Nambling Notes - May 18, 2001

Tidbits from the US -- In a long, nearly 2,000-word story on the change of position on Internet wagering by Las Vegas casinos, the New York Times quoted Arizona Senator Jon Kyl, who started all the controversy, as saying the window of opportunity for passing Internet prohibition "may have closed." Writer Matt Richtel also wrote that "already, members of Congress from Nevada who supported the bills just months ago are suggesting that their positions have changed, echoing the sentiments of an industry that pours millions of dollars into campaign coffers."

Kyl, originally worried about corrupting the youth of the nation, now apparently is focused on the economy. "You can literally wake up in the morning, log on and start losing all your money," he is quoted by Richtel.

Ah, for the good old days of moderation and self restraint.

J. Terry Lanni, chairman and CEO of MGM Mirage, commenting on a personal and corporate change of heart in Vegas, told Richtel that he had come to believe that regardless of legislation that bans online wagering, people would still be able to gain access to gambling sites and find ways around restrictions by using foreign-based Internet service providers or foreign banks or credit cards, which the United States cannot regulate. "My view, very simply," Lanni said, "is you should not put American business at a disadvantage to business outside the U.S."

Harrah's Entertainment continues to shine in the IT world. The latest praise for the company's award winning Total Rewards customer loyalty system comes from the Internet Business Alliance of Nevada, which named the company its "From Brick to Clicks Company of the Year" at the eNevada Awards.

Reaffirming Harrah's commitment to IT excellence is the amount of money the company is willing to spend on staffing its information technology unit. Computerworld recently researched SEC proxy statements in an effort to determine which of the Fortune 1,000 companies have appointed chief information officers. In doing so, the group discovered that Harrah's CIO, John Boushy, is the eighth highest paid CIO on the list. Boushy makes $1.8 million per year.

A recent article in the Standard points out that the much talked about federal bill that would ban wagering in the United States on college sports would place the burden of enforcement in the hands of the schools themselves. If the bill is passed, colleges and universities would be required to monitor student Internet use for illegal gambling transactions and federal education funding would be withheld if they don't comply. The monitoring language was added by Sen. John Ensign, R-Nev., who opposes the bill. Sen. John Breaux, D-La., additionally added an amendment requiring certain colleges to submit annual reports on illegal gambling activity on their campuses to the federal government.

A Tidbit from Down Under -- The Article reports that New Zealand-based Sky City will likely submit a bid for the South Australia TAB in a joint venture with the racing industry. Rumors of the pending bid began to spread over the weekend following the state government's extending of the bidding period by one week. Meanwhile, one of the preliminary bidders, SA-based Imagination Entertainment, is expected to take itself out of the running.

A Tidbit from Way Down Under -- The Alliance in New Zealand has called, though a submission to the government's review of gaming legislation, for the New Zealand to follow Australia's lead in banning Internet gambling. Specifically, referring to a bill in Australia that would place a federal ban on Internet gambling, the party recommends that the country enact "similar legislation." Gaming interests, led by Sky City and Christchurch Casino, have been advocated that the government instead regulate online gaming activity.

A Tidbit from the Far East -- AFX News reports that the Hong Kong Jockey Club is seeking "swift action" in the legislature to plug legal loopholes in Hong Kong's gambling law to prevent illegal offshore bookmakers from moving large sums of money out of the SAR by means of illegal offshore bookmakers. The club, which runs a legally protected race gambling monopoly, says that illegal and offshore gambling on overseas races and soccer matches last year amounted to HK$80 billion (around US $10.26 billion)--nearly as much the club's revenues, which amounted to HK$83 billion.

New Stuff -- Lottery Insider reports that Finnish software company European Game & Entertainment Technology Ltd Ab (EGET) has released a new lottery module to its WinOneT Internet gaming system. The first games to be released were Lotto and Joker (Spiel), both of which are available online from EGET's Finnish client, Alands Penningautomatförening (PAF).

Online casino Quingo (www.quingo.com) has played the online gambling industry's first card in integrating traditional casino-style gaming with games of skill that are played for real-money stakes by rolling out a play-for-pay version of backgammon. Customers can play head-to-head against each other online and can do so for real cash if they wish.

