Scandinavian Gambling Files: Iceland

The "Scandinavian Gambling Files" is a five-part series providing information on the operators, the legislation and the main supporting companies of the North European countries: Norway, Finland (including the autonomous Åland Islands), Sweden, Denmark and Iceland. This is the fifth and last edition to the series.

Iceland

Key figures
Currency: Iceland Krona (ISK)

1 U.S. Dollar =3D 107.190 Iceland Krona
1 Iceland Krona (ISK) =3D 0.009329 U.S. Dollar (USD)

1 EUR =3D 94.68414 Iceland Krona
1 Iceland Krona (ISK) =3D 0.01056 EUR

The Country

Iceland is the most western country in Europe and the second largest island in the North-Atlantic ocean. The first settlers came to Iceland from Norway and Ireland in the ninth century. Iceland was subsequently ruled by Norway and Denmark, which is why it is a part of the "Scandinavian Files" series.

Althingi, the world's oldest functioning legislative assembly, was established in the year 930 A. D. Iceland has a strong economy, low unemployment and low inflation. Per capita income is among the highest in the world. Iceland is ranked in fourth place for standard of living in the "Wellbeing of Nations" report, which was published Oct. 11, 2001 (the United States is ranked 27th).

In environmental terms, Iceland is unique. It is a large country (103,000 square km), about the same surface area as Ireland or the State of Virginia, but is sparsely populated, with only three per square km living mostly along the coast. The interior of the country contains stunning contrasts. It is largely an arctic dessert, punctuated with mountains, glaciers, volcanoes and waterfalls. Most of the vegetation and agricultural areas are in the lowlands close to the coastline.

In 1989 the Icelandic Stock Exchange (ISE) launched its first trading system, which allowed continuous trading, order-driven and acceptance-based. Trading has always been electronic by remote access. The exchange has never had a trading floor.

Iceland's economic intelligentsia met Nov. 2, 2001, to consider making the country a tax haven. Brains from the Institute of Economic Studies at the University of Iceland and the International Policy Network invited economists, lawyers and public policy analysts to examine how countries like the two Channel Islands, the Isle of Man (both promoting free Internet gambling), Switzerland and Luxembourg have become wealthy by offering business-friendly laws and tax rates to individuals and corporations. Iceland is not a member of the European Union. It has access to the common European market through the EEA (European Economic Area) agreement. It's also protected by a defense agreement with the United States.

Iceland, with its stable political situation, a location in the middle of the North Atlantic Ocean, daily flights to the major financial centers of the world, sophisticated telecommunications system, well-educated population and well developed financial sector, may at present have a unique opportunity to join countries which offer low tax rates to individuals and corporations. Tax Free offshore Internet gambling will also be considered.

Population*: 282,845 (Dec. 1, 2000)
0 - 18 yrs.: 82,580
18 -70 yrs.: 179,054
70 and older: 21,211

Key Economic Figures*:
GDP: 673,660 million ISK (2000)
Economic Growth: 5.0 % (2000)
GDP per capita: 30,597 (2000 in USD)

* Iceland statistics

Mobile Telephones - Internet penetration

The Icelandic Internet Survey for the Information Society Task Force, conducted by PricewaterhouseCoopers, in March and April 2001 shows that:

• Roughly 81percent of respondents have access to or own a computer and roughly 77 percent have access to a computer connected to the Internet.
• Those who spend time on the Internet spend on average 5,44 hours a week on the Net. Men spend on average more time on the Internet than women and people aged 21-24 spend the most time on the Net a week or 6.43 hours on average.
• roughly eight out of 10 Icelanders use GSM mobile phones and more than half use SMS text messages.

(The sample size was 1,200 and the response rate 774 or 65,6 percent. Age: 16-75 years.)

Lotteries and Lottery Legislation

The term "lottery" is not defined in Icelandic law. The general interpretation, however, is that a lottery is an activity in which a group of participants take part, on payment of a fee, in a draw for one or more prizes, i.e. their hope of winning depends on chance. The term does not cover instances in which, on the one hand, the payment of a fee is not a condition for participation, and, on the other, when participation requires a certain amount of skill, with the result that the probability of winning does not rest solely on chance.

Under Articles 183 and 184 of the Criminal Code, No. 19/1940 (cf. the Act No. 82/1998), it is a punishable offence to engage in gambling and betting on a professional basis, to encourage others to participate in these activities and to derive direct or indirect income from having the activities take place on one's premises. Gambling is illegal in Iceland whereas lotteries are not.

Operation of lotteries in Iceland is governed by general laws, on the one hand, and by special laws on lotteries held by particular parties on the other.

