Aristocrat Leisure, a poker machine manufacturer, is spending $5b to enter'real-money gaming

 Aristocrat Leisure poker machine manufacturer is spending $5 billion to play'real money' gaming

Quiet achiever

Aristocrat Leisure is a company that most Australians don't know, despite it being one of the top 20 companies listed on the country's stock market. Its market capitalisation stands at almost $30 billion.

Colin Mansfield works as a director for Fitch Ratings' US corporate financing group. He's based out of Boston, but he is very closely involved in the company's North Shore operations.

Aristocrat, also known as EGMs (or pokies), is the world's largest manufacturer of electronic gambling machines. However, they are not for use in pubs, clubs or casinos.

The company now has its largest bet: $5 billion acquisition of Playtech, the real money gaming dynamo.

If the technology is successful, it will take over the electronic world of computers, phones, tablets, and smartphones.

Playtech: Big money for big companies

Playtech is listed at the London Stock Exchange. But, Playtech wants to purchase it outright. The offer includes a value of 58% higher than the price they traded before the bid was made.

The deal must be ratified by the shareholders of the UK.

A bidding war is possible as other parties are interested, but Aristocrat holds the box seat thanks to the Playtech board.

Aristocrat's digital gaming revenues grew by 15% to $2.6 billion last month, which is more than half of Aristocrat’s after-tax profit of $820 millions.

Potential US market worth $100b

Real money gaming will explode. Mr Mansfield said that although it is only legal in six states of America, he believes that this will change as cash-strapped countries seek to make money.

He says, "Now, it's about $4 billion in the US and future growth really hinges upon more and more states legalizing real money gaming."

Alexander Mees, Morgans senior analyst, writes in a note to clients that RMG in the United States alone could be worth $US70 billion ($98.4 billion) in just a few short decades.

Mr Mees predicts that the proposed deal would increase Aristocrat Leisure’s earnings prior to interest, taxes, and amortization by 17% in 2023.

He states that "we expect the strong sector expansion to be driven a North America market growing in a compound annual growth rate close to 50% as more US States liberalise and permit online iGaming, and online sports betting."

'Devastating' risks

Reverend Tim Costello, chief advocate for Alliance for Gambling Reform is a umbrella organization that includes over 60 groups that work to reduce harm from gambling.

He warns that he can be found alone and drinking while playing real-money gaming.

"It is illegal in this country to have casino or roulette games at my house. It is a terrible thing. What is a poker creator?