Australians have once again retained their status as the planet’s most avid gamblers, reporting annual gambling losses of US $1,144 per resident. The figures came courtesy of H2 Gambling Capital, which put Australia’s total gambling losses last year at $18.4b. That’s well off the United States’ total 2013 loss of $119b, but Australia has only about 1/14 the population and individual US residents lost a comparatively paltry $500 or so. Nearly half the total Aussie losses came via video poker machines (pokies) located in pubs and clubs.
That non-casino spending is bad news for Aussie casino operator Echo Entertainment, which saw revenue fall 4.9% to $867.8m and profits fall 30.5% to $46.1m in the six months ending Dec. 31. If you exclude certain off-off items, like a $22.2m haircut on interest rate swaps positions, normalized profits rose 1.3% to $71.5m. A lower win rate in Echo’s VIP gaming rooms also helped drag down the numbers.
Action at Echo’s flagship The Star casino in Sydney was “soft” due to “subdued” discretionary consumer spending and a hot streak by VIP gamblers. The Star’s revenue fell 6.5% year-on-year while earnings fell 4.3% to $134.6m. Echo’s Queensland casinos suffered from the same negatives, with revenue down 8.7% and earnings down 15.5%.
Echo’s overall VIP gaming revenue was down 20.5%, with amounts staked down 3.5% and win rate falling 0.13 points to 1.56% (normalized VIP win rate traditionally runs in the 2.7% to 3% range). Echo says all is not lost, because VIP action has experienced “a strong start” in January. Electronic gaming machine revenue is also faring well in 2014, “particularly in Queensland.”
The upbeat projection wasn’t enough to keep CEO John Redmond (pictured) hanging around any longer. Redmond announced he’d be stepping down for personal reasons, with CFO Matt Bekier set to assume Echo’s reins. Redmond and his wife will be returning to the United States after a three-month transition period to make sure Bekier has things under control. Echo chairman John O’Neill expressed confidence that Bekier, a veteran of the days when Echo was still part of bookies Tabcorp, was “the right person to lead the group forward.”
Redmond had only assumed Echo’s helm a year ago, but it was tumultuous 12 months that saw Echo shares shed over a third of their value. The year saw Echo lose its Sydney monopoly to archrival Crown Resorts, which is now threatening to end Echo’s monopoly in Queensland as well. Echo is hoping the money it made by selling off its Townsville casino will give it sufficient ammo with which to protect its Brisbane casino from James Packer’s assaults.
