Lucky Australian punters and lower spending sting Tabcorp

TheAustralian.com.au

TABCORP has warned of a slowdown in revenue growth in the second half of the financial year as higher interest rates and luckier casino punters reduced turnover last month. 

Speaking at a Macquarie Securities conference in Sydney yesterday, Tabcorp chief executive Elmer Funke Kupper said revenue growth for the financial year to the end of April was 1.6 per cent, down from the 2.6 per cent growth seen in the first half.

He said part of the blame lay with the cycling of last year's fiscal stimulus package, as well as higher interest rates trimming consumer spending.

"We've had six interest rate rises in a very short period of time and that's hurting discretionary income," he said.

The Queensland casinos division was the worst performing division, with revenue down 7.2 per cent over the financial year to the end of last month.

"The Queensland market has had a sharp downturn in the last six to eight months, from fairly reasonable growth to quite a steep contraction," he said.

He blamed the slowdown on a combination of falling wealth among retirees, tighter interest rates and a generally softer economy than in other states, as well as the company's lack of investment in the state in recent years.

"We haven't been investing substantially in our Queensland business, and casinos depend on maintenance and expansion investment, which is why we are seeing growth at Star City in Sydney," he said.

"We haven't made those investments in Queensland but we need to, and we'll make a decision on that later this year."

The Sydney casino experienced a welcome 4.3 per cent increase in revenue over the financial year to the end of last month. Mr Funke Kupper noted, however, that an increase in the number of high-rollers using its private gaming rooms had coincided with a lucky streak that saw them walk away with more winnings than statistical averages would suggest.

"You can get fluctuations in the win rate -- we've had a couple of months where our customers have been very successful, but that will come back. Over time the win rates will level out to the right number," he said.

The company's Victorian gaming business was also suffering after the maximum bet allowed on poker machines was cut from $10 to $5, he said.