Las Vegas Casino and Starnet Come to Blows

27 July 1999
The past week was a relatively quiet period for the interactive gaming corner of cyberspace: no breakthrough technology to re-revolutionize the Internet, not much to write home about from camp Kyl and no major new lawsuits to speak of. Then, an online casino operator called Las Vegas Casino, Inc. released quite a bomb from the calm sky over downtown Vancouver onto the bustling headquarters of software supplier Starnet Communications.

In the fall of 1998, Las Vegas Casinos split with Handa Lopez, its original software supplier, and established a short-lived marriage with Starnet, a publicly traded Vancouver-based company that develops gaming software through its subsidiary, Softec Systems Caribbean, Inc. Rumblings in recent months, namely stories posted in an online magazine that serves as a portal to the Las Vegas Casino sites, have indicated that the relationship was deteriorating.

The bottom fell the rest of the way through today as Las Vegas Casinos announced that it's suing Starnet for $1 billion for "a very substantial number of breaches of agreement" that include problems with accounting and billing, as well as bugs in Starnet's software.

After a few hours of chaos that spewed a mass of classic rhetoric amid newsgroups and message boards, Starnet announced that it hasn't received formal legal notice of any lawsuit whatsoever from Las Vegas Casino Inc., and neither has Softec. A spokesperson for Starnet indicated that the company had terminated Las Vegas Casino's contract on July 23 due to nonpayment and that the lawsuit was fabricated by Las Vegas Casino as a retaliation.

A counterattack could be on the horizon as well. CEO Mark Dohlen intimated that the company will look into taking Las Vegas Casino to court. "…We are instructing our counsel to commence defamation proceedings against Las Vegas Casino for statements made against our companies and against officers of our companies," he said.

Despite the fact that Las Vegas Casino's announcement doesn't include a court date or location or a case number, a spokesperson from the company insists that the lawsuit is legitimate.

Regardless, the announcement proved to be a significant punch to the gut for Starnet. Its stock took quite a ride, plummeting from 22 11/16 to 10 in about two hours. After rebounding slightly, it closed at 13 5/16, a 37 percent drop from its opening price of 21 ¼.

Even if the lawsuit is a fabrication, the retaliation was at least mildly successful in the short term. Starnet's stock would likely recover, however, not all is well with the industry giant. An anonymous licensee of Starnet told IGN that at least some of Las Vegas Casino's complaints aren't farfetched. The unnamed operator claims that Starnet's accounting department has been inaccessible and that it has failed to deliver financial statements on time. "They're growing way too fast," a spokesman for the operator said. "They're signing up all kinds of licensees and not taking care of the one's they've got."

On the other hand, several Starnet licensees, such as, and, have gone on record as being very happy with the service they've gotten so far. The CEO of Venture Tech Inc., for instance is very enthusiastic about his company's experience with Starnet. "Venture Tech Inc. and its subsidiaries, remain completely committed to a mutually rewarding relationship with Starnet and we continue to have full confidence in the integrity and capability of its management and staff, with respect to our web-site now in full operation," he said.

Meanwhile, Cryptologic, a Starnet rival based in Toronto, has given a lukewarm confirmation that it has a licensing agreement with Las Vegas Casino. We'll leave that one for another chapter.

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.