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Czech – Early adopter Trans World hit by new laws in Czech

By - 16 November 2017

Having introduced a raft of government-mandated changes, Trans World Corporation, the operator of three American Chance branded casinos in the Czech Republic, saw attendee fall off in the third quarter by 22.5 per cent, negatively impacted revenues for the quarter by 27.4 per cent.

The Nevada-based operator runs Ceska Kubice, on the Czech‐German border, Route 59 on the Czech‐Austrian border near Znojmo, and Route 55 in Dolni Dvoriste, on the Czech‐Austrian border.

Rami Ramadan, TWC’s Chief Executive Officer, commented: “The quarter was negatively impacted by a combination of factors including the implementation in August 2017 of a new casino management system (CMS) at all of our casinos, as required for all casino companies in the Czech Republic by the recently enacted 2017 Gambling Act, which now requires all casino customers to use a player loyalty card to track all gaming activities. There was also the implementation in July 2017 of the European Union-directed, Czech government-mandated Anti-Money Laundering (AML) registration forms. We also experienced a significant decrease of 4.9 percentage points in consolidated hold percentage versus the same prior year’s quarter and a decrease of 5.4 ppts versus the company’s five-year average of historical hold percentage. There was the impact of a new competitor for one of our larger casinos and the negative impact of an in-door smoking ban that became effective on May 31, 2017.”

Mr. Ramadan continued: “Because we are in the process of applying for the renewal of our gaming licenses, we instituted these changes proactively and believe that early compliance with these legal mandates will help expedite the government approval process. However, these new regulations created a different casino experience/environment for our frequent and new customers. Many of our guests were initially not accustomed to the changes and as a result, reduced their visitation and play during this quarter. Furthermore, because TWC was the first casino operator to implement the Czech government and EU mandates, our guests were experiencing this new environment for the first time at TWC’s facilities. Consequently, our casino attendance and business volume were disproportionately and negatively impacted during the third quarter, with live game attendance decreasing by 22.5 per cent, contributing to a 27.4 per cent decline in total gaming revenue, when compared to the prior year’s comparable quarter. By the end of the quarter, our guest visit numbers have stabilized as our players become acclimated to this new casino experience.”

TWC’s hotel segment was not affected by the regulations and showed significant continued improvement this quarter, beating the prior year’s third quarter in total revenue per available room (TRevPAR) by 40.8 per cent.

Nevertheless, the hotel segment revenue was insufficient to offset the revenue decline of the casino segment. Thus, total revenue decreased by 4.2 per cent to $12.6m, compared with approximately $13.2mfor the same quarter of the prior year.

Despite lower casino segment revenue, gaming taxes for the nine months ended September 30, 2017 increased to approximately $9.2m, representing 31.5 per cent of gambling revenue, versus approximately $9m, representing 27.5 per cent of gambling revenue in the comparable period in 2016, as a result of the increase of the gaming tax rate on slot revenue from 28 per cent to 35 per cent in 2017.

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