Not entirely sure but it does dis-incentivise large shareholders from dumping the majority of their shares on market if their intention is to then re-applying for those same dumped shares via the rights offer at a lower entry price.
One things for certain, it's unlikely you will see the major shareholder (aka Ian Gandel) from selling their shares on market, which is what would have happened if the company went through the usual placement process with a broker.
AGS Price at posting:
14.5¢ Sentiment: Hold Disclosure: Held