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THURSDAY, MARCH 13, 2003

A casino company with close ties to the $12.7 billion Indian gaming industry will drop its lawsuit over the legality of a controversial machine, officials announced on Wednesday.

Under terms of a settlement approved by the Department of Justice, Multimedia Games Inc. (NASDAQ: MGAM) of Texas agreed to remove all MegaNanza machines currently in play at tribal casinos. The game will be replaced by another product that has been given a fast-track review by the National Indian Gaming Commission (NIGC), the federal agency responsible for regulating the industry.

"We are very pleased that all parties took an open, collaborative approach during the discussions leading up to this agreement," said Clifton E. Lind, Multimedia Games president and chief executive officer, in a statement.

Last September, Multimedia was at the losing end of a federal court decision over the game. U.S. District Judge James H. Payne, of the Northern District of Oklahoma, said the non-Indian owned vendor lacked standing to challenge NIGC's classification of MegaNanza.

The company appealed to the 10th Circuit Court of Appeals but will withdraw the suit.

Richard B. Schiff, NIGC's chief of staff, said the settlement was necessary because of the jurisdiction question. "We don't litigate that often with companies," he said yesterday. "We don't have any direct authority over them."

The NIGC considers MegaNanza to be of the Class III variety, the same category in which slot machines fall. That prompted the agency to order several tribes in Oklahoma, where Class III gaming is outlawed without a valid tribal-state compact, to remove the machine.

The NIGC also issued a notice of violation (NOV) to the Chickasaw Nation, Multimedia's largest tribal customer. But earlier this year, NIGC chairman Phil Hogen and Chickasaw Gov. Bill Anoatubby reached a settlement in which the tribe agreed to drop its administrative challenge to the NOV.

Multimedia, whose stock rose 7 percent yesterday upon announcement of the settlement, hopes a new game, called Reel Time Bingo, will prevent those kinds of disputes. The settlement calls for NIGC to determine its legality within 60 days.

Schiff said the NIGC can request an extension of that requirement. "I'm not sure exactly how we are going to proceed," he said. "We'll issue an advisory opinion on the Reel Time game."

Schiff added that the advisory opinion will be accompanied by further guidance from NIGC regarding the classification of casino games.

Discussion on Multimedia:
Yahoo! Finance Message Board

Relevant Links:
Multimedia Games - http://www.multimediagames.com
National Indian Gaming Commission - http://www.nigc.gov

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