HONG KONG--(BUSINESS WIRE)--Asia Entertainment & Resources Ltd. (“AERL”) (OTCBB: AERCF) (OTCBB: AERLF), which operates through its subsidiaries as a VIP room gaming promoter, today announced unaudited Rolling Chip Turnover (as defined below) for the month of May 2010. The Company’s Rolling Chip Turnover for the month of May 2010 in Macau was US$1.185 billion, an increase of 378% year-over-year, compared to US$247.8 million for the month of May 2009. The Company’s Rolling Chip Turnover year-to-date through May for 2010 in Macau was US$3.649 billion, an increase of 169% year-over-year, compared to US$1.356 billion for 2009. In the month of May, the majority of the business was on a fixed commission basis.
AERL Chairman Lam commented, “May 2010, which included the Labor Day long weekend holiday in Mainland China, was a record level of monthly Rolling Chip Turnover for our company, and the first month in which we exceeded US$1 billion. Starting in July 2009, Macau’s gaming industry began to see a rebound in growth from the prior year. While we believe we will continue to see strong year-over-year growth, we believe that the high levels of growth rates so far achieved may be moderated on a year-over-year growth basis as a result of being compared to more successful months in the previous year for the remainder of 2010."
The Company’s VIP rooms are primarily focused on high stakes baccarat. Baccarat accounts for approximately 88% of total Macau casino winnings. The VIP room in the Galaxy Star World in Downtown Macau was successfully transitioned to a 1.25% commission on Rolling Chips Turnover at year-end 2009, where there is no shared risk with the casino or volatility from patrons’ winning. Based on the commission model, AERL’s net profit before general and administrative expenses is typically 0.45% of the Rolling Chip Turnover.
Historically, the Company’s net gaming win revenue was based on the win rate split model. On a win rate split agreement with the casino, the Company splits the win on an agreed upon basis. AERL’s VIP gaming promoters’ gross win rate as a percentage of Rolling Chip Turnover has historically ranged between approximately 1.1% and 4.5%. The industry average gross win rate for Baccarat is approximately 2.85% to 3.00%. Below a 1.9% win rate, the Company may lose money due to the ratio of commissions paid out to agents and collaborators. Based on a statistical average of 3.00%, AERL’s net profit before general and administrative expenses is typically 0.45% of the Rolling Chip Turnover.
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 (Macau Gaming Control Board) to distinguish between VIP table revenue and mass market table revenue.
About Asia Entertainment & Resources Ltd.
AERL, formerly known as CS China Acquisition Corp. (“CS China”), acquired Asia Gaming & Resort Limited (“AGRL”) on February 2, 2010. The principal business activities of its wholly owned subsidiaries are to hold Profit Agreements with VIP Room gaming promoter companies ("Promoters") and to receive 100% of the profit streams from the Promoters. The Promoters currently participate in the promotion of two major luxury VIP gaming facilities ("VIP rooms") in Macau, China, the largest gaming market in the world. One of the Macau VIP rooms is located at the top-tier MGM Grand Macau Casino in downtown Macau and is operated by the MGM Grand Paradise S.A. Another Macau VIP gaming facility is operated by Galaxy Casino, S.A. and is located in the luxury 5-star hotel, the Star World Hotel & Casino in downtown Macau. In addition, the Promoters plan to promote the first luxury VIP room in Jeju Island in South Korea, which will offer Macau-style gaming, and have concluded a favorable trial operation there.
Forward Looking Statements
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. Theoretical win rates for AERL’s VIP gaming promoters’ VIP gaming room operations depend on a variety of factors, some beyond their control. The gaming industry is characterized by an element of chance. In addition to the element of chance, theoretical win rates are also affected by other factors, including gaming patrons’ skill and experience, the mix of games played, the financial resources of gaming patrons, the spread of table limits, the volume of bets placed by AERL’s VIP gaming promoters’ gaming patrons and the amount of time gaming patrons spend on gambling — thus VIP gaming rooms’ actual win rates may differ greatly over short time periods, such as from quarter to quarter, and could cause their quarterly results to be volatile. These factors, alone or in combination, have the potential to negatively impact the VIP gaming rooms’ win rates.