Mikohn spin-off to
acquire VirtGame

Feb 1, 2005 1:42 PM

By GT STAFF

Progressive Gaming International, the company spun off from Mikohn Gaming, will enhance its offering of casino management systems through its acquisition of VirtGame Corp.

The acquisition, which is expected to be finalized by the second quarter of 2005, is a stock-for-stock deal valued at about $20 million.

Progressive Gaming produces slot and table games for the casino industry, as well as progressive slot systems and casino accounting/management software systems.

By acquiring VirtGame and its central server technology, Progressive Gaming will be able to add downloadable slot games and centrally-managed sports betting systems to its existing casino management systems.

"The reality of central-server based and downloadable slot games is rapidly approaching the gaming industry," said Russ McMeekin, president and chief executive officer of Progressive Gaming International. "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."

Downloadable slot games are a cutting-edge technology that is not yet available in Nevada and other major U.S. jurisdictions. It has so far been implemented in a few casinos in Europe, where machine players can pick their favorite game from a menu and download it from a central computer server.

"We believe the future of slot games is through the use of this type of technology," McMeekin said.

In Nevada, regulators have said downloadable games might be one to two years away from approval.

VirtGame also produces a central-server based sports betting technology that has been adopted by Cal-Neva sports books and a few others. Most of the sports book betting systems in Nevada are provided by Computer Bookmaking Systems (CBS), a Vic Salerno company. VirtGame also produces a series of remote sports betting kiosks that lets players place sports bets at their favorite bar.

VirtGame also manufactures a real-time sports betting system that allows players to place bets on events throughout the contest. These could include the outcome of a hitter’s at bat, calling the pitch, whether a football team will pass or run and so forth.

Progressive Gaming officials said they would not operate the real time sports wagering business in Nevada. Those systems have been implemented in off-shore venues and Internet casinos.

Officials added that they expect to introduce their new casino operating systems at the Global Gaming Expo (G2E) in September.

McMeekin said he plans to have at least 30 downloadable games installed in the CasinoLink management system that will be unveiled at G2E.

"Our customers worldwide are continuously asking for an integrated yet flexible solution to increase their revenues at a much lower incremental cost," McMeekin said. "The requirements of our extensive customer base were a key factor in the decision to pursue an investment in this company."

Progressive Gaming International in December announced it would sell Mikohn’s signage division to its employees and splinter off the balance of the company and rename it.

A publicly-held company, Progressive Gaming is now traded on Nasdaq under the ticker symbol, PGIC.