Naga Casino and Elixir Gaming Tech

My blog post on Cambodian casinos was quoted by someone discussing Elixir Gaming Technologies, Inc (NYSE Amex: EGT). EGT, formerly known as VendingData Corporation, supplies gaming machines to Phnom Penh's Nagaworld, a five-star hotel luxury casino resort in Cambodia and the only licensed full service casino in and around the capital city of Phnom Penh. EGT manufactures its machines in Guangdong Province, China and Melbourne, Australia.

The discussion thread on Yahoo Finance had the subject "Naga World already paid?"

Apparently it is in reference to Naga's new purchase of an additional 200 electronic gaming machines from EGT. From Business Wire:

"Elixir Gaming currently operates 237 machines at Premier Club at NagaWorld, which have been achieving average win per unit per day (WUD) of over $200 during May, June, and month to date in July."

I am no expert on the casino business, but this is what I gathered: In gaming parlance, the "win" is what a consumer is willing to pay for the excitement and experience casino gaming offers. It is quantified as win per unit per day (WUD or WPUPD). According to an Aug 13 press release by EGT, the company's average WUD for the Philippines and Cambodia was $58 and $197, respectively, up 2% and 156% on a quarterly sequential basis.

156% quarterly sequential growth! No wonder these Yahoo Finance posters are excited. EGT, the company they have shares in, will be raking it in, as they will get 100% of the WUD from the additional 200 machines until, says Business Wire, "it has received the total accumulated WUD of US$7.3 million (the commitment fee plus Elixir Gaming’s 20% share of the WUD). Revenues from the Additional Machines will be settled and collected daily by Elixir Gaming."

Here is what one poster wrote: "Yes, but EGT keeps 100% of revenue until 120% of what they laid out is reached, so as soon as the machines go in, we start collecting, so a good chunk of cash will be returned in the next quarter, and much more in 4th quarter, so cash flow is not a problem. 15 machines are actually going in by the end of this month. Total will be 600+ machines, that's a huge chunk of daily cash, more placements and chip orders to come IMO, I see green by year's end, and agree completely with the other poster that believes the funds are now loading up, the trading action supports that too."

The posters are understandably concerned about saturation of machines in NagaWorld. One calculated there are currently 640 machines at NW. 200 were there before EGT, which later installed 240 then another 200 machines.

(NagaCorp which operates NagaWorld, holds a casino license issued by the Royal Government of Cambodia, which gives the company the rights to operate the casino for 70 years commencing January 1995 with 41 years exclusivity within a 200 kilometer radius of Phnom Phen (except the Cambodia-Vietnam boarder area, Bokor, Kirirom Mountains, and Sihanoukville.) NagaCorp Ltd. is incorporated in Cayman Islands with limited liability and its securities are listed on the Main Board of The Stock Exchange of Hong Kong Limited.)