Casino equipment maker Paradise Entertainment Ltd narrowed drastically its full-year loss in 2017 compared to the prior year.
But revenue from sales of electronic gaming equipment and systems – via its LT Game brand – slumped dramatically, by 87.7 percent year-on-year, to just under HKD22.8 million (US$2.9 million), compared to HKD185.7 million in 2016, it said in a Monday filing to the Hong Kong Stock Exchange.
The firm said in a separate press release that this reflected the fact that in 2017 only 78 of its Live Multi Game casino game terminals were sold in the Macau market, compared to 893 such terminals in 2016 “when there were a number of flagship casinos opened” in the Macau market.
Paradise Entertainment’s 2017 loss was just under HKD30.7 million, compared to nearly HKD380.4 million for the preceding 12 months.
The 2016 deficit had included the writing down of nearly HKD334.8-million, “due to a one-off non-cash loss arising from assignment of intangible assets” in relation to patents and associated technology to International Game Technology Plc (IGT) in April 2016, Paradise Entertainment said.
Paradise Entertainment in April 2016 agreed to transfer all of its electronic table game technology, patents and other intellectual property to IGT, with the exception of table game intellectual property used exclusively in Macau. Paradise Entertainment said in its Monday press release it had commenced in 2017 “to recognise royalty income” from the deal with IGT, which contributed HKD2.9 million revenue to the Hong Kong-listed firm.
Full-year 2017 group revenue fell 13 percent, to HKD1.01 billion, from HKD1.16 billion a year earlier.
Revenue from casinos under the group’s management was flat year-on-year, up 0.6 percent, at HKD973.9 million.
The firm currently manages casino gaming at Casino Kam Pek Paradise on Macau peninsula under SJM Holdings Ltd’s gaming licence. It also manages casino operations at Casino Waldo also in downtown Macau, under the Galaxy Entertainment Group Ltd licence.
Paradise Entertainment said in its annual results that the fall in total 2017 group revenue was “partly due to the change of the cooperation mode at Casino Macau Jockey Club”.
Last year the local gaming regulator said gaming licence rights of Casino Macau Jockey Club were “relocated” to a new property nearby – the Macau Roosevelt Hotel – and a casino there opened on June 29. Since January 1, 2017, Paradise Entertainment has changed its accounting process to reflect an operational change from provision of casino management services at Casino Macau Jockey Club to revenue sharing from Live Multi Game electronic table game terminals at the new venue.
Annual revenue from Casino Kam Pek Paradise rose 1.3 percent year-on-year, to HKD681.8 million, from HKD672.9 million. That from Casino Waldo was up 6.2 percent, to HKD292.1 million, from HKD275.1 million.
Jay Chun, chairman of Paradise Entertainment, said in a prepared statement in the press release, that 2017 had been a “challenging year as satellite casinos in Macau experienced sluggish recovery”.
He added: “Nevertheless, our management team has successfully executed the business strategies and the group has achieved solid results on the back of such a challenging and competitive operating environment in Macau.”
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"If the [Macau casino] concessions are put up for bid, there will also be a lot of giant Chinese companies, some having nothing to do with gaming, which would like to take over these enormously successful casinos”
Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau