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NIGC Publishes New Gaming Rules

MGAM CEO and Chairman of the Board, Gordon T. Graves said "We are extremely pleased about the adoption of these new rules. While they are not everything the tribes hoped for, they will take a lot of the guesswork out of designing electronic bingo games for Indian gaming. Even though this clarification will probably mean stronger competition for MGAM, it is good for Indian Country and good for American gaming. Management firmly believes whatever is good for Indian Country usually turns out to be the best for MGAM."

The new rules were adopted by a two-to-one vote of the NIGC commissioners last week. Clinton-appointed Chairman Monte Deer, an ex-prosecutor for the Justice Department, filed a strong dissent. Within hours of Chairman Deer filing his dissent, NIGC field agents threatened some tribes by warning them that the Chairman might cite them with a violation if they continue to run MegaNanza. The tribes were also warned if they are in fact cited, they may eventually be subject to financial penalty. MegaNanza is MGAM's most successful bingo product, and is the subject of litigation initiated in April 2002 by MGAM in federal court in Oklahoma seeking a judicial determination that Megananza is a legal, Class II game.

Graves continued, "MGAM is probably not as concerned about these threats as are some of our tribal customers. In light of these new regulations that appear favorable to Indian gaming and MegaNanza, we believe that it is unlikely that scarce government resources will be expended on these types of enforcement actions.

We have talked to most of our tribal customers and we believe that we are fully prepared to deal with the existing situation and, hopefully, with whatever contingencies develop. We have completed extensive testing of the first of our standard sequence bingo games, Reel Time Bingo, and have received enthusiastic response after demonstrating this game to our largest customers. Any tribes that are uncomfortable running MegaNanza 30 and wish to substitute Reel Time Bingo can begin transitioning to this new game within a week and we should complete the transition network wide in a few weeks thereafter. Frankly, I don't expect the threats to have an impact on our existing earnings per share guidance for FY 2002. We continue to forecast earnings of $1.75 per share for FY 2002, which would represent an increase of 210% over our earnings of $0.57 per share in FY 2001." Multimedia Games, Inc. is the leading supplier of interactive electronic games and player stations to the rapidly growing Native American gaming market. The Company's games are delivered through a telecommunications network that links its player stations with one another both within and among gaming facilities. Multimedia Games designs and develops networks, software and content that provide its customers with comprehensive gaming systems. The Company's development and marketing efforts focus on Class II gaming systems and Class III video lottery systems for use by Native American tribes throughout the United States.

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