Ordinary Lotteries

The ordinary legislation applying to lotteries and raffles is the Act No. 6/1926. Under this act, lotteries of all types are forbidden except under license from the Ministry of Justice, and raffles are forbidden without the permission of a police commissioner. Under the act, lotteries with cash prizes may not be established without authorization in law. It is also forbidden under the act to trade in, or sell, shares in foreign lotteries, or to engage in any work connected with them.

The Ministry of Justice grants 50-75 licenses under the act each year for various ordinary lotteries. Licenses are granted for lotteries that are in aid of charities and philanthropic causes, sports clubs and political parties. The range covers many small-scale lotteries, both local and national.

Lotteries Under Special Legislation

In addition to the general legislation on lotteries, special legislation has been enacted covering the largest lotteries operated in Iceland. Separate legislation applies to each of the six lotteries, which are operated by the same number of separate parties and constitute by far the large part of the lottery market in the country. Various types of lotteries are represented, including sports pools. Pools have not been regarded as being covered by the term "lottery" because the chance of winning a prize depends to some extent on knowledge or skill. Nevertheless, pools are closely related to lotteries. Most of the lotteries involve cash prizes.

1) The University of Iceland Lottery (Happdrætti Háskóla Íslands) www.hhi.is**
Established in 1933, the University of Iceland Lottery (UIL), which is state-owned, is the oldest statutory lottery in Iceland. The University has an exclusive license to run cash lotteries in the form of class lotteries, instant-ticket lotteries and video lottery machines. Video lottery machines appear to be the most popular of these forms at present. The University pays 20 percent of the net profits of these lotteries as a license fee to the Treasury.

2) - 3) The Lotteries of the Retired Seamen's Home "DAS Class Lottery" (Happdraetti DAS), www.das.is, and the Association of Icelandic Heart and Chest Patients "SÍBS Lottery" (Vöruhappdraetti), www.sibs.is/sibs_lottery.htm
Two other organizations run class lotteries which are non-cash lotteries (i.e. the prizes consist of goods or services). The Association of Icelandic Heart and Chest Patients (S=CDBS) has been licensed to run a lottery to support its activities since 1959, and the Retired Seamen's Home (DAS) since 1973. The popularity of these lotteries has declined; class lotteries no longer seem to be very popular, in addition to the fact that they are not cash-prize lotteries.

4) Sports Pools
Under legislation passed in 1972, Icelandic Football Pools (Íslenskar Getraunar) has had an exclusive license to run sports pools. The prizes are cash. The company is state-owned. Profits go towards supporting sports enterprises. Football pools are the largest pools category.

5) Number Lotteries
Under legislation passed in 1986, Icelandic Number Lotteries, Lotto (Íslensk getspá), which is owned by the Icelandic Sports Federation, the Icelandic Youth Association and the Icelandic Federation of the Handicapped, has held an exclusive license to operate number lotteries in the form of Lottó, Joker and Viking Lottó. Viking Lottó is operated in collaboration with number-lottery organizations in Denmark, Norway, Sweden, Finland and Estonia. The prizes are cash, and profits go to the sports organizations and the handicapped.

www.toto.is
Sports betting and lotto entities merged in 2001 into one company Íslensk getspá - getraunir, the successor to Íslenskar Getraunir and Ílensk Getspá, established 1968 and 1986 respectively.**

** Member of World Lottery Association (WLA)

6) Video Lottery Machines: (Íslenskir söfnunarkassar) ww.isk.is & (UIL) www.hhi.is


Under legislation passed in 1994, the company Icelandic Gaming Fundraising (Íslenskir söfnunarkassar), which is owned by the Icelandic Red Cross, Organization of Rescue Squads and Organization for Rehabilitation for Alcohol and Drugs Abuse, is licensed to run video betting machines ("fruit machines" or "one-armed bandits") for fund-raising purposes. Before that date, the individual organizations had each operated similar machines under licenses from the Ministry of Justice since 1972. The machines involved are very similar to those operated by the UIL, the main difference being that the university's video machines are interconnected and so accumulate large jackpot prizes, while the betting machines may not be interconnected and the prizes are far smaller, the maximum being ISK 15,000. These betting machines are generally located in refreshment shops and small restaurants, while the university's gambling machines are located in special gambling saloons and restaurants.

Promotional Lotteries

Many types of promotional lotteries and games, which were prohibited up to 1993, have become popular recently in connection with the sale of goods and services. They take various forms, and it has become more common to offer participation through a mechanical medium, e.g. via the telephone or computer. If there is no direct payment for participation in the game or lottery, or if participation is based to an appreciable extent on knowledge or skill of some type, then these lotteries or games have not been regarded as being subject to the ordinary legislation on lotteries, and have therefore taken place without any licenses or supervision. On the other hand, lotteries of this type have become so conspicuous that attention must be given to the question of whether legislation should be enacted to cover them.

