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Emily D. Swoboda

Nambling Notes - Apr 28, 2000

28 April 2000

Tidbits with a European Flavor - A new online horseracing betting service has been launched in France. An estimated 1.6 million CanalSatellite (a French digital satellite TV broadcaster) subscribers can now bet on the ponies live via themed channel Equidia, according to Advertising Age. The venture will be managed by PMU, a national equestrian gambling monopoly. Equidia, CanalSatellite and Canal's competitor, TPS, which will also offer interactive betting to its Equidia viewers this fall, will receive a percentage of revenues generated. PMU expects the betting service to generate $450 million over the next five years.

The Mediterranean island of Malta looks to be set for an explosion of Internet wagering business. Electronic Telegraph reports that at least 12 independent bookmakers have applied for licensing in the tax-free betting jurisdiction. Stanley Leisure, back in March, became the first company to receive a license. Sunderlands and Heathorns were also recently approved. A few groups financed by local interests are said to be nearing approval as well. The Malta Treasury, which acknowledges that it could up face up to a £200m set back in annual revenues, appears to be in it for the long haul, and anticipates big-time earnings if the Island can establish itself as a center for offshore, tax-free bookmaking. Electronic Telegraph reports that bookmakers are thrilled with the island's reasonably low property costs as well with its workforce. Additionally, companies are not required to pay a fee for a license; they instead must pay a 0.5 percent duty on bets for the period of the license.

North America's three heavyweights in the interactive racing business, Television Games Network, The Racing Network and TrackPower, are among five contenders vying in Great Britain for the right to link live horse racing to television for 42 English tracks not covered in some way by a proposed agreement between Britain's 'Super 12' and its media partners, led by Channel 4. In addition to the three North American hopefuls, the other bidders are SIS, the operator of the Racing Channel in Britain, and Arena Leisure, a five-track race track group with Internet betting ambitions. England's Racing Post says that while Channel 4 is the favorite in the race for the Super 12 tracks, "the deal is not yet done and dusted", so the North American entries could play a role in that decision too.

Independent News reports that telephone bookmaking giant Victor Chandler, famous for breaking the "tax-free" betting barrier in the U.K., has launched Internet two new services--a phone betting service and a website--that will attach the standard 9 percent duty to all wagering. Chandler says the creation of the new services was prompted by the recent court decision that prevented his company from advertising its tax-free betting service via Teletext. "It gives us freedom to advertise and to partner up with content providers and broadcasters," Chandler said.

U.K.-based Littlewoods, which last month established a presence in the Net betting industry through the launching of its Internet lottery, has reportedly put its Littlewoods Leisure division up for sale for roughly £250.

New Stuff - Hong Kong Jockey Club members can now bet on horse races via their mobile telephones in a pilot program from Oberthur Card Systems. The program, launched this month, enables subscribers to place bets, transfer funds from their bank accounts to pay for the bets and deposit winnings, all via their mobile phone. Additionally, users can purchase lottery tickets making manual or random choices and check balances on their betting and bank accounts. The service supports all Hong Kong banks.

This Week in Cyber Law - Look for action on horseracing provisions in the House Internet prohibition bill, HR3125, to ensue in coming weeks. Congresswoman Maxine Waters of California, who still would like an amendment that she withdrew worked into the language of the bill, to make her voice heard again. The amendment as offered, the American Horse Council says, would require by federal law that if a racetrack enters into an agreement with one entity to facilitate account wagering, it would have to enter into a similar agreement with other interested entities. It would nullify a track's ability to enter into an exclusive agreement on account wagering with one entity.

Tennessee inched closer to joining the United States' increasingly popular prohibition club when the House Judiciary Committee approved by a voice vote HB2151, a bill that that would make gambling on the Internet a misdemeanor and operating an Internet gambling site a felony. In response, Harness Tracks of America, through its daily newsletter, appropriately poses the question, "Where's Davey Crockett when we need him?" ... Perhaps he's tending to the delicate situation in Australia, where saving the day might actually be possible. Next stop: the House Finance Committee (for the bill, not Davey).

It's looking like the U.S. Congress will pass a digital signature bill that House Commerce Committee Chairman Tom Bliley (R-Va.) says will result in an "explosion in the growth of e-commerce." Some analysts project that it will be passed and signed by President Clinton before the summer recess, as long as legislators can settle differences between the competing House and Senate versions.

