Amax Enters into Agreement to Sell LCD Business

August 27, 2008 at 6:19 am · Filed under Online Gambling

Amax Entertainment Holdings Limited (HKSE: 0959) (“Amax” or “the Company”) announced today that it has entered into a Sale and Purchase Agreement (the “Disposal”) pursuant to which the Company has agreed to sell to an independent third party (the “Purchaser”) 100% of its equity interest in Profit Goal, which is principally engaged in the sales of LCD and LCD modules through a subsidiary. Profit Goal recorded a net liabilities of approximately HK$30.8 million as at 31 March 2008 and the Purchaser has agreed to acquire Profit Goal for a nominal consideration of HK$1.00, subject to shareholders approval and additional customary closing requirements. As a result of the planned Disposal, Amax expects to record a gain of approximately HK$30.8 million for the year ending 31 March 2009 and an increase in the Company’s net assets of approximately HK$30.8 million.
Mr. Ted Chan, Chief Executive Officer of Amax, commented, “The sale of our LCD business represents the final step in Amax’s transition to a company solely focused on the gaming and entertainment business through our junket aggregation business in Macau and our promotion and management of the Greek Mythology Casino in Taipa, Macau. Following the disposal of this non-core asset, our operating results and capital structure will more accurately reflect the significant leverage inherent in our gaming intermediary business model.

“Since establishing our unique junket aggregation business model in December of 2007, Amax has consistently generated market-leading monthly VIP rolling chip volume. We remain confident in our ability to deliver promising results following the expected implementation of a commission cap of 1.25% of rolling chip volume. Going forward, Amax’s resources will be fully devoted to its gaming and entertainment business model and we look forward to working with our strategic partner to extend and expand upon our success in providing the risk free liquidity that brings industry-leading VIP rolling chip volumes to their top-tier VIP gaming facilities.”

Late in 2007 Amax entered the gaming promotion business in Macau through AMA, whose business model differs from that of other junket operators in Macau. Instead of working directly with junkets and/or gaming customers, AMA aggregates the business of junket operators to whom commissions of 0.9% to 1.21% of rolling chip volume are payable.

Definition of Rolling Chip Volume

VIP 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 junket operators. Junket commissions are paid based on the total amount of “non-negotiable chips” purchased by each player. Junkets 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 junket operators, “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 Amax Entertainment Holdings Limited (HKSE: 0959)

Listed on the Main Board of the Hong Kong Stock Exchange, Amax Entertainment Holdings Limited (“Amax”) is principally engaged in gaming and entertainment business in Macau. Amax conducts its casino operation in Macau via its 49.9%-owned Greek Methodology Macau Entertainment Group Corporation Limited and late in 2007 entered into gaming promotion business in Macau via AMA International Limited (“AMA”) in which it has an indirect 80% interest. The gaming promotion operation is expected to emerge as the Company’s primary source of earnings.

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Black Gaming posts $20.3 million loss for quarter

August 27, 2008 at 6:06 am · Filed under Online Gambling

If you think the slowing economy has hit casino operators in Las Vegas hard, travel 80 miles northeast to Mesquite.

Black Gaming, operator of three hotel-casinos in the town, reported an operational loss of $15 million for the quarter ended June 30, driving the company to a net loss of $20.3 million.

The latest loss is wider than the $2.6 million net loss posted for the same quarter last year. For the year, the company has posted a loss of $24.3 million.

Chairman and Chief Executive Randy Black Sr. said the company has been put in a "defensive position" and "at some point you just can't cut your way to profitability."

Late last year, Black Gaming, which owns the CasaBlanca, Virgin River and Oasis casinos along Interstate 15, began an aggressive campaign to combat the economic downturn by eliminating departments, reducing management salaries and conducting layoffs.

Black told investors the company cut more than $10.5 million in operating expenses in the first six months of the year, but it hasn't been enough.

"The combination of reduced spending by customers and price reductions we have implemented to remain competitive has impacted our profitability and continued to decrease our (cash flow)," Black said last week in a conference call with investors.

