HONG KONG -- (PRESS RELEASE) -- Asia Entertainment & Resources Ltd. (“AERL”) (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 September 2012 at the company’s VIP rooms in Macau was US$1.249 billion, down 34.8% year-over-year, compared to US$1.916 billion for the month of September 2011. This compares with a year-over-year increase in overall gross gaming revenue for Macau of 12.3% for September 2012. Win rate for the month of September 2012 was 3.39%.
For the first nine months of 2012, AERL’s Rolling Chip Turnover was US$14.097 billion (an average of $1.566 billion per month), down 1.8% year-over-year, compared to US$14.357 billion (an average of $1.595 billion per month) for the first nine months of 2011. Overall, Macau gross gaming revenue increased 14.9% for the first nine months of 2012, while Macau VIP revenue growth for the month of September 2012 is believed to be negative versus the same period in 2011.
The decline in Rolling Chip Turnover was attributable to the Company’s self-directed tightening of credit to agents due to the slowing economy in China and the slowdown of business in the last two weeks of September 2012 before the Golden Week holiday, partially offset by a higher-than-average win rate as all AERL VIP rooms are now on a revenue sharing model.
“Our September 2012 results were affected by 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 and led to disappointing results,” said AERL Chairman Lam. “We believe the acquisition of our new VIP room at City of Dreams, hopefully with further policy easing by the Chinese government, will 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.
Commencing September 1, 2012, all AERL VIP rooms are on a revenue sharing remuneration model.
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.
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