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Anne Lindner

Q & A: Scott White, dot com Entertainment

13 September 2001

Scott White is president of dot com Entertainment Group, an Internet software development company. Dot com creates bingo and casino games as well as provides related services to the I-gaming industry.

During the past few months, dot com has announced several key license agreements with operators including the Hard Rock Hotel and Casino in Las Vegas and Victor Chandler. The company also recently launched a not-for-profit bingo division-the first of its kind in the industry.

IGN: For people who may be unfamiliar with dot com, can you explain who your company is and what it does?

SW: We are providers of interactive gaming technologies; we support those technologies and provide a series of e-digital services that are designed to help our licensees increase the amount of player traffic that is generated on their Web sites.

But really we have three key business divisions right now. The first major business division is the supply and support of Internet gaming technologies like bingo and casino, and the second business division is the development of e-digital solutions for those licensees-things like Web sites, things like marketing buys, programs, stuff that helps them move their business forward. We've recently launched a not-for-profit division which is going to help charities enhance the way they receive online donation revenues by using gaming technologies and specifically tolerable or socially acceptable gaming technologies like bingo, with the intention to at some point help charities through the actual pay-for-play gaming space, when the market allows that to happen.

IGN: How old is the company, and who founded it?

SW: The company was founded by three guys-myself, Scott White, I serve as the president; Perry Malone, who is our chief technology officer; and Ted Colivas, who serves as one of our vice president of operations. And the company has been around since 1996, but really has only begun to grow since 1999. We were three people in 1999, and today we're over 40.

IGN: Have you always been based in Oakville, Ontario?

SW: The principle development and management office is located in Oakville. We do have a corporate headquarters in Buffalo, New York and a subsidiary corporation in Antigua.

IGN: What's the name of the company in Antigua?

SW: Dot com Antigua Ltd.

IGN: Does that operate online casinos?

SW: No, we do not operate any online casinos; we never have. We're really in the business of simply supporting the technology that we develop and helping customers, sort of on an arm's length basis, build their businesses through e-digital services. So we don't operate, we don't host, we don't provide e-commerce. We are really a pure technology provider.

IGN: You have announced several license agreements in the last few months. Is there any reason why so many happened all at once?

SW: I guess the reason is because in October of 2000 we showcased our Internet casino technologies, and we are the guys that were really focused for the most part in the early stages on the creation of the online bingo space in a multiplay, pay-for-play environment. And as we started to increase the number of licensees using our bingo technology, we were approached by many, many other companies that saw what we did on the bingo space and asked us whether we had an interest in getting involved in first of all bookmaking and secondly casino. We decided that we would not enter the book-making space, but we wanted to become involved in the provision of Internet casino technology, and we began that development process in early 2000 and completed it in October and showcased it at the World Gaming Conference in Vegas last year, which really has led to many of the license agreements that we have completed this year.

One of the things we provide is bingo and casino technologies utilizing the same platforms. We came up with concepts like multistreaming, where you can run a variety of different bingo games at the same time with different entry fees--cards would cost different amounts of money, and that enabled us to round out the product offering to licensees that wanted to have both. So many of the deals that we've done lately are deals where clients either buy both bingo and casino technology from us or they'll buy one or the other with an option to purchase the other.

We've also really just started, or started in October, to get our name out there. We had really been involved, because we were so small, in development of the technology and making sure the technology worked, and it took us a while to get to a point where the world began to recognize that we are a group that could be considered in the casino space. That's one of the reasons why you've seen in the past four or five months the number of deals we've announced.

IGN: The deals that I've heard about in the past few months have been with the Hard Rock Hotel's online casino, Victor Chandler and DSI Sportsbook International in Costa Rica. Are there any others?

SW: There are others that are coming, yes. I can't give too many specifics about them because they haven't been announced yet and we are a public company, but what our business strategy is is to make sure that we have better penetration of what we call the tier 1 space, which is the brand name, Victor Chandler, Hard Rock style of casino, and we have a number of irons in the fire that way. We also wanted to gain better penetration of what we call the tier 2 category, which is guys like Diamond Sportsbooks (DSI), who are pretty sizable operators but are using competing technologies. And the trick is to make sure that you develop a very comprehensive game management system, which we've tried to do and we continue to improve on a monthly basis.

