CryptoLogic enters Asian market

19 January 2007

SINGAPORE – (PRESS RELEASE) -- CryptoLogic Inc., a leading software developer to the global Internet gaming industry, has signed a Memorandum of Understanding with Brilliance Technology Co. ("Brilliance") and 568 Network Inc. ("Game 568") to penetrate the high growth, high potential Chinese market, including China, Macau, Taiwan and Hong Kong.

The three companies will jointly establish a new company in China to adapt CryptoLogic's online casino and poker games to the Chinese market and develop new poker and casual, skill-based games that are more familiar to players in those areas. Brilliance will establish a division to deliver the games in two modes: "play-for-fun" subscriptions for users in internet cafés and on mobile devices, and "play-for-money" through sites licensed by China Welfare Lottery, the nation's gaming licensing authority.

Cryptologic's investment will initially be a minority interest in the new company, with an option to increase its investment to a controlling position. Cryptologic will have the right to appoint all members of the board of the new company. No financial terms were disclosed.

"This is the first major step in executing one of our cornerstone strategies: to expand in Asia – a key growth market for CryptoLogic," said Lewis Rose, CryptoLogic's president and CEO. "The agreement brings to CryptoLogic substantial game development and IT skills uniquely suited to the Asian gaming market, and provides well-placed resources in China to guarantee that our first steps are successful ones."

Brilliance is a software developer and systems integrator in China, with products that have been awarded various levels of certification by Chinese state agencies. Brilliance also has a proprietary payment processing system which every year facilitates billions of dollars in transactions for the four largest banks in China. Brilliance will enter into an exclusive licensing agreement with respect to the new company's online gaming software and service offering, and will apply for all required gaming licenses.

"There is a huge appetite for online gaming throughout Asia and this is the right group to penetrate the market quickly, deeply and legitimately," said Mr. Li Fu Hua, Chairman of Brilliance Technology Co. "CryptoLogic's award-winning online game offering will nicely complement our company's banking, payment processing and networking solutions that are already widely used throughout China."

Asia is quickly becoming the next major geographic area for online gaming. Industry experts expect Asia to be the fastest growing and ultimately the largest online gaming market in the world. China alone has over 135 million Internet users, the world's second largest user group after the United States. In addition, China has the world's largest mobile phone market with more than 400 million subscribers, many of whom are expected to switch to the high-speed 3G networks over the next few years, creating the opportunity for explosive growth for game and content developers. Brilliance intends to use its relationships with the major service providers to license the new company's casual game content to their subscribers.

"CryptoLogic recognized early that Asia's e-gaming market has vast potential for profitable growth, and we've quickly established a strong position here," said Shailesh Naik, Managing Director of CryptoLogic Asia-Pacific. "With these experienced and respected partners and CryptoLogic's global reputation for innovation, we're poised to make an impact not just in China – but across the continent."

Game568, headquartered in Markham, Ontario, Canada, is a game developer, publisher and operator with a Chinese subsidiary already creating games for that market, including card games such as "Fight Landlord" and "Za Jin Hua", and skill-based casual games such as "Lian Lian Kaan" and "Dragon Ball". Game 568 has a license from China Welfare Lottery, and has a database with more than one million registered players in the portals that it owns and those it operates for other developers.

"Our software engineering expertise in Shanghai and our existing Asian game roster, combined with Brilliance's IT leadership position in China and CryptoLogic's unmatched casino and poker game suite will give this partnership a decisive leadership edge in Asia," said William Cheng, Vice-President-China Operations for Game 568.