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Entertainment Gaming Asia books Q3 loss on competition and democracy

TAGs: Cambodia, dreamworld, Entertainment Gaming Asia

entertainment-gaming-asia-slotsAsian casino and slots operator Entertainment Gaming Asia (EGA) saw revenue fall 9% to $5.6m in Q3 as the company dealt with increased competition in the Philippines and reduced player traffic at its facilities in Cambodia. EGA’s gaming operations again contributed the bulk ($4.5m) of its revenues, while its gaming products division added $1.1m. Earnings fell to $1.8m from $2.1m a year earlier, resulting in a net loss of $309k for the quarter. On the plus side, the company remains debt-free and boasts a cash balance of $4.6m.

EGA CEO Clarence Chung said player traffic at NagaCorp’s NagaWorld casino in Phnom Penh – to which EGA supplies slots – was negatively affected by Cambodia’s national elections in July, leading to reductions in both revenue and average win per unit per day. EGA’s Dreamworld Poipet slots hall in Cambodia’s border area with Thailand contributed positive earnings in Q3, despite having only opened in May. Revenue from EGA’s slot operations in the Philippines dipped 10% to $800k due to higher jackpot payouts and “increased competition in the market,” a likely nod to the recent opening of the Solaire Manila casino.

Dreamworld Pailin, EGA’s casino in western Cambodia, saw revenue rise to $432k from $340k in Q3 2012, although the total was down significantly from Q2’s $907k. The sequential decline was blamed on EGA’s decision to decrease its use of high-cost tour group promoters. The property also recently leased 10 of its 36 gaming tables to a third-party operator with a roster of quality players from Thailand, a move that EGA expects will provide recurring revenue and reduce costs. Pailin’s operating expenses fell to $703k from $1.2m in Q2, and EGA expects Q4’s results will further demonstrate the benefits of its cost-cutting initiatives.

EGA’s gaming products division currently has $1.3m of orders in the pipeline and the company recently inked distribution agreements with several third-party gaming suppliers. Looking further downfield, EGA expects to secure gaming chip and plaque orders from “at least one” of the new casinos being built on Macau’s Cotai Strip, and Chung told analysts that an initial order from that type of facility could generate revenue between $3m and $6m for EGA.

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