When it comes to the capital goods sector of the gambling industry – the gaming machine manufacturers – there are no clear winners. There are safer companies and more dangerous ones, but none in any sort of exceptional position. One thing that stands out about the capital goods sector of gaming is that, while most retailers – the big direct-to-consumer casinos themselves – have recovered spectacularly since the financial crisis, the machine manufacturers have not. At least not in terms of share price. International Game Technology (IGT) gets singled out sometimes for lagging in capital growth compared to direct-to-consumer casino companies, but that’s apples to oranges comparing two different strata of the gambling industry.

Scientific Games (SGMS), Aristocrat Leisure (ALL), and IGT are all way below their 2007 highs. The only game manufacturer that ended up surpassing its 2007 highs was Bally Technologies, which got acquired by Scientific.

Let’s take a look at three of them.

Aristocrat Leisure in Australia

Aristocrat is in something of a weird situation. First, taking a look at the macro conditions and monetary picture in Australia, we see this.

money supply growth has been stable for a decade. You can almost draw a straight diagonal line from 2002 until now, so nothing too crazy there. However, take a look at the Aussie Dollar / US Dollar exchange rate and there’s definitely something strange going on in the Outback.

The AUD has weakened 20% in 6 months against the USD. This can’t be because of supply, since while the AUD supply certainly is not stable (it keeps growing at a close to constant rate), it is a lot more stable than the supply of other currencies. This has to do with USD demand, which has skyrocketed in tandem with collapsing oil prices, the USD being for all intents and purposes an oil-backed currency, since oil can only be traded in US Dollars. The conclusion being that the current fall in the Aussie Dollar since September is artificial and entirely related to oil. See for yourself below, comparing the oil price with the AUD/USD ratio.