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Japanese Pastime Moving to U.S. Public Markets
Olympic Entertainment Group, Inc., a publicly traded company, has announced the completion of its acquisition of Exam USA, Inc., a Delaware corporation. As a result of the acquisition, U.S. investors have what is believed to be the first opportunity to buy stock of a company in Japan's Pachinko industry - an industry with estimated revenues approaching $240 billion. Pachinko combines elements of U.S. slot machines and pinball machines, with some differences. Players buy Pachinko balls, which are fed into a machine. The player determines the speed at which the balls enter the machine, making this a game involving both skill and chance. Approximately 24 million people in Japan are regular players of Pachinko, and the industry employs over 318,000 workers - almost double the number of workers in the Japanese automobile industry. The pachinko industry is a highly fragmented industry that is currently undergoing consolidation and modernisation, with Exam creating a dynamic new business model. "We are bringing new technologies and a contemporary style to the Pachinko industry," said Toshiki Hara of Exam. "Our company has created a friendlier playing environment with higher payouts than the traditional parlors, at the same time generating higher net margins for the company. We fully intend to bring this national pastime to a new level." The company had gross wagers in 2003 of over $130 million, and a net revenue figure exceeding $15 million after deduction for winning patron payouts of approximately $115 million. Exam expects to use U.S. and Asian investment capital to build additional new parlors, thereby increasing revenues, building economies of scale and continuing its overseas expansion. To this end, the company will access U.S. capital markets, initially via the OTC Bulletin Board. The Company expects to apply for listing on the American Stock Exchange at such time as it satisfies the applicable listing requirements, which will increase exposure and investor opportunity to this dynamic industry. Until now, the only investment opportunity in the industry was to actually own and operate a parlor.
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