History

All lotteries were banned in Iceland by legislation in 1926. This was primarily decided to stop Icelandic funds from running to foreign lotteries (mainly the Danish "det Kongelige Köbenhavnske Klasselotteri") and to stop private parties running small scale lotteries mainly in marketing purposes. In 1933 the Icelandic parliament (Althingi) granted the University of Iceland monopoly right to run a lottery in Iceland with monetary based prizes. All profits should run the university, except for a 20 percent license fee, for the monopoly rights. The legislation is largely based on the Danish law about the Klasselotteri (which is understandably chosen as the model since Iceland was a Danish colony).

Since then other lotteries have been established. The first two, (SIBS class lottery in 1949 and DAS class lottery in 1954) were also class lotteries, but had to give prizes out as some non-monetary objects (i.e. houses, boats, cars, etc.).

Sports Betting was introduced in 1972, lotto in 1986, and legislation for slots machines was passed in 1994, although they had been operated in the market for more than a decade in another organizational form than the law defined. The Sports Betting and Lotto have now merged in one company: Íslensk getspá - getraunir, Reykjavík (successor, in 2001, to Íslenskar Getraunir and Íslensk Getspá, established in 1968 and 1986 respectively). The products of Islendic Getspa are: Lotto, Joker, Lotto Askrift and Vikinga Lotto.

Each lottery operator has a right to provide a particular form of lottery, except for the UIL which has a more general permit to run a monetary based lottery. On that basis the UIL runs a class lottery, instant tickets and video lottery terminals. According to the law regarding to the lotto, no other party is permitted to run a lotto in Iceland. No other party is permitted to run slot machines as the operation is defined in the legislation.

All operators do in fact have a monopoly right except for the two smallest product based class lotteries. The only party to pay a licensing fee is the UIL. The logic behind that lies in legal terminology. The slot machines are fundraising machines (with small stakes and low prizes) but not a lottery.

The lotto is not a lottery but a numbers game, according to Icelandic law. In that manner the Icelandic parliament was able to permit new lottery licenses in Iceland from 1949 without breaching the UIL's monopoly right for running a monetary based lottery in Iceland. Other lotteries do not pay a licensing fee or any proportion of profits to another cause other than the good causes that they are legally bound to support.

Ownership and Regulation

The four lottery operators in Iceland are:

• University of Iceland Lottery; owner/holder of license: University of Iceland
• Happdraetti Das; owner/holder of license: Elderly Seaman's homes organization
• Íslensk getspá - getraunir
• SIBS Lottery; owner/holder of license: The Icelandic Association of Tuberculosis and Chest

The Icelandic Gaming Fundraising, which runs the slot machines, is also an operator on the lottery market. The difference between their operations (slot machines) and UIL's Video Lottery is mainly that the Icelandic Gaming Fundraising (IGF) operates standalone machines. They are fundraisers, as their name suggests, but are usually included in the list of lottery operators. The owners/holders of the license of Icelandic Gaming Fundraising are the Icelandic Red Cross, Organization of Rescue Squads, and Organization for Rehabilitation for Alcohol and Drugs Abuse.

Other gaming possibilities in Iceland are bingo halls and private clubs.

The market

The latest official market share of the Icelandic lottery landscape dates from 1997, according to statistics officially published by the Icelandic Ministry of Justice. The report is from the beginning of the year 1999 and all statistics from the year 1997:

In 1,000 ISK

*** 80% of UIL's profits run to the University of Iceland and 20% to the state as a licensing fee.

2000
Approximate turnover in 2000 in 1,000 ISK****

UIL: 2,179,000
Lotto: 1,095,000
Sports Betting: 382,000
SIBS: 382,000
DAS: 178,000
Total: 4,216,000 (=39,331,064 USD)

**** excluding Icelandic Gaming Fundraising

The Internet

It is possible to take part in a large number of lotteries and games of foreign origin on the Internet, in addition to the Icelandic purchase-incentive lotteries mentioned above. Participation in sports pools on the Internet has been authorized, but the activities on which the lotteries themselves are based do not take place on the Internet. Many parties have contacted the Ministry and requested permission to set up lotteries on the Internet, and the statutory lotteries have also sought to expand their activities to include the Internet. Up to now, no licenses have been granted to hold traditional lotteries on the Internet, such as number lotteries, betting machines, etc., in which participation in the lottery would actually take place on the Internet. Consideration is being given to the question of whether such lotteries should be permitted, and, if so, then in what form. It is likely that legislation would have to be passed covering such activities. Permitting Icelandic parties to operate lotteries on the Internet may be a better way of preventing participation in foreign Internet lotteries.

The Internet has been used by the sports betting (odd set) for a few years to sell their product and give information. The UIL class lottery has sold tickets on the Internet since January 1997. You can also purchase lotto on the Internet in Iceland.

A common feature in those operations is that all operators are selling an existing product on the internet.

