LifeTec sees big payout from gaming
[ Jun 07, 2006 ]
Drug producer seals deal to supply betting machines to Greek Mythology
LifeTec Group, a Hong Kong-listed drugmaker, expects its new gambling-related business to account for 90 per cent of the company's earnings in five years.
The company made the forecast after reaching an agreement with Macau's New Century Hotel Greek Mythology Casino, which operates under the Sociedade de Jogos de Macau (SJM) licence, to provide up to 300 live baccarat betting system terminals to the casino over five years.
LifeTec, which posted a net loss of $24 million last year, expects the project to generate at least $200 million in revenue each year. It also plans to expand its gambling-related business to other casinos.
Under the agreement, LifeTec will take up to 24 per cent of the profit of Greek Mythology's baccarat betting segment, the Macau government 40 per cent, SJM 29 per cent and Greek Mythology the remaining 7 per cent.
In return, LifeTec will be responsible for installing and maintaining the machines and for staff costs.
It costs $100,000 to install a machine, according to Philip Poon, senior vice-president and company secretary.
Mr Poon said the company had invested more than $5 million in research and development of the machines, which enable 30 people to bet simultaneously at a baccarat table via an intranet.
At present, a Macau baccarat table, which generates net profit of between $30,000 and $50,000 a day, can only accommodate nine customers at a time.
While SJM wants to use the baccarat betting system exclusively, LifeTec plans to sell the system to other licensed casinos.
Under the agreement, SJM will take 2 per cent of the profit from every LifeTec baccarat betting machine incorporated in casinos under other licences, according to LifeTec chairman Jay Chun.
Mr Chun said the company would need to raise funds to meet its target of installing 1,000 machines in Macau in two years.
While LifeTec would rely heavily on its gambling-related business, Mr Chun said there were no plans to phase out its drug segment.
He said the company was developing a drug for treating liver cancer.
Reporter Andy Cheng