American Wagering Heads Down Under

2 September 1998

American Wagering Inc. (AWI) is a Las Vegas based company which is in the midst of taking quite a turn into the world of interactive gaming. A publicly-traded company (BETM on NASDAQ) run by Vic Salerno, the parent company operates the largest number of sportsbook locations in Nevada through its subsidiary Leroy's. Leroy's operates 42 out of 118 sportsbooks in Nevada and pools the bets to create better odds for the bettor. They've concentrated on working with the smaller facilities which explains why the operation makes up only 4% of the state's handle. It keeps the smaller operations afloat and insures them against a disaster.

The company also has Computerized Bookmaking Systems (CBS) which designs, installs and maintains sports and race book equipment and software. The most innovative is the Mega$ports product which allows for play by play parimutuel sports wagering and is produced in conjunction with IGT.

According to CEO Vic Salerno, the company is now poised to enter the interactive gaming field in a big way...starting in Canberra, Australia. They've received the last of four internet wagering licenses available in ACT (the seat of the federal government, the equivalent of the US District of Columbia) from the Bookmakers Licensing Committee (BLC). This will allow the company to offer online parimutuel wagering for its Mega$ports product once the final laws are passed in ACT.

According to Vic Salerno, "The goal is for Australia to become the international hub for the company's Mega$ports betting system, accepting interactive bets on the internet from bettors around the world, excluding the US market."

American Wagering really sees its credibility as a big plus in the world of internet gaming. "We're a publicly traded company that's been licensed for over 20 years in Nevada," noted Salerno. "We've also had long-standing relationships with such well-known international companies such as William Hill of Great Britain and Ladbroke."

But Salerno isn't just looking at the internet. "The ideal thing," he said, "would be to combine the television and the phone into a terminal, like Web-TV. We want the process to be interactive and efficient." To that end, he's exploring all sorts of low-cost options for the punter from hand-held units to screen phones.

The prospect of using parimutuel wagering is one that could be quite fun for the wagerers. Above and beyond the typical sports, Salerno envisions getting into such sports as soccer, tennis and golf. "We want the Italians to have the option of betting against the Chileans during the World Cup. International parimutuel betting dramatically increases the betting pool, which improves the odds."

He's anticipating the 2000 Olympics in Sydney, Australia as a big event that they'll be working toward as they build their Australian base. "That will be a tremendous boost for us," said Salerno.

What about issues such as underage and compulsive gambling? Salerno obviously feels that these are critical issues in the world of internet gambling. "But, in some ways, this type of gaming is much better suited to address this than land-based facilities," he said. "We have the ability to impose limits which can't be changed during a 48 hour cooling off period. And we're already looking at biometric encryption and other technological ways to guarantee the identity and age of the player."

What are the biggest challenges facing a Nevada based company taking the leap into internet gambling? Salerno is quick to point out, "The greatest drawback of internet wagering is its lack of strict regulation. It's an instant industry....meaning anyone can set up a sportsbook website regardless of experience, business ethics or company solvency. "

He certainly knows that it will be a long haul for internet gambling in the US. So, he's going to Australia which is aggressively pursuing the business. "We're encouraged by the Australian government's progressive attitude toward internet wagering," Salerno told IGN. "They've decided to capitalize on the US government's stance of complete prohibition and feel that strict regulation of internet wagering will prove to be a far more successful means of monitoring the internet."

Salerno added that he thought they would be very reasonable in their approach in Australia. "They're looking closely at Nevada regulations as a model."

And what about the taxing situation? AWI CFO Bob Ciunci expects the ACT government in Australia to tax at a rate of one quarter of 1% of the handle or turnover (money wagered). "It will function more like a federal excise tax," he offered.

Salerno is outspoken about the way things are headed in the US. "Who benefits from the idea of a prohibition of internet gaming in the US?" he posits. "The state lotteries and the illegal bookmakers."

He's also made his views known about the way the Nevada Gaming Control Board is handling a law passed last year by the State legislature. Some interpreted it as a way to have limited in-state internet sportsbetting. But the Control Board has developed regulations which clearly keep that from happening. At a recent hearing on the matter, Salerno made his feelings known in no uncertain terms.

But he's got his shareholders firmly behind him. "They're very curious to know when the Australian project will be finalized because they know it signals the beginning of what will be an incredible growth period for our company," said the CEO.