DEQ Systems and Talisman Group Resolve Their Business Differences

deq systemsInvestors of Australia-based entertainment and gaming firm Echo Entertainment are questioning its theoretic model of future profit projections based on revenues from VIP gamblers. They stated that the projections of profits that the firm can win over a period of time are highly inflated as these are based on the premise that high rollers will bet specific amounts during this period. According to the theory projected by Echo Entertainment’s financial management body, future profits are based on an estimation that the casino will earn 1.43 percent on every $100 bet by VIP customers at its tables.

Actual vs projected earnings at Echo Entertainment

This projection was accepted at face value until it was discovered that Echo’s win rate from VIP customers was only at 1.27 percent so there was a shortfall of $66 million over projected earnings of $521 million which was largely due to volatile behaviour of high rollers. Though these high net worth clients wagered around $46 billion on its tables in 2015 it has not led to growth in revenues. Analysts’ state that Echo Entertainment’s projections are a little unrealistic and the closest earnings a casino can expect from high rollers is 1.35 percent in table games like baccarat which is easily achievable and is the industry standard.

Echo Entertainment’s earnings

Echo group owns three popular casinos in Queensland area of Australia and calculated the win rate on the basis of theoretical average of five years. Though the volume of VIP gamblers at Echo’s Jupiters Hotel and Casino has grown in recent months when compared to previous years the market has become very volatile so its theoretical rates are way above what is actually earned. Echo older theoretical rate was at a high of 1.62 percent a couple of years ago but was reduced to 1.43 percent after protests by its 10 percent stakeholder James Packer of Crown. But even this rate is higher than industrial average of 1.35 percent so there is a difference between actual win rate and projected rate.

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