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HOME > NEWS > Daily News > Asia Entertainment & Resources announces Rolling Chip Turnover of US$1.471 Billion for August 2012
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Asia Entertainment & Resources announces Rolling Chip Turnover of US$1.471 Billion for August 2012

5 September 2012

HONG KONG -- (PRESS RELEASE) -- 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 August 2012 at the company’s three VIP rooms in Macau was US$1.471 billion, down 19.3% year-over-year, compared to US$1.822 billion for the month of August 2011, and up 12.3% compared to US$1.310 billion for the month of July 2012. This compares with a year-over-year increase in overall gross gaming revenue for Macau of 5.5% for August 2012.

“Our August 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”

For the first eight months of 2012, AERL’s Rolling Chip Turnover was US$12.848 billion (an average of $1.606 billion per month), up 3.3% year-over-year, compared to US$12.440 billion (an average of $1.555 billion per month) for the first eight months of 2011. Overall, Macau gross gaming revenue increased 15.2% for the first eight months of 2012, while Macau VIP revenue growth for the month of August 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, as well as a higher-than-expected win rate of 3.19%. At a normalized win rate between 2.85% and 3.00%, AERL’s Rolling Chip Turnover for August 2012 could have been between US$1.649 billion and US$1.566 billion.

“Our August 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,” said AERL Chairman Lam. “With our new revenue sharing model now in place, along with further policy easing by the Chinese government, we expect to return to our normal credit policy in the near future, which should 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 were based on a fixed commission until September 1, at which time AERL changed 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.

 
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