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Entertainment Gaming Asia Inc. (NYSE Amex: EGT) (“Entertainment Gaming Asia” or “the Company”), a leading provider of electronic gaming machines on a participation basis to the Pan-Asian gaming industry, today announced it entered into a new casino development project in the Kampot province of Cambodia near the Vietnam border. This casino project represents a strategic incremental step in the Company’s growth plans to become the leading owner and operator of regional casinos in emerging gaming markets in Indo China and is expected to contribute to near-term earnings.
The casino, which will be operated under the Company’s “Dreamworld” brand, will include table games such as baccarat, roulette and dice games as well as electronic gaming machines. The initial phase of the casino is expected to be opened in the fourth quarter of 2011, subject to the timely issuance of the required gaming license, with up to 14 table games and 25 electronic gaming machine seats. Depending on demand and the availability of capital, the Company may add at a future date additional casino floor space and equipment as well as complementary facilities such as hotel rooms, a spa and other entertainment amenities.
The casino will be developed and constructed on approximately 108,000 square feet (approximately 10,000 square meters) of land strategically located near one of Southern Cambodia’s busy border crossing checkpoints with Vietnam. The project will be one of a few casinos in the Kampot province and will cater to visitors from the major nearby cities in the region.
The casino project will be owned by a joint venture company (the “JVC”) incorporated in Cambodia for the sole purpose of operating the casino. The shareholders of the JVC are Entertainment Gaming Asia with a 67% interest and a local partner with a 33% interest.
Under the terms of the shareholders agreement, the JVC will apply for its own casino license and the local partner will lease to the JVC the land for a period of 25 years for an annual fee of $1.00. In return, the Company will make a one-time lump sum payment to the local partner in the amount of $260,000 and will fund the development, construction and operation of the casino on the land. Entertainment Gaming Asia will have exclusive management rights and control over the development and operation of the casino, and management and voting control over the JVC. The Company and the local market partner will share the net revenue of the JVC (the total gross revenue of the casino less any payouts paid to customers, operating expenses, and gaming and non-gaming taxes on the JVC’s revenue) on a 60/40 basis, respectively. The initial project term is 25 years with renewal options. Development of the casino is subject to the JVC’s receipt of the required gaming license and relevant construction permits, for which the JVC is in the application process.