Nambling Notes - June 22, 2001

A Tidbit from the Far East -- DrHo.com Chief Executive Peter Kjaer predicts nothing but problems if Hong Kong goes ahead with proposed changes to its gambling law. According to the gambling ordinance in Hong Kong, bettors can only wager on horse races and Mark Six through the Hong Kong Jockey Club. Any other type of sports gambling is strictly illegal, although operators of overseas gambling services, including those that offer Internet gambling, cannot be prosecuted. The government is currently trying to find ways to make the law more consistent, and most legislators would like to see offshore rendered illegal. Kjaer calls the idea unrealistic.

"The punter should not be criminalized for clicking a mouse to do something that is otherwise perfectly acceptable if they visit a racetrack down the road or a casino while on holiday," he said.

The trouble, he said, is that enforcing a law against offshore betting would put "a limitless burden on enforcement agencies and, hence, negate tax revenue currently derived from traditional gambling outlets."

NetValue, a measurement firm that studies online gambling, holds that 39.6 percent of Hong Kong residents who used the Internet in April gambled online, as opposed to 30.1 percent of people in Singapore and 13.8 percent in China. While Kjaer was critical of how successful laws against Internet gambling would be, he did offer to help in crafting the proposed amendments.

"We believe there is great potential for a licensing, taxation and socially responsible system that can include the necessary checks and balances to satisfy all parties concerned," he said.

A Tidbit from Down Under -- The Australian government may be stopping short of disallowing Australian online casino operators to continue to offer service internationally, but Canbet, a Canberra-based bookmaker, still hasn't ruled out moving to another country. Last month the firm said that if the anti-Internet gambling law had passed it might be forced to move overseas, possibly to the United Kingdom. However, a cross-party deal made this week will allow online sports betting and lotteries to continue, even though anyone physically present in Australia won't be able to participate. Canbet Chairman Richard Farmer said he was pleased the proposal was defeated, but he expressed concern that the topic is still on the political radar. "The fact remains that one of the two major political parties in this country thinks that our industry is not socially desirable and the only reason that wagering is being excluded [from the legislative ban] is that they haven't got the numbers in the Senate," Farmer said. "This has given us a terrible fright. It's nice to have escaped but I don't want it happening again."

Tidbits from the US -- The Las Vegas Sun reports that American Wagering Inc. will seek an extension from the Nevada Gaming Commission on the sale of its MegaSports subsidiary. The company was forced by the Gaming Commission to divest in MegaSports, an Australia-licensed Internet sportsbook, after investigators from the Gaming Control Board were able to place bets on the site from within Nevada. A deal with Forward Publishing Pty. Ltd. of Australia fell through because of Forward Publishing's inability to raise funds amid the federal government's efforts to ban Internet gambling. The Gaming Control Board has already extended American Wagering's deadline to sell the company the maximum three times allowable.

The New Jersey Assembly passed on Thursday a bill that would legalize off-track and telephone account wagering in the state. The state Senate's Gaming, Tourism and Veteran's Committee will debate the legislation in a special session Monday. The Senate is scheduled to vote on the bill June 28. Thoroughbred Times reports that Governor Donald DiFrancesco is expected to sign the bill.

In a move that could resolve the difficulties between the National Thoroughbred Racing Association and some major eastern tracks that regard the NTRA's ties to an Oregon wagering hub as competition to their own operations, Television Games Network has moved to take over the hub from the NTRA, which is in the second year of a seven-year license to operate it. Matt Hegarty, writing in Daily Racing Form, reports that the executive director of the Oregon commission, Steve Barham, says TVG's application "almost certainly will be approved" at a commission meeting Friday, and that TVG--which has been paying the NTRA a "processing fee" as a marketing partner to operate the hub--will take over operations on July 1. There also have been reports, notably in the Thoroughbred Times, that Churchill Downs and Magna Entertainment--which between them own 15 race tracks--have "joined forces" to work on a plan to operate the hub. Tim Smith, commissioner of the NTRA, told the Blood-Horse that "for a number of months it has been apparent that we were not the best hub operator for TVG," and TVG chief executive Mark Wilson acknowledged, "It's no secret that the NTRA's active involvement in the operation of a wagering hub has been a source of controversy for the organization."

The owner of the Golden Nugget hotel-casino wants to stop three companies from using the Golden Nugget trademark to market Internet porn and online gambling. Mirage Resorts Inc. is suing Cybercom Productions of Chester, Flintshire, U.K.; Leighton Global Enterprises of Boca Raton, Fla., and its owner, Paul Leighton; and Med Enterprises of Columbia Station, Ohio, and its owner, Michael Daniels, in U.S. District Court. Cybercom allegedly owned a pornographic website called "Golden Nugget 2000," which it is accused of linking to its domain name, "goldennugget2000.com." The site also allegedly has a hyperlink to an online casino called "Planet Luck Online Casino," which also allegedly belongs to Cybercom. The lawsuit additionally charges that Leighton Global provided a link to its domain name, "goldennuggetcasino.com," to an online casino at "www.GoldenNuggetsCasino.com." Med Enterprises allegedly linked "wwwgoldennugugget.com," its domain name, to a Web page that transfers to a website called "Bizarre Sex."

And yet another cybersquatting lawsuit involving gaming-related websites has surfaced. The Ohio Lottery Commission has filed complaints against the operators of two websites using names that the commission has trademarked. The sites, ohiolottery.com and wwwohiolottery.com, were registered in January and March this year by an anonymous person with a Moscow address. Both sites redirect users to Club Dice Casino. In a separate case from February 2001, the commission filed a complaint against the owner of ohiolotterygames.com and was successful in gaining the rights to the domain.

