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20,000 more pokies for Victoria?

Victoria doesn’t have enough poker machines according to industry veteran Len Ainsworth, and could easily do with another 20,000 or more to meet the needs of the market.

Well, he might say that, given he’s the founder of poker machine manufacturer Ainsworth Game Technology (ASX: AGI), and was previously chairman and founder of another poker machine major, Aristocrat Leisure (ASX: ALL).

But when compared to other states, either they have too many poker machines, or Victoria doesn’t have its fair share. Victoria had a quarter of the country’s population and just over 29,000 poker machines at the end of 2009. Compare that to New South Wales with over 97,000 and Queensland with more than 45,000 according to the Productivity Commission’s 2010 report into gambling.

Given those stats, Victoria has much less poker machines per person than the other states.

Until recently Tabcorp Holdings (ASX: TAH) and Tatts Group Limited (ASX: TTS) held the sole right to own and operate electronic gaming machines in Victoria, but the state scrapped their duopoly by refusing to renew their licences. Mr Ainsworth, speaking in an interview with BRW on Friday, said that the 13,000 machines assigned to each company were placed where they would earn the most amount of revenues and small clubs and pubs missed out, as there weren’t enough machines to go around then.

Despite its lack of poker machines, Victoria still makes the highest proportion of revenue of any state from gambling, with $1.6 billion, or 13% of its revenues compared to 9% in NSW and 11% in Queensland, according to the Productivity Commission’s report.

Foolish takeaway

Good luck to Mr Ainsworth. Poker machines and gambling can be seen as socially negative, and Victoria is unlikely to substantially increase the numbers of its poker machines, never mind go close to doubling the numbers.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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