Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Internet Gambling The State of a Developing Industry Sebastian Sinclair Christiansen Capital Advisors

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC The Internet The fastest growing medium in history Testing national sovereignty Re-configuring businesses and industries the world over

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC E-gambling Industry Outline A growth industry Brings the commerce back into E- commerce Some crowded markets Some good markets Many undiscovered opportunities

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Estimated Actual Internet Gambling Expenditures (in millions U.S.D.) $1,167.0 $2,207.5 $3,119.0 $4,546.6 $6,346.3 $- $1,000.0 $2,000.0 $3,000.0 $4,000.0 $5,000.0 $6,000.0 $7,

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Sources: CCA, Global Reach River City Group Lingual Opportunities A Differential Analysis

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC The Growth Markets Source: Morgan Stanley Dean Witter

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Internet Gambling – 2000 Total Consumer Expenditures $2.2 Billion (U.S.D.) Casino Games 40% Sports Betting 45% Lotteries 10% All other 5%

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC E-gambling Sites by Type Source: River City Group

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Investment Opportunities Capitalizing on inaccurate valuations Untapped markets New technologies Different and new games New business models

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Regulation: how do you? Regulate a global, unstoppable business Translate existing ‘real world’ regulation to the Internet via an architecture of software and services Prevent the proliferation of problem gambling, when it becomes so available to so many

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC A Flawed Solution: prohibition Does not prevent people, including problem gamblers, children, and others from gambling on-line Puts the operator beyond the reach of regulators and therefore deprives players of help and necessary consumer protection

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Can E-gambling be Regulated? Preventing the proliferation of problem gamblers Making sure that gamblers are located in a “legal” jurisdiction Age verification

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Wrong Question: how much do you want to regulate E-gaming? Gambling, for operators and consumers is a privilege, not an entitlement Law needs to strike balance between EFFECTIVE regulation, and privacy

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC An Example: problem gambling Responsible Gaming Solutions, LLC. With the assistance of problem gambling experts designed algorithms that detect problematic betting patterns Patent pending technology that utilizes pattern recognition to detect potential problem gambling behaviors Flags and reports any suspicious activity to relevant individuals

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC Another Example: geographic location California-based Virtgame.com’s, eBorder technology Utilizing a proprietary dialer, eBorder control allows a controlled transaction over a "state wide web” Approved by the Nevada Gaming Control Board Other solutions: a combination of proprietary dialers and IP header addressing

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC E-Gambling A rapidly developing, changing, and broadening market Prohibitions and Moratoriums aren’t all they’re cracked up to be Regulation of e-gaming is not only possible, existing and in-development technologies can create the most highly regulated gambling market in the world. The brands are coming

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC It Ain’t Just the Internet Gaming products in new media, including wireless and ITV Large media players are entering the business Integration of gaming and Interactive entertainment

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC A Killer App: ITV and sports betting BSkyB's reported in May 2001 income from interactive services of £60m for the last nine-months period. Of this, an astonishing £55m came from betting Interactive television can, and is, widening the audience for sports betting Rupert Murdoch has suggested gambling could deliver revenues of £700m for Sky by I call that conservative

Christiansen Capital Advisors, LLC © 2000 Christiansen Capital Advisors, LLC The Future E-gambling becomes mainstream in many major markets The brands consolidate the industry E-gambling fulfills the promise of its bright future—the questions is whose?