Aristocrat settles US lawsuits

by William Brown Last Updated
Aristocrat’s financial forecast bumped up after strong digital performance

Australia’s largest gambling machine manufacturer has agreed to pay A$47.4 million to settle two lawsuits lodged in Washington State.

Channel news reports the plaintiffs in the case allege that some of Aristocrat Leisure’s online Big Fish Games on social media platforms – including Big Fish Casino, Jackpot Magic Slots and Epic Diamond Slots – are games of chance, which are prohibited by Washington law.

Although the Big Fish games are free to download, users can buy virtual gaming chips to play games, meaning that players are often online gambling with real money.

Because the chips had to be bought to continue playing Big Fish Games, the US Court of Appeals determined the virtual chips did have real-world value, even though chips cannot be exchanged for cash.

One plaintiff lost A$4590 playing Big Fish Casino games on her smartphone.

Another lead plaintiff lost A$1530.

Virtual chips on Big Fish cost between $1.99 and $250.

Under the Washington District Court Settlement, Aristocrat will pay US$31 million into a settlement fund, with a further USD$124 million (A$189.8 million) to be paid by Churchill Downs Incorporated.

Aristocrat Leisure acquired Big Fish Games from CDI in January 2018.

Some of the plaintiff complaints were made before this time.

Aristocrat cuts back on staff

Gaming giant Aristocrat Leisure cut staff and imposed pay cuts on employees and management as it coped with the fallout from coronavirus imposed lockdowns.

The Australian reported in late April that the poker machine manufacturer won’t declare a dividend.

1000 staff are being stood down from May 1 until June, while the gaming manufacturer will be eliminating another 200 roles and transitioning another 200 jobs to part-time until September.

An Aristocrat Leisure spokeswoman says most of the stood down roles are in the United States, where the company has the bulk of its workforce.

The spokeswoman also said it has stood down “a few hundred” workers in Australia.

It is also cutting the pay of 1500 of its 4000 staff until the end of September.

Most of the pay cuts are from 10 to 20 per cent, while chief executive Trevor Croker takes a 30 per cent reduction in his base salary.

Mr Croker made $1.6 million in 2019, plus another $4 million in bonuses and share-based payments, according to the company’s annual report.

On Monday, the gaming company said it would apply for the JobKeeper employment subsidy to protect as many jobs as possible in Australia and was working to determine its eligibility for government stimulus measures in the United States.

“We are very sensitive to the impact of cost reduction measures on our people and we will work hard to support them through this difficult time,” Mr Croker said.

Online gains to be had for Aristocrat

The company usually earns an average of A$78.77 a day from each of its 48,218 gaming machines across North America, for an average daily haul of about A$3.8 million, but almost all its land-based customers have suspended operations.

“While highly uncertain, at this stage, Aristocrat anticipates that venue reopenings will take place on a phased basis, with a gradual ramping up of gaming floors in line with improvements in consumer confidence and the wind back of social distancing and travel limitations over time,” the company said.

But its digital business, where Aristocrat derived 40 per cent of its revenue from, has performed strongly during the lockdowns, with higher books and player engagement.

The company’s digital games include the fantasy role-playing game Raid: Shadow Legends as well as digital casino games.

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