Will Internet lotteries be legal in the United States? While the question has yet to be answered by Congress, the word from Washington is that prohibitive legislation will probably include a loophole that would permit them. MDI Entertainment, which just dropped load of money to buy The Lottery Channel, is betting on such a loophole.
The purchase, estimated to be worth $66 million by Reuters, is pursuant to shareholder agreements from both companies, as well as finalized financing terms. A stock swap between shareholders of the two companies calls for The Lottery Channel stockholders to receive 13 million shares or options to purchase MDI common stock in exchange for The Lottery Channel common stock and options and rights to purchase The Lottery Channel common stock. The two companies would merge, and The Lottery Channel would become a wholly owned subsidiary of MDI, which then proposes changing its name to Lottery.com.
"The merger helps pave the way for creating the 'medium of the future' for lottery information, entertainment and ticket sales," said Steve Saferin, MDI president and CEO. "As the merger of AOL and Time Warner implies, there is a very high consumer demand for branded entertainment, games and other forms of amusement and commerce among the more than 300 million Internet users worldwide. "
"Our goal, " he added, "is to be at the forefront of providing lottery information, entertainment and commerce to the 70 percent of North American adults who spend in excess of $41 billion on lottery games annually. Combined with our strategic partner, Scientific Games, and The Lottery Channel's strategic partner, NBC (a unit of General Electric), we will possess the unique skill sets and resources to achieve that goal."
The Lottery Channel, which provides a total communications package for the government-sponsored lottery industry, has created an agenda to compete for consumers' discretionary income against other forms of gaming and entertainment. A web site at lottery.com offers up-to-date lottery information, free-for-play lottery-related games and the fulfillment of lottery purchases from individual state lottery programs. The acquisition of gameland.com, a popular gaming site, will allow The Lottery Channel to more rapidly expand its game offerings.
Lottery sites on the Internet have been expanding recently with such diverse governments like Cambodia, Jamaica and Vietnam all considering or actively pursuing Internet lottery development.