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Iao Kun Group Holding Company Limited announces rolling chip turnover of US$0.54 Billion for June 2015

6 July 2015

(PRESS RELEASE) -- Iao Kun Group Holding Company Limited, which operates through its subsidiaries and related promotion entities that act as VIP room gaming promoters and a collaborator, today announced unaudited Rolling Chip Turnover (as defined below) for the month of June 2015 at the company’s VIP rooms in Macau was US$0.54 billion, down 60 percent year-over-year, compared to US$1.35 billion for the month of June 2014. Win rate for the month of June 2015 was 2.50 percent.

For the first six months of 2015, IKGH’s Rolling Chip Turnover was US$3.92 billion (an average of $0.65 billion per month), down 58 percent year-over-year, compared to US$9.43 billion (an average of $1.57 billion per month) for the first six months of 2014.

The Company’s VIP rooms are primarily focused on high-stakes baccarat. Baccarat accounts for approximately 88 percent of total Macau casino winnings according to the Macau Gaming Inspection and Coordination Bureau (DICJ). In Macau, two remuneration methods are used to compensate VIP room gaming promoters. On a fixed commission basis, VIP room gaming promoter revenues are based on an agreed percentage of Rolling Chip Turnover. On a win/loss split basis, the VIP room gaming promoter receives an agreed percentage of the “win” in the VIP gaming room (plus certain incentive allowances), and is required to also bear the same percentage of losses that might be incurred. Compared to the fixed commission basis, the win/loss split basis subjects the VIP room gaming promoter to the risk of losses from the gaming patron’s activity and to greater volatility.

As of September 1, 2012, all IKGH VIP rooms are on a revenue sharing remuneration model.

Definition of Rolling Chip Turnover

Rolling Chip Turnover is used by casinos to measure the volume of VIP business transacted and represents the aggregate amount of non-negotiable chips players purchased. Bets are wagered with “non-negotiable chips” and winning bets are paid out by casinos in so-called “cash” chips. “Non-negotiable chips” are specifically designed for VIP players to allow casinos to calculate the commission payable to VIP room gaming promoters. Commissions are paid based on the total amount of “non-negotiable chips” purchased by each player. VIP room gaming promoters therefore require the players to “roll,” from time to time, their “cash chips” into “non-negotiable” chips for further betting (hence the term “Rolling Chip Turnover”). Through the promoters, “non-negotiable chips” can be converted back into cash at any time. Betting using rolling chips, as opposed to using cash chips, is also used by the DICJ to distinguish between VIP table revenue and mass market table revenue.

All IKGH VIP rooms are on a revenue sharing remuneration model. On a win/loss split basis, the VIP room gaming promoter receives an agreed percentage of the “win” in the VIP gaming room (plus certain incentive allowances), and is required to also bear the same percentage of losses that might be incurred.

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