Makin' Deals -- World Gaming plc will continue to provide three Internet Opportunity websites with software until August of 2004. The expanded agreement was announced by the two companies last week. Internet Opportunity, World Gaming's prime licensee, processed more than $1.3 billion in wagers on behalf of its 80,000 customers during the past year, making it one of the largest providers of Internet gambling in the industry. Under the agreement, Internet Opportunity's websites www.sportsbook.com, www.playersonly.com and www.acecasino.com will use World Gaming software exclusively for the next three years.

Additionally, an existing $1.5 million loan to World Gaming from an affiliate of Internet Opportunity was fully converted into equity by the issuance of World Gaming shares to AIM Investments Limited in Gibraltar. Internet Opportunity and World Gaming have also agreed to work together on European ventures.

The CEO of World Gaming said the move will strengthen the companies in important ways. "The conversion of the loan to equity is a strong endorsement of management's current direction and business plan," said Mike Aymong. "Internet Opportunity's success in the I-gaming industry makes it a strong business partner for opportunities we are now exploring in Europe."

Poker.com, Inc. announced this week that it has sold casino licenses to Bellagio Funding LLC and Barracuda Enterprises Inc. Under the agreement, Poker.com will provide Bellagio Funding LLC with a single and multi-player Internet casino and will provide Barracuda Enterprises Inc. with a full Internet casino and sportsbook, which will operate as www.1stopgambling.com. Bellagio Funding LLC has been involved in land-based entertainment ventures for many years and will apply their marketing expertise to developing a successful online casino. Barracuda Enterprises Inc. has been involved in marketing and website development since 1996.

Boss Media of Sweden announced Thursday that it signed a license agreement to supply an Internet casino to Casino.Net Ltd. Scheduled to go live this fall, the new casino will be powered by Boss Media's multi-player software platform. Casino.Net Ltd. has been an online casino operator for the past three years.

Go Call Inc. announced Thursday that it has acquired Kokobe SA of Costa Rica. The international sports betting agency is Go Call's first acquisition this year, following an 18-month restructuring period aimed at focusing the company on its more profitable ventures. Go Call CEO James Palmer said the move represents his company's first step toward what it hopes will be a very successful future in the Internet gambling business. "With dollar volume projected to reach $20 million for wagering at Kokobe SA this year," he said, "we believe that we are now positioned to become a leader in the industry."

Kokobe SA, a sports wagering service for high-end clients, doesn't currently offer Internet wagering, although Go Call plans to expand the company into Web-based marketing. Go Call's restructuring included spinning off all non-core business holdings and arranging private placement funding to accelerate its acquisition schedule.

New Stuff -- Auto racing fans now have a casino and motorsports betting site designed with them in mind. Software developer NetEntertainment has jointed with Formula 1 and CART driver Stefan Johansson to offer Speedbet.com. The Java-based site lets players bet on their favorite drivers and play casino games. Bettors can wager on Formula 1, Nascar, Speedway and CART races using expert pre-race analysis. In between races they can bet on soccer, golf and tennis. NetEntertainment, which operates CasinoDomain and Cherry Casino, chose Johansson as the spokesman for its race-themed casino for his long, successful career in the sport of auto racing.

Net Entertainment also announced the launching of a new online casino in Spanish. The new site, Apuestas Casino, will be a joint project between Net Entertainment and Gruopo Zeta, one of the leading media groups in Spain. Targeting the Spanish speaking audience, the Apuestas Casino (www.apuestas.com) will be based upon the Net Entertainment Internet casino platform. The games are Spanish-themed with Spanish design and game names. The site will also feature an English version of the casino.

LotteryInsider.com reports that EssNet of Sweden has formed a subsidiary, EssNet Interactive AB, to develop interactive gaming for digital TV, the Internet and mobile phones.

Las Vegas gaming and entertainment portal site Vegas.com has announced plans to launch a free-play Internet casino using software from Toronto firm Interactive Gaming Software Solutions. The new site, "Playing 4 Fun," will be the first commercial site to use games developed by the company. The site is expected to be launched in July or August.

A Tidbit from the UK -- Camelot Group, the current and future operator of England's National Lottery, said this week that it won't take the lottery online until February 2002. The group intended to commence Internet sales this fall, however, delays in getting its licensed renewed have pushed things off schedule.

On the E-commerce Front -- eConnect reported this week that it is pleased with its progress in working toward rolling out what it calls "the first-ever system for performing Internet credit card transactions by swiping a credit card at home." The system is based on utilizing the company's eCashPad device, an external, user-end piece of hardware that reads credit cards and ATM cards. "We are pleased with the initial eCashPad orders that we are receiving and the forward progress of first-ever international home credit card-swiped transactions from Surrey, England, and the United States, to be followed later this quarter by the first-ever home ATM card with PIN cash payments,'' said Thomas S. Hughes, founder, chairman and CEO of eConnect. "We feel that eConnect is well positioned to strongly participate in the new Personal Encrypted Remote Financial Electronic Card Technologies, particularly with the recent approval by the Nevada State Legislature for Internet casino gaming that will demand cash payments. The eCashPad can deliver these payments by using an ATM card swipe with PIN entry online debit transaction, which results in an instant cash payment over the Internet.''

Names and Faces Changing Places -- GTECH has announced the appointment of Larry R. Smith to the position of senior vice president and chief development officer. Reporting to Howard S. Cohen, GTECH CEO and president, Smith will be directly responsible for leading the company's solutions engineering functions worldwide as well as overseeing all technology development initiatives for the company. As part of these efforts, Smith will manage ongoing solution development and delivery cycles, including integration of new technologies for the company's lottery and transaction processing platforms. Smith will also work closely with Donald L. Stanford, the company's chief technology officer.

P2P gaming site flutter.com has appointed Ian Davies, assistant racing editor at the Independent, to the position of senior product manager. Davies worked with the company on an advisory basis during its launch.