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Entertainment Gaming Asia Inc. Reports Second Quarter 2013 Results And Provides Market Update

“Quarterly performance benefited from strong contribution from our operations in NagaWorld. However, overall results were negatively impacted by lower revenue and high non-recurring costs for the gaming products division primarily due to the relocation of the manufacturing facilities from Australia to Hong Kong during the quarter and a gross margin loss for Dreamworld Pailin.

“In addition to strong performance from NagaWorld, slot operations revenue benefited from Dreamworld Poipet. Our targeted marketing efforts have helped to begin building a quality player base for these operations and the achievement of positive EBITDA for the month of July. Slot operations performance in the quarter was negatively impacted by a decrease in revenue for our operations in the Philippines. This market is experiencing increasing competition from the development of major integrated casino resorts in Manila. With a solid local player base and proactive approach to marketing to our target customers, we are focused on improving customer loyalty. Further, this increasing competition is likely to bring consolidation at the slot club level and, we believe, this could provide an opportunity for us.

“For Dreamworld Pailin, we are preparing to implement efforts to refocus these operations that we believe will better allow us to capitalize on the existing market conditions and substantially reduce operating costs. We intend to introduce a new operating model with an increased focus on VIP players and a shift in the mix of gaming offerings, with the goal of improving the earnings potential for these operations.

“In addition to our gaming operations, our gaming products provide a diversified revenue stream with attractive earnings potential. With the production plant relocation behind us, we entered the third quarter of 2013 with a gaming chip and plaque order pipeline of approximately $2 million in revenue expected to be recorded during the third quarter, a more normalized operating cost structure and a focus on expanding our product offerings and customer base.

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