Nambling Notes - Jun 23, 2000

Tidbits from Here and There -- The June 18 edition of Beaufort, South Carolina's Beaufort Gazette tells the tale of a video gambling casino owner who plans on shifting gears at the onset of the state's video poker ban and taking his business to the Internet. The businessman, Henry Ingram, says he'll replace his gaming machines with computers and set up an Internet gambling facility if that's what it takes to save his business. "They won't get me down, won't get rid of gambling, and they won't get any tax out of me either," Ingram told the Gazette.

The Gazette also reported that at least one other South Carolina casino owner, Wick Scurry, has looked into Net betting as a viable option. "I've researched it a little bid," Scurry said. "It would take a good bit of capital in order to start something like that. It would be like starting a whole new business."

The publication went on to say that the South Carolina attorney general's office, in the absence of pertinent legislation and/or case law, will look at Internet gambling "on a case-by-case basis."

Someone might want to tell the proprietors of South Carolina casinos about Mr. Kyl and Mr. Goodlatte. While you're at it, you might want to also tell them about Sealand.

What is Sealand, you ask? In case you didn't catch the cover story for the latest issue of Wired magazine, a group of creative, gun-slinging entrepreneurs is converting an anti-aircraft deck six miles off the coast of Great Britain into a safe haven of sorts for Internet business owners who don't want governments messing with their operations. Surrounded by the choppy waters of the North Sea, the "principality" of Sealand has been occupied since 1967 by Roy Bates, who declared it independent from Great Britain and named himself sovereign prince. Since then, Bates has pondered a number of money-making schemes, the most recent being a deal giving a company called HavenCo exclusive rights to locate a server for the its data-hosting services on the rusty facility. HavenCo offers a completely tax-free, lawyer-free, regulator-free and government-free data hosting facility for online gambling companies, pyramid schemes, adult pornography, and other companies that aren't welcomed elsewhere. A few services, such as spamming and child pornography, however, are not invited. Before signing up with them, a check with the British government may be necessary. It seems that the British Foreign Office now considers Sealand subject to British laws and the accompanying taxation, regulation and long list of lawyers. Maybe it's time to call on the diplomats to write a treaty.

While English soccer fans are doing a dandy job of making Boston's "Ugly American" golf enthusiasts look like the "Book of the Month" club, punters who've dropped big money on the British team winning the Euro 2000 have got to be fretting the prospect of their team getting disqualified because of fan misbehavior. Not to worry, says William Hill. The British bookmaker says it will refund all stakes on bets for England to win the tournament if rioting fans get the team expelled. "It would not be fair to expect punters to suffer for the actions of so-called supporters of the team," said William Hill spokesman Graham Sharpe. "Although we would be returning a small fortune in stake money it is the only morally acceptable position to take. Of course all bets on other countries will be unaffected."

According to a story in Thursday's Denver Post, a group of retired military officers in Denver is planning to launch the world's first billion-dollar online lottery. In 30 days, the company's director of operations, Danny Ives, will move to St. Kitts, where the lottery will be conducted under a government license. The company, International Financial Group Holdings Inc., has reportedly raised $200,000 to cover licensing and incorporation expenses. It's additionally seeking $4 million in start-up funds and $30 million to underwrite the first bets. The site is intended to offer a "Weekly 6" drawing for $1, with a prize starting at $10 million to $30million, as well as a weekly "Super 7" drawing for 50 cents, with the prize starting at $22 million. According to the Post, the company forecasts $4 billion in revenue its first year.

The Sydney Morning Herald reports that the U.S. Securities and Exchange Commission is going after the operator of StockGeneration, an online market betting site based in Dominica, for operating a Ponzi scheme (a scheme in which early investors are paid with deposits of later investors) that has cost thousands of U.S. investors most of their deposits. The alleged perpetrator is a 23-year-old Russian woman.

Coming and Going -- MGM Grand Inc. Chairman J. Terrence Lanni, a major figure in Las Vegas and former member of the National Gambling Impact Study Commission, will resign from the board of Youbet.com effective at the end of June. Lanni's appointment to the Youbet board in February turned a lot of heads because it signified a rare instance in which a high level exec was closely associated with both a Las Vegas-licensed gaming company and a provider of an online gambling service. After joining Youbet.com, however, Lanni returned to MGM Grand as a full-time executive, a position from which he'd stepped down in December 1999. MGM spokesman Alan Feldman said Lanni's resignation was not related to any disagreement with the company.

E-Vegas.com Inc., a software and casino gaming business based in Costa Rica, announced last week the appointment of Dean E. Fox to its board of directors. Fox will be part of a team that will provide technical support to future gaming licensees. His experience has been product development, research and marketing for publicly trading companies. Most recently, he was a director of AlphaTrade.com.

Makin' Deals -- Go Call Inc. announced that it has signed a joint marketing agreement with software developer IQ-Ludorum in which it will market IQ-L's proprietary iBook, Casino-X, and e-Sportsbook software. Acting as the total systems integrator, Go Call will market the casino, sportsbook, and associated services to new startup Internet gaming sites on a turnkey basis. With this agreement, Go Call, Inc. will market, set up, and install IQ-Ludorum software and run it under its license, thereby reducing the upfront cost to startup businesses. IQ-Ludorum will refer prospects unable to absorb the normal startup costs to Go Call, Inc. to aid them in getting started. IQ-Ludorum will continue to focus on its primary market of larger gaming companies.