And because our technologies are available in sort of an instant delivery format, which means that they're not downloads, they're very simple to upgrade when you create better enhancements, which means that licensees get the latest and best release much more quickly than they could compared to some of the competitors that are out there with downloadable stuff.

IGN: When the charity bingo section was announced, you said that it had been a founding principle of the company to enter the charity area. Why was it so important to dot com to do that?

SW: At the beginning, back in 1996, I was a partner in a law firm in Toronto. Some of the clients that I did business with were in the not-for-profit space, and one of them in particular was a very large North American telemarketing organization, and their sole business strategy was to help charities generate revenue streams through the telephone.

The individual who was the principal of that company and I had several meetings to talk about the concept of utilizing online bingo technology in the not-for-profit space. So the software at the beginning was actually developed to help charities move some of their donation revenues from a land-based environment to an online environment. And really, the company was one computer plugged into a telephone dial-up line in someone's basement, at the beginning, and to our amazement, people from all over the world came to play bingo, when there were no prizes, there was no support and really nothing other than a game.

And from those beginnings we were approached fairly quickly by groups that were interested in running online casinos for money, and so we deviated from the not-for-profit focus to a pay focus, and that's what carried the business and made it grow for the first couple of years. And then we added casino, and then we added play for fun and now we've got the resources to go back and take a look at that charity model, which we believe can be a very significant side of our business because no one else has done it. Bingo, which is where our roots are, is, in Canada anyway--more than 50 percent of all charitable revenues are generated through land-based bingo. So we just saw huge application on the charity side and given that it's more socially acceptable, we were the guys that could penetrate that market.

IGN: Have you had any charities sign up to use it yet?

SW: We've got lots of interest; we can't announce a deal as yet. The problem is the division itself is so new that we do not have a working prototype yet. It's there as a scale-down version of the pay technology, but it won't be something that we will actually sell in the form of a license agreement for at least another month. There is very significant interest--interest from household-name charities all over North America and outside of North America as well.

IGN: It looks like dot com's stock hit a yearly high point around the end of July and has stayed in the same neighborhood of the chart since then. What in the past year has made the company successful?

SW: I guess one of the things that we have done is that every single quarter has seen an increase in not only our revenues but in the amount of cash that we've added to the bottom line, which means that we're a cash accumulator. In an environment where the majority of our competitors aren't cash accumulators, it's very important for us to make sure that we proved out the business model, meaning the revenue stream would always be in excess of where the company was on the expense side.

We weren't one of those companies that went out and raised $5 million or $10 million, hired a hundred developers and hoped we could sell a product. We generated all of our growth organically, from cash flow, because the people who are involved in running this business have been out there, outside of the dot-com world, running businesses and making sure that we had fiscal responsibility. It was funny to watch many of the competitors go and raise money and blow through it. We just didn't get involved in that, and that may be why no one really heard about us for the first couple of years.

IGN: Where do you see dot com headed in the future?

SW: The market itself is so vast, potentially, both on the casino side and on the bingo side. And we believe that we are going to maintain a leadership position in online bingo, given the fact that we are adding additional functionality and additional games to our bingo suite of products on a monthly basis.

Right now people estimate there's somewhere in the neighborhood of $70 billion spent in land-based bingo halls every year. Our hope is to help convert somewhere in the neighborhood of one percent of that land-based play to the Web by 2003. Making the assumption that we continue to have a reasonable share of that market, clearly the growth of this particular company will be gigantic based on bingo alone. And as we move forward on the casino model and on the not-for-profit model, we're going to enhance the revenue side of our company by adding strategic licensees, and potentially strategic partners, maybe even other software companies, that can add value to our shareholders. So we expect that we're really just at the beginning. Our revenue streams are going to start to scale very soon, and that will mean good things for the future.

Q & A: Scott White, dot com Entertainment is republished from
Anne Lindner
Anne Lindner