Total Telecom reports that the New Zealand government will converge with merchants and consumers to draft guidelines for e-commerce. The guidelines will likely be heavily weighted in favor of consumer rights, similar to those of Australia. Among other things the new code will force e-commerce sites to post privacy and security policies as well as their real-world addresses.

Makin' Deals - The machine dedicated to cranking out new online casinos in 2000 shall hereby be known as Boss Media. The Sweden-based gaming software provider announced this week that the signing of three new licensees. Global Interest Ltd., Blue Sea Inc. and Cyber Croupier Ltd. will operate California Casino, Riverboat Casino and Queens Club Casino respectively. Boss has sold 22 Internet casinos since 1998, eight of which were sold in 2000.

Dijaya Corp Bhd announced this week that its wholly-owned subsidiary, Gema Investments Ltd, had entered into an agreement to buy a 70 percent stake in Diva Gold International Ltd., the operator of Atlantic Casino at Based in the British Virgin Islands, Diva has been appointed by Atlantic Gaming Ltd., the owner of Atlantic Casino, to manage the business operations of the site. Dijava says that Diva Gold will target "key markets in Asia, such as Hong Kong, Taiwan, China, Thailand, the Philippines, Indonesia and Malaysia." The games will eventually be available in Chinese. The casino was developed by Boss Media.

GTECH Holdings Corporation has acquired a 6.5 percent stake in Internet security company Indicii Salus (IS), for approximately $9.3 million. GTECH will employ IS's encryption software, XenophonTM, for its wholly owned Internet gaming business UWin! as well other business ventures including new media. The Xenophon software allows players to securely participate in online lotteries, whether from PCs, cellular phones, PDAs or interactive television. GTECH is currently developing Internet applications for international customers, including the Irish National Lottery.

Investors' Corner - Vanuatu online casino operator My Casino, less than two weeks after wrapping itself in the corporate shell of Abador Gold and re-listing on the Australian Stock Exchange, is having a heck of a time staving the effects of Australia's recently announced moratorium on Internet gambling, despite the fact that the moratorium will not effect the company's operations. After peaking at $1.15 the day of the re-listing, it didn't take long for the company's stock to plummet to 60 cents. It has since recovered, climbing as high as 75 cents this week, only to drop back to 56 cents, where it closed today. The company owns an Internet casino, previously known as Casinos Australasia, as well as an Internet sportsbook.

Global Entertainment Holdings/Equities Inc. of Nebraska has reported gross revenue for the year ending December 31, 1999 of $2.82 million, a 287 percent increase over the company's 1998 revenue of $980,000. The company also reported operating income of $56,000 and a net loss of $10,000 in 1999 as compared to an operating loss of $262,000 and a net loss of $278,000 the prior year. President and CEO David Wintroub says the young company's business model calls for aggressive re-investment in the early stages of development, "enabling our revenues to grow at a greater rate, thereby maximizing future profits for our shareholders." Eighty-six percent of the company's revenues were derived from software license fees and royalties gained through the its wholly owned subsidiary, Interactive Gaming and Wagering N.V. (IGW). The license agreements the company has for IGW's Internet & Telephony Sportsbook and Casino System (ITSCS) have increased from two in 1998 to eleven in 1999. The company anticipates significant revenue growth from licensing and royalty fees in fiscal year 2000 as the demand for online gaming software licensing continues to expand. Eight percent, or $233,000, of revenue was derived through advertising from the company's newly acquired subsidiary, Prevail Online, Inc. Current assets for the company in 1999 totaled $1.8 million compared to $1 million in 1998. Current liabilities totaled $762,000 compared to $228,000 in the prior year, demonstrating a favorable current 2.3 to 1 ratio. Total assets in 1999 were $3.6 million and total liabilities were $1.1 million, with shareholders equity totaling more than $2.5 million.

A Tidbit from the U.S. - Will the American Wagering Inc. (AWI) Internet betting case in Nevada ever come to a close? The Nevada State Gaming Control Board filed a complaint against AWI, a Nevada-licensed land-based sportsbook operator, with Gaming Commission back in December after Board (and perhaps bored) investigators in Nevada were allegedly able to place wagers at Megasports, AWI's Australian-licensed Internet sports betting service. The Board is asking the Commission to penalize AWI, which was originally given 20 days to respond to the complaint. The deadline has been pushed back a few times, and as it stands now, AWI has until May 8 to respond.

Nambling Notes - Apr 28, 2000 is republished from
Emily D. Swoboda
Emily D. Swoboda