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

Stocks in this article: EGT

Refocusing Dreamworld Pailin to Improve Bottom-Line Performance

The Company is formulating a strategic change in the operating model for Dreamworld Pailin located at the Cambodia-Thailand border. Dreamworld Pailin opened in May 2012 and presently houses 26 table games and 58 EGM seats.

Dreamworld Pailin’s financial performance has been slow to ramp up and these operations are not yet profitable. After a thorough analysis of the operating results and market trends, the Company has formulated a new operating plan which it anticipates will better capitalize on the market conditions and allow for a substantial reduction in operating expenses.

The new strategy entails a shift in the primary focus to the VIP market. As a result, the Company intends to reduce the number of tables in operation from 26 to approximately 16. The Company has recently expanded its new junket program to include five VIP promoters and is focused on adding more quality promoters to the program. In place of the removed tables, the Company intends to add semi-live electronic gaming tables with approximately 30 seats, which are intended to appeal to visiting individual mass market players. With its strong relationships with gaming suppliers, the Company plans to obtain these machines on a revenue sharing basis resulting in minimal capital investment.

By decreasing the emphasis on the higher-cost, mass market tour groups and increasing the focus on the VIP market, the Company’s goal is to significantly reduce operating costs by approximately 30-40% while increasing the dollar level of play. Under this refocused operating model, the Company estimates Dreamworld Pailin will achieve break-even to positive EBITDA within the next two quarters.

Clarence Chung, Chairman and Chief Executive Officer of Entertainment Gaming Asia, commented, “As our first casino development project, Dreamworld Pailin has provided us a valuable learning experience with relatively low capital investment. The challenges we have faced in our first year of operations have provided us a firm understanding of this market and we are proactively taking steps to enhance the earnings potential for this project.

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