Dotcom 2000 Inc. announced this week that it has released version 3.0 of its audio/video software (A/V 3.0), which includes two-way audio communication capabilities and enhanced video. The product's live one-way video and two-way high fidelity audio communication feature is designed to enable Internet broadcasters to provide their customers with telephone-quality voice and video Internet communications.

Makin' Deals -- TrackPower, Inc., a provider of interactive race wagering services, announced Tuesday that it has entered into an exclusive worldwide distribution agreement with Post Time Technologies, Inc. (PTT) through which TrackPower will become the exclusive reseller of PTT's RaceVision^TM kiosk product when combined with an ATM solution in a harness racetrack. RaceVision^TM is a horseracing video replay and archiving service available to customers via a kiosk located within a racetrack or gaming facility. The deal calls for PTT to receive 100,000 common shares of TrackPower as a commission for every location that places ATM's. The non-ATM kiosk profits will be shared between TrackPower, PTT and the racetrack. PTT and TrackPower will each receive an equal share of the ATM revenues. The companies will also enter into a non-compete and management services agreement, as well as other cooperative initiatives.

Dutch media company Lost Boys has announced that it will merge with German branding and design agency MetaDesign. The new entity creates a 700-person international network spanning eight countries. The two companies had a combined pro-forma turnover of 35 million euro in 2000. Both companies will continue to operate under their current brand names in their respective markets, with Lost Boys N.V. being the parent company. Lost Boys' connection to interactive gambling is rooted in a November 1999 deal with dot com Entertainment Group, Inc. through which Lost Boys agreed to lend its avatar technology to dot com for an online bingo site.

Global Payment Technologies, Inc. (GPT), a manufacturer and innovator of currency acceptance systems used in the worldwide gaming, beverage, and vending industries, announced this week that it has formed a strategic alliance with Smart Card Integrators, Inc. (SCI), a smart card applications system integrator headquartered in Los Angeles. SCI is a key player in the emerging North American and Latin American smart card market and has established a worldwide market niche in gaming. SCI provides integrated smart card solutions by combining a system's design, development, and implementation components into one seamless product, including software, firmware, hardware, and cards. "We are very enthusiastic about our alliance with SCI," GPT Chairman and CEO Steven Katz said. "We will work closely with them to jointly develop new products that combine the attributes of the traditional paper currency validator with the capabilities to process transactions using credit cards, debit cards, and smart cards. The first phase of product development will focus on the gaming industry, with opportunities in vending and retail to be pursued thereafter." Through the partnership, GPT will have the right to distribute the new products, as well as SCI’s current product line, on an exclusive basis in GTT's key markets of Australia, South Africa, and Southeast Asia. GPT will also have the right to distribute both new and existing products worldwide on a non-exclusive basis subject to certain exclusions. Finally, GPT and SCI will co-own the intellectual property of any product jointly developed in the future.

Online Gaming Systems, Ltd. (OGS) announced Monday that it has executed a broad licensing and distribution agreement for the Asia-Pacific Region. The agreement is with Australian On-Line Casino Ltd. (AOC) and Casino Australia On-Line Pty Ltd. (CAO), its subsidiary for the licensing and distribution of OGS products. AOC holds an online casino and bookmaking license from the Australian territory of Norfolk Island and is seeking to establish itself as a global marketer and supplier of Internet gaming services. AOC has been granted an exclusive license to distribute OGS's software products in the Asia Pacific region and non-exclusive rights to distribute its other products. To retain this exclusivity in this territory, AOC must meet minimum sales thresholds, at recommended sales prices approved by OGS. OGS has obtained certain non-exclusive rights to distribute new products that CAO creates. The agreement calls for OGS to receive $250,000 in cash for the agreement, plus ongoing royalties associated with sales, service and hosting revenues. OGS will additionally receive an option for 5 million shares of AOC stock. AOC is planning a 50 million share offering to raise AU$10 million. The transaction is subject to a number of conditions, including the successful public offering of AOC, and the certification of the OGS's ICE software by the appropriate Australian authority. OGS expects the transaction to be completed during the second or third quarter of this year. The company also expects to complete the sale of substantially all of its Australian assets to AOC.