On Aug. 5, Moody's Investors Service downgraded Black Gaming's bond ratings for the second time in three months based on declining market revenues.

Black told investors that he believes an infusion of funds will be necessary next year for the company to meet "liquidity needs." However, enough money should be available to meet working capital requirements, capital expenditures and scheduled interest payments through the end of this year.

In a move to increase revenue, Black Gaming and casino industry veteran Michael Gaughan, owner of South Point, merged their sports book operations Aug. 21, in time for the start of the lucrative football season.

Anthony Toti, an executive who joined Black Gaming late last year after 28 years at Coast Casinos, said combining the operations will let the Mesquite properties increase their limits to $5,000 for college sports and $10,000 for professional sports.

"It's so we can increase our handle and our drop, take bigger bets without so much exposure," said Toti, whose father, Frank Toti, is Gaughan's business partner. "If we're linked between three or four books, it's just easier to take higher limit bets."

The merger will link the sports-book operations, but not the race books, of the three Mesquite properties, South Point and the El Cortez in downtown Las Vegas.

Although Black Gaming continues to adopt changes to help curtail the economic slide, second-quarter net revenues fell 16.2 percent to $36 million for the three months ended June 30, from $43 million a year earlier.

Revenues for the first six months of the year fell 16.2 percent to $74 million from $88.3 million, an Aug. 14 filing with the Securities and Exchange Commission shows.

Casino revenues decreased between April and June, dropping 22.1 percent to $21.2 million from $27.2 million, and 19.6 percent to $45.6 million from $56.7 million. Gaming revenue in Mesquite slid 12.2 percent to $37.2 million for the quarter, state gaming regulators report.

Black said in May the "other guy" -- the privately owned Eureka casino in Mesquite -- controls approximately 30 percent of the local market and his company needs to "cut into" that share.

Black Gaming's other quarterly revenues dropped, too, including 16 percent in the hotel, 17.2 percent in food and beverage and 14.3 percent in other departments.

The company's aggressive room rate cuts led to a six-month revenue decrease of 19.2 percent to $16 million from $19.8 million.

The company released neither occupancy rates nor daily room rate averages for the quarter. However, a check of room rates on Monday for the upcoming Labor Day weekend found rates ranging from $59 per night to $119 per night.

Prices drop to as low as $29 per night by the middle of next week and $49 per night on Friday, Sept. 5.

"We still see that people are coming to our properties, just not as many people," Black said. "People are spending money, just not as much."

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Abuzz with casino anticipation

August 27, 2008 at 6:02 am · Filed under Online Gambling

The Sun City Aliante clubhouse is like a never-ending summer camp for the retired.

It's where the guys with 168 hours of free time each week — like 81-year-old Norman DeSellem, and Fred Schagel, a youthful 61 — pass the time by playing eight-ball pool while sharing the wisdom of old men and offering a dash of trash talk.

The picture windows overlook a golf course framed by mountains.

On the other side of the building, Aliante Station has risen, standing tall over the single-story homes that fill one of the newest planned communities in the valley. And this, as much as the weather or the grandkids or Schagel's 39th wedding anniversary this weekend, is the talk of Sun City Aliante, a community for people 55 and older.

The casino's towering modern architecture and glass exterior at Interstate 215 and Aliante Parkway can be seen for miles, making it the best — and maybe only — landmark in the area.

The casino will open in November, bringing 202 hotel rooms, a 650-seat concert venue, six restaurants and 16 movie screens to an area that three years ago was undeveloped desert. In the past year, Sun City Aliante — one of more than a dozen communities that make up Aliante — has neared completion with roughly 2,000 homes, a grocery store, a pharmacy, a gas station and a host of fast-food options.

The casino, in the eyes of men like DeSellem and Schagel, is more meaningful than a burger joint or another coffee shop.

"I absolutely cannot wait," says Schagel, a retired New York City Fire Department mechanic. "My wife likes the slots. Nothing big. Penny slots."

It will mark the end of the 15-minute drive across town for buffet dinners and a little light gambling at the 8-year-old Santa Fe Station.

