Reductions in consumer card use in casinos is adversely affecting Global Cash Access Holdings Inc.’s financial performance, Scott Betts, the company’s president and CEO, informed analysts during an Aug. 4 conference call to discuss second-quarter earnings.

The Los Vegas-based company provides cash-access products and related services in more than 1,100 casinos worldwide through ATMs, point-of-sale debit card transactions, credit card cash advances and check-warranty services.

Global Cash reported net income of $6 million for the quarter ended June 30, down 34.1% from $9.1 million during the same period last year. Revenues fell 9.1%, to $157.2 million from $173 million.

ATM revenues totaled $80.6 million, down 4.7% from $84.6 million, largely because of a 5.6% reduction in year-over-year transaction volume, Betts said. Check-service revenues dropped 24.8%, to $7.9 million from $10.5 million, as casino patrons wrote fewer checks. Cash-advance revenues totaled $64 million, down 14.4% from $74.8 million.

During the conference call, Betts acknowledged a softening in revenues at the casinos it services, noting he expects reductions in “same-store” revenue to drop in the “mid-single digits” for the rest of the year after dropping by 7% during the first half of 2010.

“The rate of decline is certainly slowing down significantly, from the double-digit rates that we experienced in 2009, and that is certainly good news,” he said. “Even in the current pricing pressure, the decline in our gross margins has been primarily impacted by the continued same-store revenue declines, and patrons’ continued shift away from credit card cash advance. This trend should reverse itself when we enter into a recovery period.”

Similar to previous quarters, reductions in consumer credit card use drove virtually the entire drop in same-store revenue during the quarter, Betts said.

Betts also acknowledged the loss of Harrah’s Entertainment’s casino business, says he believes Harrah’s did not place much value in the company’s services and product innovations.

In an analyst report, Tien-tsin Huang of JPMorgan Chase & Co. noted his belief that the Harrah’s deal came down to price and that the casino operator overlooked Global’s service offering.

“To defuse concerns that the loss of [Harrah’s] is a new trend, [Global] indicated a top-10 client notified them of their intentions to renew an existing contract on an exclusive basis, which is encouraging and somewhat validates their recent product innovation initiatives,” he wrote.

Last week, Global Cash announced that the Nevada Gaming Control Board has granted it permission to begin a product field trial of its Quikticket product in that state. The company developed Quikticket to enable casino patrons to have the choice of withdrawing cash or obtaining a slot ticket when conducting an ATM transaction.

Quikticket also ties in to the company’s Self Transaction Exclusion program, which enables customers to exclude themselves from access to their funds from any access devices within Global Cash’s network. Consumers may use slot tickets directly in electronic gaming devices or use them to redeem cash.

Global Cash expects to select a beta site and begin testing the product once it receives the required approvals from Visa Inc. and MasterCard Worldwide for use over their respective Plus and Cirrus international ATM networks.

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