NIGC Letter April 2002
Investor/Analyst Conference Call
 
OPERATOR: Thank you. The next question comes from David Scially. Please state your question.

MR. SCIALLY: Hi. West Highland Capital. Actually I have a couple of questions. I guess the first question would be with respect to the definition as you provided it Gordon, that the NIGC does not regulate the gaming, but the Tribal Gaming Authorities do.

MR. GRAVES: Well, I think a good way to look at it - who knows how it's going to turn out. I think some at the NIGC think they should have a lot more regulatory [oversight] and certainly the tribes think they should have less, and there's a mixed opinion on that. But I think it's going to turn out where it is kind of like the Gaming Commission in Nevada versus the Control board.

MR. SCIALLY: Okay. But the question I was going to ask -

MR. GRAVES: Yeah.

MR. SCIALLY: -are you aware of any tribal attorneys that have reviewed this matter and happen to agree with the NIGC's current letter or more specifically the attorney at the NIGC's opinion?

MR. GRAVES: Well, I don't know what you mean by tribal attorney. There are a couple of attorneys out there, neither of whom are tribal attorneys, tribal members.

MR. SCIALLY: Well, are they -

MR. GRAVES: And both who work for one of our competitors that have come out with an opinion to one or more tribes saying they think the game is Class II, and we've been in negotiations with those people and I think we've settled to the point - well, none of the tribes have listened to them, taken them seriously or shut us down, but involved. Clifton knows more detail about that than I do. Do you want to talk about that, Clifton.

MR. LIND: Again would you repeat the question?

(unrelated conversation)

MR. SCIALLY: I was asking whether or not at the company you were aware of any other attorneys working on behalf of a tribe, since Gordon had referred that the tribal gaming authority is more impactual than the actual NIGC.

MR. GRAVES: And I said that we have not had any tribal authority or tribal gaming commission that has asked us to take out the game that I know of.

MR. SCIALLY: Yeah. That's not the question though, Gordon.

MR. GRAVES: Yeah.

MR. SCIALLY: The question is whether or not any attorney has rendered an opinion -

MR. GRAVES: And I said that there was -

MR. LIND: There are five different versions of the MegaNanza games that are out there. At least two of those versions are the results of changes that either gaming commissions or gaming commission chairmen have asked us to make. One of the versions that is running in two halls is a version of the game that is in a test mode because the original version of the game, that we're not running any more, in the opinion of the gaming commission's attorney did not have the attributes that the game needed for him to in his opinion to classify it as a Class II game.

Therefore - the NIGC's self-government guidelines provide - we entered into an agreement for a six-month test with that particular tribe. That agreement is subject to a mutual confidentiality agreement, so I can't go into much detail. And we have fielded a new game that is running in that hall that the gaming commission is now in the process of evaluating to see if the new attributes we added remove the concerns.

So there certainly was an early version of MegaNanza, the first version that we had running, that a tribe's gaming commission had objections to, and issued and then withdrew an opinion that they thought the game was not a Class II game, and we're under confidentiality in a test on the new game that is running.

MR. SCIALLY: Okay. Well, that doesn't really answer my question, so I'll ask it a different way then. Are there any-

MR. LIND: I must not have understood your question because I certainly thought that answered it. Go ahead.

MR. SCIALLY: Are there any new offerings from competitors that have MegaNanza-like economics that another tribe would see this NIGC letter, and might say I'd rather go and install this other machine and deinstall a MegaNanza due to the potential negative impact of a negative NIGC ruling and potential civil penalties against my operations from the NIGC?

MR. GRAVES: Sure. Let me answer that. Sure that can happen, but we don't see it happening, but it could.

MR. SCIALLY: No. Well, I'm asking if you know of any?

MR. GRAVES: No. We know of none.

MR. SCIALLY: You know of no competitor that -

MR. GRAVES: I know of no competitor that has set of games that come anywhere close to ours, not even close.

MR. SCIALLY: Okay. And then I wanted to get some clarity -

MR. GRAVES: And let me say on that other thing - there's a couple of knuckleheads out there who have tried to come up with some argument why that first game we put out there wasn't Class II and I don't think it amounts to a hill of beans.

MR. SCIALLY: Okay. Well, I don't concern myself with knuckleheads, so I just was curious.

MR. GRAVES: Yeah.

MR. SCIALLY: So then specifically with respect to some of the earlier statements in here, I'm wondering why is it that you don't just instead of fighting, instead of litigation, why don't you just change the engine?

MR. GRAVES: Because there's too much evidence that is with the present power structure in the NIGC, too, too, much evidence that if we try to work with them we're going to get screwed.

MR. SCIALLY: Okay.

MR. GRAVES: You can't work with a bureaucratic organization in this type of an environment and keep from getting screwed. You've got to go to the courts to do it, I've gone through it time and time again. I've seen it, got screwed. It's just going to happen. You can't get around it. It's just the nature of the beast. It's not that anybody's evil or anything, it's just what's going to happen and you've got to go get the court system to support you.

There's nothing in this country that's nearly as powerful and as wonderful as our court system. It's fair. It's something unique that nobody - I don't know of any other country that has them. Maybe there probably are, but it's just the greatest thing about this country. And you go to those courts and I think you can feel pretty damn safe, you're in good hands, and you can't do that with the bureaucratic organization. It's a crying shame that you can't and when the NIGC gets to the point it's as mature as the Nevada Regulatory system, that probably won't be the case. I'm sure there's a lot of guys out there that do business in Nevada all the time that don't feel that way, but they feel that it's unfair sometimes and it probably is. But you just can't do it, you just can't, it just doesn't work. I wish it did, but it doesn't.

MR. SCIALLY: Okay. Well, since the forum is [?] and would like to go to the judicial level for declaration, why did you only ask for a judicial declaration for two of the versions of MegaNanza, the Count Down Bingo and Two Step Bingo?

MR. GRAVES: I think that's probably one of those areas where we're just getting into too much strategic detail, [and] it's not worth talking about. I think the bottom line is those two versions - if we wanted to we could make it all those two versions, but I just don't think - we're getting to a point I just don't think we ought to talk about it too much. Clifton, do you want to say anything about that?

MR. LIND: Well, no. Those are the two versions of the games that are most richly featured and the ones that we have been marketing for the last 30 days because of their new game features that none of the competitors can match. And so we just wanted to make sure those were emphasized because it is likely that many of the tribes will want those new features that are in those games that will make them more popular with players. So we just wanted to emphasize what we think are going to be the most popular games when this actually gets into court, if it does.

MR. SCIALLY: Okay. Well, I'm still just trying to understand. So for legal reasons you don't want to talk about that.

MR. GRAVES: That is correct.

MR. SCIALLY: Historically have you - you had said that you found that you will fight them. But historically you had changed at one point.

MR. GRAVES: I don't want to talk about it any more.

MR. SCIALLY: Oh. I'm sorry.

MR. GRAVES: We're not going to talk about it any more.

MR. SCIALLY: Okay. Well, let me change it then.

MR. GRAVES: Okay.

MR. SCIALLY: You said earlier you said you've never had to pull a game out of a casino due to the question of Class II's?

MR. GRAVES: I didn't say.

MR. SCIALLY: Okay.

MR. GRAVES: I didn't say that.

MR. SCIALLY: Okay. Well, then one last question. Tony Graham, where are you practicing law these days?

MR. GRAVES: I don't want Tony to answer that.

MR. SCIALLY: Okay. Is there any question that you feel or any area of business that you'd like to discuss today that I can ask a question then?

MR. GRAVES: I doubt it.

MR. SCIALLY: Okay. Well, then thank you, Gordon.

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