In a separate announcement, Go Call's Go Cash Inc. subsidiary reported that it has commenced beta testing a website (www.goscratchtickets.com) that uses the company's brand new scratch ticket software. The site presents an e-commerce solution to online purchasing of scratch tickets. The product beta test is intended to generate early promotion and significant new customer sign-ups, as well as undergo the required testing. The company has been privately beta testing the proprietary software for several months. "This full beta test to the public will be the final test before Go Cash licenses the system," CEO James W. Palmer said. "We believe the front-end customers' interface of this system to be error-free now, so this test is primarily to verify the back office accounting features."

Additionally, Go Call announced that it has completed the renovation of its new facility in San Jose, Costa Rica. The 3,500 square-foot building underwent more than a month of intensive retrofitting and rewiring.

Redundantly redundantly named IGN Internet Global Network Inc. recently announced the signing of its first European client for the provision of financial transaction-processing services using IGN's proprietary e-commerce system. IGN will provide complete transaction-processing services for the unnamed European gaming company in exchange for a flat fee for each transaction processed in addition to a monthly flat fee for administration and gateway. Revenues from this agreement will complement the growing revenues from the company's Internet gaming operations and other e-commerce initiatives.

IGN also said that it will soon unveil three new themed Internet casinos over the coming Months. The first will be Wild Wild West Casino (www.wildwildwestcasino.com), a unique gaming experience based on IGN's Casinos of the World software. The names and URLs of the second and third casinos haven't yet been announced. Casinos of the World version 3.0 will be released in July 2000, with a range of new features and enhancements. iCrystal, Inc., a designer, developer and licensor of Internet-based games and casino gaming software, announced the signing of a deal with I.C.&T. Inc. of Costa Rica in which I.C.&T has become iCrystal's second master licensee. In addition to purchasing the licensed software, I.C.&T. Inc. has agreed to host sites for any future licensees of iCrystal Inc. Larry Hrabi, iCrystal's CEO, said, "Along with our master licensee in Dominica, we now have the ability to offer our licensees gaming sites that require wide bandwidth to operate, such as our bingo and lottery projects."

Scuttlebutt -- The Detroit News reports that Canadian auto parts and racetrack magnate Frank Stronach has renewed his interest in building a dual-breed horse racetrack and family entertainment complex in southeast Michigan and that he's looking for property near Ann Arbor. The story quotes Michigan racing commissioner Annette Bacola as saying, "Stronach needs 200 to 300 acres so he can build a one-mile track for the turf and flat horses and five-eighths-mile for the standardbreds." Stronach's Magna Entertainment Corp. already owns Great Lakes Downs, a small thoroughbred racing facility near Muskegon in Western Michigan. The company is additionally looking into developing Internet wagering operations.

Ladbrokes, Hilton Group Plc's betting division, may add some racecourses to the company's Internet and interactive TV betting product mix, reports The Times. The company has joined Arena Leisure as a potential buyer for Bath racecourse. It's also eyeing a stake in Arena Leisure, which currently operates seven racecourses. Several suitors have signed confidentiality agreements before looking over Arena's financial papers. One analyst gave a thumbs-up to Ladbrokes foray into racecourse ownership. "It is sensible for Ladbrokes to see whether there is any merit in boosting its new media strategy by investing in content," the analyst told The Times. Ladbrokes briefly owned another track, Lingfield Park, before selling it eight years ago to Arena.

The Times also reports that Littlewoods Leisure may be getting out of the Net betting business, as Littlewoods Pools might be sold for £170 million to Trevor Hemmings, owner of Blackpool Tower. The deal would include Littlewoods new Net betting sites, betdirect.co.uk and bet247.co.uk. Hemmings owns a 47 percent stake in Arena Leisure.

The Financial Post is reporting that Gemstar International Group's $9.2 billion purchase of TV Guide Inc., announced in October 1999, will likely be delayed beyond the end of this month by ongoing regulatory review. The merger was originally expected to close by the end of June. It's now more likely to be completed next month or even later. Stock in TV Guide Inc. has fallen 26 percent this year while Gemstar International's stock has declined 27 percent.

New Stuff -- NorAm Gaming and Entertainment Co. has completed the first phase of beta testing for its Internet gaming site. The company signed an agreement with software developer Global Gaming Corporation in December 1999 for the design and production of a complete software and programming package. The software has undergone beta testing via private access since early June 2000. Following the final changes to the software, expected to be completed by Global within the next 30 days, the company will offer the site to qualified organizations that have already agreed to participate in the program.

What Others Are Saying... -- Paul Ham, for the Sydney Morning Herald, writes: "The grotesque sight of a Labor government presiding over the thickest afforestation of pokies on Earth--representing the biggest indirect tax on the "battlers" ever levied--might be comprehensible were it not for the fact that NSW Premier Bob Carr earnestly opposes online casinos."

Harness Tracks of America, in its daily newsletter, had this to say about this week's House hearing on the Internet Gambling Funding Prohibition Act: "While hard evidence of the dangers of the Internet or of Internet gambling were scarce at the hearing, the comments did appear to be pretty strong proof that at least a few people read Unabomber Ted Kaczynski's rant on the dangers of technology in the Times or the Post."