Aussie outfit makes U.S. inroads

LAS VEGAS -- While a photographer adjusted lighting equipment, Aristocrat Leisure Limited CEO Jamie Odell relaxed in the Australian gaming equipment manufacturer’s south Las Vegas showroom and played a few free spins on a “Batman” slot machine.

Dressed casually in jeans, a dress shirt minus the tie and a sports coat, Odell, 55, was anticipating a 14-hour plane flight that evening. He was returning to Sydney after spending much of the week traveling between Las Vegas and Tulsa, Okla.

No one could begrudge the CEO some downtime.

Besides, Odell is a fan of the video slot machine, which the company introduced last fall with great fanfare at the Global Gaming Expo in Las Vegas. Based on the classic 1960s television series that starred Adam West as Batman and Burt Ward as Robin, the game is quickly finding its way onto U.S. casino floors.

In June, Aristocrat unveiled the game at the Pechanga Resort & Casino in Temecula, Calif., which featured an appearance by West.

Odell, who became Aristocrat’s CEO and managing director in 2009, wasn’t giving away any secrets of what his game designers have in store for this year’s G2E in late September.

“We have a lot of ideas and a lot of plans,” Odell said. “It’s my job to prioritize what we bring out. You’ll just have to come to the show and see what we have.”

Aristocrat, which operates as Aristocrat Technologies in North America, is on an upswing.

The opinion is supported by Aristocrat’s purchase this month of a rival slot machine manufacturer and a recently released survey of casino operators.

“We made a strategic business decision a few years ago to concentrate on our core games and focus on the U.S. market,” Odell said. “That effort seems to be paying off.”

Aristocrat sent a rumble through the slot machine community on July 7 with its $1.3 billion acquisition of Video Gaming Technologies, Inc., a Tennessee-based slot machine maker that provides equipment to the American Indian casino market.

The transaction is expected to close by the end of the year and will more than triple Aristocrat’s business in the gaming operations segment — slot machines in which the provider shares revenue with the casino. Aristocrat will add Video Gaming Technologies’ 28,400 North American slot machines to its current base of 8,200 games.

Odell said the company, which also has a corporate presence in Tulsa, will be a subsidiary of Aristocrat.

“It fits comfortably into our strategic initiatives and frankly, it’s running quite well at the moment,” Odell said. “They have great leadership and we see no reason to change anything. When you buy a great business, you have to be careful you don’t take away what made it great.”

The transaction is the latest deal among gaming equipment manufacturers. Until recently, the sector experienced little consolidation and merger activity going back almost 10 years. In 2013, lottery provider Scientific Games Corp. bought slot machine maker WMS Industries for $1.5 billion and slot machine giant Bally Technologies, Inc. spent $1.3 billion on table game developer SHFL entertainment.

Odell said Aristocrat’s purchase is different.

“What I like about this deal is that its not built on synergies or cost out,” Odell said. “It’s on a growth opportunity for us because the businesses are so complimentary.”

The transaction, Odell said, was well-received in Australia. The manufacturer’s shares jumped 10 percent on the Australian Securities Exchange. The company issued 15 more shares above the current shares outstanding because of the interest.

One reason: Aristocrat will generate 65 percent of its annual revenue from the U.S. once the deal closes.

“This is one way Australians can own stock in a company that does business in the U.S.,” Odell said.

Aristocrat owned the headlines for nine days. Then, lottery provider GTECH bought slot machine giant International Game Technology for $6.4 billion.

Odell said Aristocrat is prepared to operate in a changing landscape for the slot machine sector.

“I think everyone in the industry expected consolidation,” Odell said. “I also think people recognize that great content can be used across multiple forms of distribution, including online gaming and lottery.”

Four days before buying Video Gaming Technology, Aristocrat purchased Paltronics, a gaming systems provider, for an undisclosed price. In 2012, Aristocrat bought San Francisco-based Product Madness, a social gaming provider.

Odell said social gaming provides $60 million in annual revenue to Aristocrat, and the market continues to expand. The company is moving its “Heart of Vegas” and “Jackpot Dreams” social gaming sites onto mobile devices.

“People love slot games over here,” Odell said in describing the U.S. as Aristocrat’s largest social gaming market.

In the most recent Eilers-Fantini Slot Survey, which takes in the opinions of casino leaders throughout North America on a quarterly basis, Aristocrat’s games were the clear leader over the competition in increased gaming floor space.

The company’s “Buffalo Stampede” slot machine was ranked second in performance to “Wheel of Fortune,” the long-running casino standard provided by IGT.

Meanwhile, other games unveiled at last year’s G2E, such as “Batman,” and a slot machine based on the television series “Walking Dead,” are taking away casino floor space from the competition. The survey found that “Batman” out-polled IGT’s game based on the movie “Avatar” as the most anticipated premium slot machine.

“Aristocrat was the clear market share gainer among the big five vendors in the second quarter,” the Eilers-Fantini survey noted in its executive summary. “The company’s share of highly anticipated games set to be released remains strong.”