Asia Entertainment & Resources Ltd. (“AERL”) (NASDAQ: AERL), which operates through its subsidiaries and related promoter companies as a VIP room gaming promoter, today announced unaudited Rolling Chip Turnover (as defined below) for the month of July 2012 at the company’s three VIP rooms in Macau was US$1.310 billion, down 40.8% year-over-year, compared to US$2.212 billion for the month of July 2012. This compares with a year-over-year increase in overall gross gaming revenue for Macau of 1.5% for July 2012.
For the first seven months of 2012, AERL’s Rolling Chip Turnover was US$11.377 billion (an average of $1.625 billion per month), up 7.1% year-over-year, compared to US$10.618 billion (an average of $1.517 billion per month) for the first seven months of 2011. Overall, Macau gross gaming revenue increased 16.8% for the first seven months of 2012, while Macau VIP revenue growth for the month of July 2012 is believed to be negative versus the same period in 2011.
The decline in Rolling Chip Turnover was attributable to several factors including a one-time cash player that contributed almost US$200 million in RCT in July 2011, five full weekends in July 2011 versus July 2012, severe (typhoon and rainstorm) weather in Macau and Mainland China which affected visitations to our VIP rooms and the Company’s self-directed tightening of credit to agents due to the slowing economy in China.
“Our July 2012 results were affected by both external factors out of our control as well as our internal decision to tighten credit to agents, as the slowdown in growth in China has caused us to be more prudent in extending credit,” said AERL Chairman Lam. “Further policy easings by the Chinese government should allow AERL to return to normal credit policy in the near future, which would lead to higher Rolling Chip Turnover during the rest of the year.”
The Company’s VIP rooms are primarily focused on high stakes baccarat. Baccarat accounts for approximately 88% of total Macau casino winnings according to the Macau Gaming Inspection and Coordination Bureau (DICJ). In Macau, two remuneration methods are used to compensate VIP room gaming promoters. On a fixed commission basis, VIP room gaming promoter revenues are based on an agreed percentage of Rolling Chip Turnover. On a win/loss split basis, the VIP room gaming promoter receives an agreed percentage of the “win” in the VIP gaming room (plus certain incentive allowances), and is required to also bear the same percentage of losses that might be incurred. Compared to the fixed commission basis, the win/loss split basis subjects the VIP room gaming promoter to the risk of losses from the gaming patron’s activity and greater volatility.
AERL’s VIP rooms at the Galaxy Star World in Downtown Macau, Venetian Macao-Resort-Hotel and Galaxy Macau™ in Cotai are based on a fixed commission until September 1, at which time AERL will change its remuneration model to a revenue sharing model for all of its VIP rooms.
Definition of Rolling Chip Turnover
Rolling Chip Turnover is used by casinos to measure the volume of VIP business transacted and represents the aggregate amount of bets players make. Bets are wagered with "non-negotiable chips” and winning bets are paid out by casinos in so-called "cash” chips. "Non-negotiable chips” are specifically designed for VIP players to allow casinos to calculate the commission payable to VIP room gaming promoters. Commissions are paid based on the total amount of "non-negotiable chips” purchased by each player. VIP room gaming promoters therefore require the players to "roll,” from time to time, their "cash chips” into "non-negotiable” chips for further betting so that they may receive their commissions (hence the term "Rolling Chip Turnover”). Through the promoters, "non-negotiable chips” can be converted back into cash at any time. Betting using rolling chips, as opposed to using cash chips, is also used by the DICJ to distinguish between VIP table revenue and mass market table revenue.
About Asia Entertainment & Resources Ltd.
AERL, formerly known as CS China Acquisition Corp., acquired Asia Gaming & Resort Limited (“AGRL”) on February 2, 2010. AERL is an investment holding company which operates through its subsidiaries and related promoter companies as a VIP room gaming promoter, and is entitled to receive all of the profits of the VIP gaming promoters from VIP gaming rooms. AERL’s VIP room gaming promoters currently participate in the promotion of three major luxury VIP gaming facilities in Macau, China, the largest gaming market in the world. One VIP gaming room is located at the top-tier 5-star hotel, the Star World Hotel & Casino in downtown Macau, and another is located in the luxury 5-star hotel, the Galaxy Macau™ Resort in Cotai, each of which is operated by Galaxy Casino, S.A. The third VIP gaming room is located at the Venetian Macao-Resort-Hotel in Cotai.
This press release includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of AERL's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements.
James Preissler, 646-450-8808
William Schmitt, 203-682-8294
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