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Alleged Bingo Cheating Scandal Prompts Equipment Shutdown Reported Suicide

25 September 2002

by Jeff Simpson

LAS VEGAS -- A Reno engineer believed to have installed a cheating scam in software that controlled electronic bingo systems committed suicide last weekend after Nevada Gaming Control Board agents discovered the man trying pull off his scam in a Las Vegas-area casino, state officials and company executives said.

The scam prompted regulators Monday evening to shut down electronic card minder systems at 16 Las Vegas-area bingo parlors. They took the action after investigators determined that thousands of bingo players may have been cheated by the scam, which control board agents think allowed the cheater to play many more bingo cards than he paid for.

Regulators allowed 3,193 hand-held card minder systems to be placed back in service Tuesday evening after they decided the devices could not be used to cheat. The Tuesday action leaves only 282 fixed-unit bingo consoles out of service while regulators and company executives try to figure out how to fix the product's flawed software.

Regulators believe the alleged cheating was orchestrated by an employee of GameTech, the Reno-based company that provides bingo card minders to six Station Casinos-owned properties, two Coast Casinos properties and eight other valley casinos.

The GameTech card minders allow bingo players to play many more cards than they could play using paper bingo cards and ink-based daubers.

The software engineer is believed to have installed a gaffe into the software code that runs 282 fixed-unit bingo consoles at Las Vegas casinos. The gaffe, an intentional software corruption, allegedly allowed him to play many more bingo games than he had paid for.

The employee, whose name the Gaming Control Board and GameTech declined to release, committed suicide last weekend, a company executive said.

Gaming Control Board Chairman Dennis Neilander said the scam was troubling, but could have been a lot worse.

"You're never going to prevent criminals from committing criminal acts, but in this case the system worked well," Neilander said. "What's troubling is the reality that we'll never prevent 100 percent of the criminal acts."

Neilander said agents believe the GameTech employee acted alone, but are interviewing other company employees as part of a continuing investigation.

GameTech CEO Clarence Thiesen said the deceased employee was GameTech software developer and one of only a very few individuals with the level of knowledge of the software to circumvent its system safeguards.

"By all accounts, he had been an exemplary employee, and we can only speculate regarding what caused him to do this," Thiesen said. "Unfortunately, we may never know, as he died Friday night of what authorities are indicating to the company involved an apparent suicide."

Tipped off by a boss who suspected abnormalities in bingo betting at one of the GameTech-supplied bingo parlors, Gaming Control Board agents conducted surveillance, and caught the employee in the act Thursday night.

Neilander said agents observed but didn't apprehend the suspected cheater. Agents identified the man and tried to contact him, but he allegedly killed himself before submitting to questioning or possible arrest.

Control board officials and GameTech executives declined to say where the suicide took place, but insiders who spoke on condition of anonymity said the suicide took place in San Francisco.

Thiesen referred questions to a crisis management public relations firm GameTech retained.

Cheryl Walsh, president of Phoenix-based Growth Strategies Group, said Nevada's casino business generates almost 6 percent of GameTech annual revenue. The company, which employs about 220 workers worldwide, generated revenue of $48.5 million in fiscal 2001.

GameTech products are not as closely regulated as slot machines; the bingo equipment sold by GameTech is considered associated equipment under state gaming rules and is not subject to the close scrutiny received by slot machines.

Neilander said the control board's lab had already tested the GameTech equipment.

"At the time we tested it we didn't think there was a way to introduce a (software) gaffe," said Neilander, who said that regulators may decide to more closely scrutinize associated equipment manufacturers and distributors.

"Perhaps we'll amplify the level of review," Neilander said.

A lawyer for GameTech competitor FortuNet said his company is concerned that GameTech's software problems will tarnish the reputation of the entire bingo business.

FortuNet supplies electronic card minders to Sam's Town, Eldorado and Arizona Charlie's East and its products were unaffected by the control board shutdown of GameTech systems.

"We want more oversight of suppliers, distributors and vendors," said Jack Coronel, FortuNet general counsel. "The overall integrity of bingo is fine, but we believe suppliers and distributors should be licensed by Nevada and subject to regulatory oversight."

FortuNet is licensed in Nevada; GameTech is not required to be and isn't.

Control board agents ordered the affected Las Vegas bingo parlors to discontinue using the GameTech system Monday evening. Coast and Station properties made the switch immediately, requiring patrons to use paper bingo cards instead.

Affected casinos said there was an impact on business Tuesday. Bingo is used as a volume-driver, one of the many casino amenities that don't make much money but bring in customers.

Suncoast General Manager David Ross said turning off the electronic devices was a disappointment and inconvenience to his casino's bingo players, with Tuesday afternoon business down an estimated 30 percent.

"The word gets around quickly with bingo players," Ross said. "Our headcount is down."

Station Casinos Chief Operating Officer Steve Cavallaro said the company's bingo player headcount at the six properties using GameTech systems was unchanged, but he anticipated the number of games played by players would drop.

GameTech shares closed at $3.86, up 16 cents in Tuesday trading on the Nasdaq stock market.

Neilander declined to estimate the number of bingo players who might have played in a game that was cheated, or how much money the alleged cheater may have won.

"This could have been much, much worse," Neilander said. "Fortunately we believe we caught this early before much damage could be done."

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