Oct 06, 2016 Newsdesk Japan, Latest News, Macau, Top of the deck  
Hong Kong-listed Paradise Entertainment Ltd, a maker of casino electronic games, has given some more information on its planned business relationship with a Japan-based firm that was announced recently.
Paradise Entertainment said in a filing after trading hours on Wednesday that LT Game Ltd, an 82-percent owned subsidiary of the group, had entered into a distribution agreement with LT Game Japan Ltd.
A July announcement from Paradise Entertainment described LT Game Japan as a Tokyo-based business in which LT Game had a minority holding alongside a Japanese partner. Contacted at the time by GGRAsia, Paradise Entertainment – chaired by businessman Jay Chun – had declined to identify the local partner.
Under the distribution deal announced on Wednesday, LT Game Japan has appointed LT Game as exclusive distributor in Macau of gaming products LT Game Japan produces. LT Game Japan is also giving LT Game a “non-exclusive licence worldwide (excluding Macau) for a term of three years commencing from 5 October 2016 to 4 October 2019”.
The Paradise Entertainment filing stated: “LT Game Japan specialises in the development and manufacture of… gaming products and it wishes to market and distribute [them] where LT Game has established valuable market presence worldwide, in particular, in Macau.”
The filing didn’t specify the nature or type of the products, but it added: “LT Game is also entitled to purchase the gaming products at a 30 percent discount.”
Paradise Entertainment further stated: “LT Game shall be entitled to a monthly commission of 30 percent of the net monthly revenue and LT Game Japan shall be entitled to a monthly payment of 70 percent of the net monthly revenue” of machines leased to third parties.
According to the opinion of some experts on Macau gaming law, there is a lack of clarity currently on whether revenue share on gaming machine operations between a casino operator and a gaming machine technology supplier – a practice found in some Asian and North American markets – is permitted under local regulations.
The Paradise Entertainment group currently manages casino gaming at Casino Macau Jockey Club, Casino Kam Pek Paradise and at an electronic gaming hall at Casino Lisboa; all of them properties under the SJM Holdings Ltd gaming licence. It also manages casino operations at Casino Waldo, which uses Galaxy Entertainment Group Ltd’s gaming licence.
Under the deal announced on Wednesday; LT View Ltd, a British Virgin Islands firm indirectly wholly owned by Paradise Entertainment, will provide a one-year loan of US$2 million to LT Game Japan at 8 percent annual interest.
The guarantor for the loan is said to be businessman Pak Suil, described as 35.16-percent owner of LT Game Japan, as well as an 18-percent shareholder and director of LT Game.
The Paradise Entertainment filing added: “The directors believe that the provision of the loan can (i) provide assistance to LT Game Japan to comply with the testing requirements in Macau; and (ii) generate higher interest income to the group comparing with the interest earned by making a Hong Kong dollar time deposit with financial institutions in Hong Kong.”
On Tuesday, the group said that LT Game had signed an exclusive deal with Inspired Gaming (UK) Ltd for the latter to provide virtual sports on electronic table games terminals in the Macau market.
On August 26, Paradise Entertainment announced a net loss of HKD416.8 million (US$53.7 million) for the first half of 2016, compared to a net loss of HKD23.9 million a year earlier.
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