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