growth
Processed
Global
Imports
Possessions
Formal
Profits
Independent
Post-Materialistic
Community
Sustainability
Natural
Local
Aussie Made
Experiences
Informal
People
Co-operative
Source: Steve Tighe, www.chasingsunrises.com.au
Long Term Gaming Trend Analysis –
What's the future of gaming revenue?
How long will the gaming income stream continue?
 It is here for the long haul – it will just be harder to sustain and grow gaming income levels.
 This wont be for all clubs.... Why are they growing more or less?
 Gaming still represents a minimum 60% net contribution.
 To maintain strong income from gaming play will get down to the overall ‘club product’ – strong
visitation levels, stick ahead of the competition, good staff, full service offering (good food,
beverage, entertainment), invest in your venue (fresh & modern) etc
 Engage your customers.
 Build stronger relationships with gaming manufacturers – finance staff should be more
involved in gaming purchasing decisions – look at ROI
 Keep up with gaming replacement programs – maintain investment.
 Forecasting and strong economic modelling required.
Long Term Gaming Trend Analysis –
What's the future of gaming revenue?
What are the long-term risks associated with Government legislation changes, ageing
and technology.
 Biggest risk is that clubs put their head in the sand and hope the challenges pass by – the
challenges will always be there as gaming is an easy target just like the resources sector.
 Lack of planning and slow responsiveness.
 Increased license fees, taxes, insurance costs
 Restrictions on trading hours, drinking age, ATMs – may need to do more with less
 Need to ensure you have strong associations and a strong board
 Boards need to become more commercial and professional with strong governance discipline
to deal with the future direction.
 Training and education needs to be maintained.
 Risk that clubs will make poor diversification decisions to make up for possible revenue
shortfalls
 Another risk is that clubs don’t embrace, understand or invest in new technologies.
 Costs of new technologies may be high so long term budget planning is necessary
 High aged population with baby boomers leaving the workforce possibly with less disposable
income
 Ensuring clubs appeal to the Gen X and Gen Y market
Further Information
• www.ClubDataOnLine.com
• Club Data Online – Financial + Gaming Benchmarks
• CDOL WebReporter – Gaming Market Research and Consumer Trends
• CDOL Earthcheck – CO2 Measurement and Sustainability Benchmarking
Michael Alexander
Ben Thomas
Greg Hurley
Sales Operations
Manager
Business Development
Manger
General
Manager
Mobile 0421 212 551
Mobile 0428 778 931
Mobile 0419 026 483
michaela@clubdataonline.com
benth@clubdataonline.com
gregh@clubdataonline.com
www.clubdataonline.com