Progressive Gaming Intends to Acquire VirtGame

24 January 2005

LAS VEGAS -- (PRESS RELEASE) -- Progressive Gaming International Corporation (the Company) (NASDAQ:PGIC), a leading supplier of integrated casino management systems and games for the gaming industry world-wide, announced today that it has entered into an exclusive agreement to negotiate to acquire VirtGame Corp. (OTCBB:VGTI) in a stock swap valued at approximately $20 million. VirtGame is a provider of open architecture gaming software primarily focused on the delivery of central server-based slot games and centrally managed sports betting.

President and Chief Executive Officer of the Company Russ McMeekin stated: "The reality of central server-based and downloadable slot games is rapidly approaching the gaming industry. This technology is expected to allow casino operators to expand the offering of available games for patrons while increasing the control and security over the process. We believe casinos will be able to increase their gaming revenues at a lower cost and provide significant flexibility in the type of game that is delivered to the patron. We also believe the future of slot games is through the use of this type of technology, and is clearly within the core competency of our technology-focused organization."

McMeekin continued: "The VirtGame technology is expected to be incorporated into our CasinoLink® architecture to provide two additional modules, CasinoLink Game Station and CasinoLink Sports Station. We intend to license these modules to our installed base world-wide on a recurring fee basis. In addition, we expect to continue to integrate our Slot Management, Table Management and Multi-Game Progressives along with the VirtGame Modules into an integrated yet modular casino management system outlined below to be named CasinoLink Enterprise Edition. Our customers world-wide are continuously asking for an integrated yet flexible solution to increase their revenues at a much lower incremental cost. The requirements of our extensive customer base were a key factor in the decision to pursue an investment in this technology."

McMeekin concluded: "We expect to immediately begin the process of porting existing slot titles to the CasinoLink Game Station Module and develop new games internally and externally with a third party game developer program. In addition, we also expect to submit our first release of Casino Link Game Station with the initial game library during the fourth quarter of fiscal 2005."

President and Chief Executive Officer of Virtgame Mark Newburg stated: "When I joined VirtGame in August 2004, it was my mission to align our company's technologies with an established global distribution system. We expect this transaction to achieve that goal while providing our shareholders a unique opportunity to increase the value of their holdings through ownership in PGIC. We expect Progressive Gaming International will continue to advance our technology to the next generation and successfully commercialize central server-based and downloadable games and centrally managed sports betting."

The Company's systems currently manage 45,000 slot machines and 1,500 table games world-wide. The ability to sell additional functionality to its existing and new installed base is expected to provide high margin, incremental annuity-based revenue.

The Company does not intend to operate the sports wagering business in Nevada, but expects to monetize the intellectual property through licensing transactions with third parties, which will be disclosed separately.

Chief Financial Officer Michael A. Sicuro stated: "We are creating a new path for the future for our customers and shareholders. We expect this transaction to significantly enhance our systems portfolio by providing multiple forms of gaming revenue for our customers world-wide from a single integrated casino management system. When we integrate these new modules with our existing solutions for slot, table and multi-game progressives, we believe we will have a unique and powerful product offering for gaming operators world-wide. This is a classic buy vs. build decision, with the intent to get a product to market faster and more cost effectively through acquiring developed technology and intellectual property. We expect the deal to be neutral in 2005, $.05 -- $.10 accretive in 2006, with the real potential for growth in revenues and free cash flow occurring in 2007 and beyond. We may realize the benefits sooner, depending on the velocity of the adoption of this leading edge technology."

The Company expects to finalize the definitive agreement within the next 7-10 days. The transaction will require regulatory approval, and approval by the VirtGame shareholders. The deal is expected to close in the second quarter of fiscal 2005.