Iao Kun Group Holding Company Limited Announces Rolling Chip Turnover of US$1.12 Billion for September 2013
HONG KONG--(BUSINESS WIRE)-- Iao Kun Group Holding Company Limited ("IKGH") (NAS: IKGH) , which operates through its subsidiaries and related promoter companies that act as VIP room gaming promoters, today announced unaudited Rolling Chip Turnover (as defined below) for the month of September 2013 at the company's VIP rooms in Macau was US$1.12 billion, down 10% year-over-year, compared to US$1.25 billion for the month of September 2012. Win rate for the month of September 2013 was 4.24%.
For the first nine months of 2013, IKGH's Rolling Chip Turnover was US$12.68 billion (an average of $1.41 billion per month), down 10% year-over-year, compared to US$14.10 billion (an average of $1.57 billion per month) for the first nine months of 2012.
September Rolling Chip Turnover was negatively impacted by an abnormally high win rate. Adjusted for a theoretical win rate of 3%, Rolling Chip Turnover would have been US$1.59 billion, or 27% above September 2012. September results were also partially impacted by Hurricane Usagi, which caused aviation and ferry terminal disruption and closures.
IKGH is lowering its Rolling Chip Turnover guidance for 2013 to a range of US$16.5 billion to US$18 billion from its previous guidance of US$19 billion, and is lowering its 2013 Non-GAAP income guidance to US$46 million to US$52 million (which includes extraordinary expenses) from its prior range of US$60 million to US$75 million. Earlier this year, IKGH was encouraged by certain Mainland China macro-economic indicators, which caused the Company to expect a change in its agent credit policy for the second half of 2013. However, the Company did not see clear signs of a sustainable Mainland recovery, and thus remained prudent with shareholders' capital. As of October 1, IKGH has begun an aggressive marketing campaign in Macau to augment its non-marker agent base, which the Company believes can increase its Rolling Chip Turnover and market share, while allowing it to maintain a vigilant stance with shareholders' capital. IKGH continues to evaluate its credit policies on a monthly basis.
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.
As of September 1, 2012, all IKGH 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.
About Iao Kun Group Holding Company Limited
IKGH is a holding company which operates through its subsidiaries and related promoter companies that act as VIP room gaming promoters, and is entitled to receive all of the profits of the VIP gaming promoters from VIP gaming rooms. IKGH's VIP room gaming promoters currently participate in the promotion of five 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 StarWorld 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. Additional VIP gaming rooms are located at the Sands Cotai Central and City of Dreams Macau, both in Cotai, and Le Royal Arc Casino, located in NAPE, Downtown Macau.
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 IKGH's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements.
KEYWORDS: Asia Pacific Hong Kong
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