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Sierra Design Shuts Down Website

12 February 2004

by Liz Benston

LAS VEGAS -- Slot maker Sierra Design Group this week averted a move by Missouri regulators to revoke its gambling license in that state -- which could have threatened the company's business nationwide -- by shutting down an Internet site that regulators believe offered illegal gambling.

The Reno-based company, which is in the process of being acquired by slot giant Alliance Gaming Corp. of Las Vegas, had operated an Internet site under a subsidiary called Arcade Planet.

In a statement issued last week, Sierra Design said the site, www.prizegames.com, offered participants the chance to play "games of skill" for money and that such games are allowed in Missouri and other jurisdictions.

"Arcade Planet has previously obtained legal opinions from experts within the industry which support this position," the statement said.

But the Missouri Gaming Commission, which conducted an investigation with the help of the state's attorney general, disagreed.

The state's investigation was triggered when Sierra Design -- which now operates under a temporary license to supply gambling devices in Missouri -- applied for a permanent supplier license, Missouri Gaming Commission Legal Counsel Mike Bushmann said. The investigation set out to determine whether Sierra Design and its subsidiary were suitable for the license, he said.

Sierra Design Director of Marketing Shawn Yujuico said the company was first informed Jan. 19 that the Missouri Gaming Commission would be considering the revocation of the company's license at the agency's next meeting Jan. 21. Sierra Design filed suit in Cole County Circuit Court in Jefferson City to block the action and won a temporary restraining order Jan. 20. The company shut down the site last month and dropped the suit a few days ago.

The Missouri Gaming Commission has agreed to take no further action against Sierra Design, which remains an applicant for a permanent license in Missouri, Bushmann said.

"We still believe it is a skill-based game, but we agreed to shut it down as a sign of good faith," Yujuico said.

Alliance Gaming's acquisition of Sierra Design -- a deal that includes cash, stock and loans worth up to $191 million -- is expected to close in early March.

The Reno company makes bingo-based gambling machines and video lottery terminals for Indian casinos and other venues that can't or don't offer traditional slot machines.

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