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Aristocrat Watch - June 2003

30 June 2003

On the great international stage, Australia and Aristocrat are always interesting to watch.  First, because Australia's local gaming market is more mature than the American market, one can see trends that may come one day to the United States.  Problem gaming lobbyists have pushed for legislation that calls for stricter controls on operating, increasing taxation, and a gradual reduction in the number of gaming devices and venues. 

The Australians have one of the highest per-capita gaming expenditures in the world.  That is bad news for the anti-gaming lobby, but good news for operators and slot manufacturers.  Because Australian slot players are very frequent players, their reaction to a new game is a good indication of that game's potential success.  If a slot machine is successful in the Australian club environment, it will most likely be successful in the United States.  And here begins the story of the success of Aristocrat, both in the U. S. and in Australia.  The multi-coin, multi-line video games that Aristocrat introduced to America came from the clubs of Australia.  In the beginning Aristocrat owned that market in both countries.  However,, they ran into some regulatory troubles in America, and some increased competition in Australia and their own internal culture.

This has been a difficult year for Aristocrat with a melt down in stock price, a complete change in upper management and pressure from investors and the founding family.  The final outcome is anyone's guess.  One thing does seem certain, Len Ainsworth, regardless of what he says, is unlikely to take over.  It is a regulatory requirement in most American jurisdictions that he not be allowed any operational control.

This week Geoffrey Ainsworth, son of Aristocrat founder Len Ainsworth, said he (was) approached by parties claiming to represent American gaming company WMS Gaming, known in the industry as Williams.  …The troubled poker machine maker, the second biggest in the world, has recently sacked its chief executive and chief financial officer while the chairman John Ducker resigned.  UBS Warburg gaming analyst Anthony Aboud said further growth in Australia for Aristocrat is limited.  "The Australian market at the moment is capped in every state except Queensland and there are measures in place which mean revenue from the machines is not as much as it used to be."  …Aristocrat has issued three profit warnings this year with its share price falling from $4.22 in February to a closing low of 89 cents.  Ratings agency Standard & Poor's has lowered its corporate credit rating on Aristocrat to the junk rating of BB from BBB-minus, with the ratings outlook remaining negative.  West Australian, 6-18-03

Days after stating his family would not sell their stake in Aristocrat Leisure unless a "phenomenal figure" was offered in a takeover bid, poker machine tsar Len Ainsworth appears to have found just such a figure, himself.  Mr. Ainsworth, who founded Aristocrat and whose family still owns 40 percent of the company, yesterday told Channel Seven's Sunday Sunrise program he would consider launching a reverse takeover of Aristocrat through his new company, Ainsworth Game Technology, because Aristocrat's management had "lost sight of the ball."  The news caps several weeks of speculation a takeover bid was imminent for the embattled gaming group, which has lost $1.5 billion of its market value so far this year.   Colin Kruger, West Australian, 6-23-03

The village was abuzz yesterday with rumors the white knight -- or at least the white-haired knight, Len Ainsworth -- might come to rescue his damsel in distress. …If Mr. Ainsworth issued script to Aristocrat, the latter would most likely lose its Nevada Gaming license and all other US licenses.  That's because Aristocrat had to change the shareholding structure, limiting the Ainsworths to 40 percent –"so they could get Nevada licenses in the first place," he said.  Stephen Downie, Daily Telegraph, 6-24-03

Ken Adams

Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
Ken Adams
Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.

Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.

Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.