US casino revenue trends

Research evidence excerpt

US casino revenue trends

Macquarie Equity Research US casino revenue trends

Company risks

• We highlight the key risks to our ratings and earnings:

Þ Aristocrat - Upside debates: 1) Aristocrat can continue to win market share supported

by industry leading design & development spend, which is seen as offensive/defensive,

and supports content/hardware commercialisation across the three channels (land-

based, social casino and iGaming), 2) Legalisation of iCasino and iLottery expands

Aristocrat's TAM, and trajectory to generate US$1bn Interactive revenues in FY29, 3)

Aristocrat has balance sheet optionality, supported by more than A$1.5bn annual free

cash flow (operating cashflow less capex) which we expect to support A$1bn annual

share buybacks, and provide ongoing M&A potential, 4) FX volatility, with a 1c change

in AUD/ impacting EPSA by around 1.3ppts, and 5) execution of the A$100m ONE

Aristocrat FY27 cost savings target (MQe = A$75m).

Þ Aristocrat - Downside debates: 1) Aristocrat's businesses are impacted by slower

consumer spending (report link), which may be through lower casino outright purchases

or Gaming Ops revenues, 2) Social Casino industry revenues have been in structural

decline since 2021, and future profitability is dependent on Aristocrat's ability to direct

volumes through its higher margin direct-to consumer platform (report link), 3) key

competitors, Light & Wonder and IGT have / are undergoing major restructures, and in

time may become more competitive, impacting Aristocrat's growth, 4) Aristocrat has

seen departures of key management in recent years, and there is a debate whether this

is an attrition or cultural issue, 5) FX volatility, with a 1c change in AUD/USD impacting