More so, it will become a point of pride in the community, just as Green Valley Ranch Station Casino, Red Rock Resort in Summerlin and South Point near Southern Highlands became focal points in their communities.

(Aliante Station and Green Valley Ranch Station Casino are owned in a partnership with the Greenspun family, which owns the Las Vegas Sun.)

"We all moved in to retire and be active," says Mark Klein, a member of the Sun City homeowners association board. "The more activity close to here the better, especially with gas prices."

He says the homeowners board is planning tours of the casino.

But until the casino opens, all attention is on the pool table at the clubhouse. The old-timers are getting ready for another game.

DeSellem, the shorter of the two, smiles when he can't hear what you're saying. Schagel has the quick-talking mannerisms of a New Yorker. The two aren't sure how long they've been buddies, but it's been long enough to know DeSellem needs to work on his pool game, they say.

DeSellem, a retired Boeing engineer from Hawaii, has his Station Casinos rewards card and he's eager to try the new buffet. He figures with his points the prices will be similar to over at Santa Fe: about $12 for two dinners.

"You can't go to the grocery store and eat for that," he says.

They figure they'll take their wives over there a few times a week when it opens.

Maybe catch a movie or go bowling. Definitely have dinner.

There are no complaints from these clubhouse hustlers.

The pool table beckons.

"Want me to mess 'em up?" DeSellem says, preparing to start another game.

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Chief: Fire dept. to close

August 27, 2008 at 5:38 am · Filed under Online Gambling

A Swoyersville fire chief said his volunteer hose company is being forced to close by authorities because its state-issued licenses to hold bingo games and sell bingo pull tabs to raise operating funds have been revoked.
“(The state) came in November and basically shut us down,” James Pugh, fire chief for Swoyersville Volunteer Hose Co. No. 1, said. “They’re basically bankrupting us. Nobody in the fire company can get a bingo license.”

The state alleges that more than a half million dollars is missing from the hose company, which the chief denies.

Pugh said the fire company has raised anywhere from $100,000 to $150,000 a year from bingo games and selling bingo chance cards.

The hose company has been prohibited, Pugh said, from hosting bingo games because of an on-going investigation of missing funds.

A search warrant and affidavit filed in Luzerne County Court on Monday indicates more than $558,390 is missing from the hose company.

State police at Wyoming and the Luzerne County District Attorney’s Office obtained the search warrant on Aug. 21 for gambling records from six Atlantic City, N.J., casinos.

Authorities are seeking the casino records belonging to Catherine Drago, who Pugh and the search warrant identified as the hose company’s treasurer. Drago, 77, of Forty Fort, couldn’t be reached for comment on Tuesday.

“This has been an ongoing situation for our fire company for more than two years,” Pugh said. “They’re embarrassed and on a fishing expedition.”

According to the search warrant and affidavit:

Drago submitted an incomplete application to the state Department of State, Bureau of Charitable Organizations, in December 2005 to register the hose company as a charity.

The Bureau of Charitable Organizations conducted an audit of the hose company, the search warrant affidavit says, and found $558,390 in unaccounted income.

The audit showed a total income of $1.32 million, with $765,593 in deposited income at a bank, the search warrant affidavit says.

The search warrant affidavit revealed Drago and her daughter, Carol Gamble, president of the hose company, had issued $416,077 in checks to themselves from January 2004 to September 2006.

More than $285,100 had been returned to the hose company, leaving $130,954 unaccounted from checks that had been written to Drago and Gamble, the search warrant affidavit says. Pugh confirmed that Drago and Gamble are under investigation by authorities.

He added that Drago had the hose company’s finances audited. That showed a discrepancy of 26 cents, but he couldn’t recall when that audit was performed.

“We have no big money missing from the fire company,” Pugh said. “The state came in and they shut us down and made copies of all our records. They confiscated everything, every bingo record. They can’t find anything; they’re embarrassed.”

The search warrant was obtained after authorities searched Drago’s residence and discovered casino courtesy cards to Bally’s, Trump, Clairage, Tropicana, Hilton, Showboat, Sands and Caesars casinos, according to the affidavit. The search warrant permits authorities to obtain Drago’s gambling wagers.

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