A Potpourri of Announcements from Crypto

CryptoLogic released a flurry of announcements Tuesday about two new licensees, the launch and impending launch to two other licensees and a new bingo game.

The Toronto-based Internet gambling software maker also issued its first-quarter 2002 financials, which show a drop in revenue to $8.7 million from $10.9 million in last year's first quarter.

The two new licensees are Ritz Interactive Ltd. and Dukes Entertainment. In addition, the Crypto-powered casino at Sports.com was launched today, and the Littlewoods Leisure online casino is expected to go live in May. Crypto also announced that its new bingo product will go live in May.

Jean Noelting, president and CEO, said the company's strategy is to concentrate on increasing licensing opportunities in what it considers to be "tier one" jurisdictions that regulate Internet gambling.

"Right now, this means Europe," Noelting said, "and the signing of Ritz Interactive and Dukes Entertainment, the launch of Sports.com and the pending launch of Littlewoodscasino.com are prime examples of this strategy in action. As a result, we expect to return to growth in the second half of the year."

Noelting said the company's first-quarter results were negatively affected by credit card transaction problems in the United States. He called the issue a "short-term challenge being faced by the entire industry."

"This pressure was anticipated," he said, "and has been factored into our projections for the year."

In response to the credit card situation, Noelting said the company's goal is to have half of its licensee revenue generated by non-U.S. markets by the end of 2002. Outhwaite said today 37 percent of the company's licensee revenue is generated from outside the United States. Areas the company will aim to develop licensing partnerships with are the European and Asian markets, he said.

Crypto's net income for the first quarter was $2.2 million, or 18 cents per share, which compares with net income of $5.7 million or 37 cents per share during the same quarter last year.

Along with providing casino software to Sports.com, CryptoLogic also invested in the U.K. operation. Outhwaite said an investment in the licensee will enable Crypto to reap a greater percentage of the site's profit over time.

Ritz Interactive will use the software to bring the casino games of the The Ritz Club, a members-only gaming club at London's Ritz Hotel, online. Ritz Interactive's offerings will mirror those of the physical club's, with games including blackjack, punto banco and casino stud poker. The site will operate under its recently issued Alderney gaming license.

Dukes Entertainment will be a slight departure from Crypto's plan to target European jurisdictions. The company is licensed in Curacao, although its parent company, the Dukes Partnership, is based on the Isle of Man. Its site, dukesgaming.com, which is scheduled to be launched sometime in the next few months, will offer Crypto's full suite of Java casino games.

Dukes is also entering a marketing agreement with PlasmaNet Inc., which operates FreeLotto.com, a multilingual sweepstakes site. As per the deal, Dukes will receive access to FreeLotto's database of 24 million registered users.

The Sports.com Casino is CryptoLogic's first licensee to purchase the entire, newly released Java games package, said Dave Outhwaite, COO. Six of Crypto's licensees have adopted sections of the java package, including Omni Casino, which launched 28 games. Sean Stokes of Crypto's investor relations department said deals with several more online casinos are pending.

Sports.com is one of the largest sports content providers in the world. According to a CryptoLogic press release, Sports.com gives news and event results to several of Europe's main information portals, such as Yahoo!, MSN and Lycos. The site's online casino is based in Curacao.

Littlewoods' online casino, which is licensed in the Isle of Man, is in the final stages of compliance testing and is scheduled to go live in May, Crypto said. The site will offer 30 single- and multi-player games.

InterBingo will be the first licensee for CryptoLogic's bingo product. The site is supposed to launch on May 23. Crypto said the bingo software allows for five virtual bingo halls offering real-money play and one play-for-fun hall. Licensees will be able to modify the themes of the halls.

Outhwaite said the bingo software was designed to be built into the software already employed by Crypto's licensees, and that it has the same basic features and strong graphics. Potential bingo licensees can either incorporate bingo sections into existing sites or develop a standalone site.