PacificNet Games enters financing deal

9 February 2007

MACAU, China –- (PRESS RELEASE) -- PacificNet, Inc. (Nasdaq: PACT), a leading provider of Customer Relationship Management (CRM), mobile internet, e-commerce and gaming technology in China, announced today that its subsidiary, PacificNet Games Limited (PacGames) has entered into a definitive agreement for a $5 million financing in the form of a convertible secured note from Pope Asset Management, LLC (Pope), an institutional investor. Proceeds from the financing will be used to provide PacGames with additional working capital to expand its gaming technology operations, to make further synergistic acquisitions in China and for general corporate purposes.

The $5 million financing, evidenced by a convertible secured note issued by PacGames to Pope, matures on February 6, 2010, and may be converted into 26% to 32% ownership interest in PacGames based on reaching certain net income milestones during fiscal year 2007. The interest rate on the convertible note will initially be set at 8%, and shall increase to 15% if the note is not converted prior to maturity.

WR Hambrecht advised PacGames in this transaction.

"We are delighted to receive the first institutional investment for PacGames which should help us further accelerate our product development and sales marketing for our gaming products in Macau and the rest of Asia and expand our market share in Asia's high growth gaming market," said Victor Tong, President of PacificNet, and CEO of PacGames. "After achieving early success in the Macau gaming market we believe that PacGames is ready to expand into other parts of Asia as we see strong demand and opportunities for growth in other Asian gaming markets. We are satisfied with PacGames success in Macau as we have quickly become one of the leading local suppliers of gaming machines to some of the most famous casinos in Macau, including Hotel Casino Lisboa, Holiday Inn Casino Macau, Jai Alai Casino, etc. The selection of PacGame's electronic gaming machines by leading hotel casinos in Macau marks a huge win for PacGames and further enhances PacificNet's strong position in Macau's gaming market. With our new focus on the rapidly growing gaming market in greater China, Macau and Asia we will continue the pursuit of becoming a leading technology and service provider to the casino operators and gaming industry in Asia. This additional capital will allow us to continue our expansion in the rapidly growing Asian gaming markets. We believe the investment will further our current initiatives in gaming technology and greatly enhance our customer base, revenue, profit, and our shareholder value."

"As Macau's gaming market undergoes growing competition, casino operators in Macau have to quickly adapt to the latest demands and trends by installing the most popular and profitable gaming machines catering to the Asian gamers," said Tony Tong, Chairman of PacificNet. "PacGames multi-play electronic gaming machines have quickly proven to be one of the best performing gaming machines designed for Asian players. Macau has become the fastest growing part of China and we are very excited to be moving forward in our pursuit of the Macau gaming technology business. We believe that the Asian gaming market has huge growth potential and that we are well positioned to win more hotel casino clients and capture a growing market share as a leading gaming technology provider in the region."

According to recent statistics provided by the Macau government, Macau is the fastest-growing gaming market in the world and has just surpassed Las Vegas as the largest gaming market in the world at the end of 2006 as Macau's gaming revenue reached US$7.16 billion. Macao's casinos offer the largest variety of casino games anywhere in the world, combining both established western favorites with popular eastern games such as Blackjack, Baccarat, Pai Kao, Roulette, Boulette, Boule, "Big and small" Fantan and Pacapio. A vast assortment of slot machines and a growing number of electronic table games are also available, often computer-linked for progressive jackpot payouts. The number of hotel-casinos in operation and in development in Macau continues to grow, including well-known Chinese names such as Galaxy and Melco and famous Las Vegas names such as the Sands, the Venetian, and the newly opened Wynn Resort. With the disposable income of the average Chinese on the rise, Macau's gaming and entertainment market is expected to grow for years to come. Macau is the only area in China where gambling is legal.