The Icelandic Justice department does not intend to permit an Internet-based lottery at this time. The issue of Icelanders participating in offshore lotteries and casinos has not been issued formally by the Justice department or the industry in Iceland.

As you can see from the above text, writes Fanney Óskarsdóttir, a legal expert from the Icelandic Ministry of Justice, Internet gaming is forbidden in Iceland at the moment, while it is not allowed directly by law. Yet we don 't have any law about Internet gaming so we consider that it is forbidden.

The largest lotteries that are operated in Iceland by special law can sell tickets via Internet, but that is not what we call a real Internet game where the game itself is played on the Internet.

The UIL Internet sales require the participant to give an Icelandic social security number so participation is restricted to Icelandic citizens, at home or abroad. The same applies to the other two that are mentioned.

Turnover and Lifecycle of Products

The oldest lottery operating in Iceland is the UIL Class Lottery. That particular form of lottery was the only permitted product for almost 40 years in Iceland. Three lotteries had the permission to run such a lottery and the market share of each seems to have been fairly stable, but UIL has been the leading product. UIL has a monopoly right to pay out monetary-based prizes and also has the highest payback ratio.

The market changed dramatically in 1986 when a new operator was given the license to run the lotto. Sports betting had been introduced to the market in 1972, but the class lotteries had dominated. Since then the market share of the class lotteries has declined and the newer technology gained popularity.

UIL's reaction to the lotto was the introduction of instant tickets. They were an immediate success on the market, but their market share diminished rapidly in recent years in competition with another product that gives instant gratification: the slot machine.

To maintain its profits and provide steady funds to the University of Iceland the UIL launched a video lottery operation in December 1993. The slot machines and video lotteries have been the fastest growing products on the lottery market. As a matter of fact, other products have been stagnant or declining, since they were introduced to the market.

The turnover of the lottery market has been fairly stable, but the revenues have shifted toward products that offer instant gratification and a high entertainment value. This is the same trend as is seen in most markets. The modern consumer demands entertainment value and interactivity.

The Icelandic model is based on the following rationale: The state controls which causes deserve the rent of the lottery market by issuing exclusive rights to operate specific forms of lotteries to specific good causes (represented by organizations). There is competition on the market but within the constraint that each has a monopoly right to supply specific product attributes (i.e. lotto, betting).*****

***** The two product-based class lotteries are an exemption. They were permitted when there was presumably no other feasible way to differentiate, therefore the same product to both.

Each party has an exclusive right and an obligation to deliver profits to a good cause. The trend in Iceland in the last decade has been that new licenses have been issued for new products, and assigned to new concerns. The lottery operators already on the market hence have a hard time holding a steady income to their owners.

In many of the neighboring countries, the state lottery is licensed to run many products, so the declining lifecycle of one is overcome by the popularity of another. In Iceland the different products in many instances are in the hands of different parties which induces fierce competition and the winners are usually those with the newest, and most technologically advanced products. In the present day the video lottery and slot machines (which are very similar, except for that the VLT's are run as an interconnected system) are the winners with increasing market share every year. Roughly estimated, 65 percent of the net profit of the lottery market in Iceland in 1997 came from VLT's and Slot machines.

University of Iceland Lottery (UIL)

I. Overview of UIL's History and Operations

According to law, the University of Iceland was to be the only concern in Iceland permitted to run a lottery with cash prizes. For this privilege the UIL was to pay 20 percent of net profits to the state, but the remaining 80 percent would be used to finance the building program for the University. The UIL is an organization owned by the University of Iceland and is therefore a state company.

At the time when the Icelandic parliament gave the university the monopoly rights to run a lottery in Iceland, the state had already agreed to build a new main building for the university, but in the middle of the depression, funds were lacking for all new state financed operations. The suggestion to raise the funds by a national lottery came from the University of Iceland, but was backed by prominent Icelandic politicians, as a means to finance education.

The UIL started its operations in 1934 by running a class lottery. The lottery was welcomed by the people of Iceland and was UIL' s only revenue for more than 50 years. It was the only income for the building program of the university. Wages and other expenses of the university are paid directly by the state and financed with taxation, but buildings were financed with donations through the UIL. In the last decades the UIL has also financed equipment and the renovations of the university buildings.

The Icelandic legislative assembly has permitted new forms of lotteries which caused increased competition on the lottery market and gradually diminished income for UIL's class lottery. In 1986 the lotto began it's operation in Iceland with an on-line system. UIL's answer to that was to introduce instant tickets in the year 1987.

In recent years the lottery market has grown more competitive and changes in technology have paved the road for new forms of lotteries. To maintain a leading role on the Icelandic lottery market UIL introduced an interconnected system of video lottery terminals in 1993.

UIL has held its position as Iceland's largest lottery since its first year of operation by answering competition with new products and product development of the older products. Regular subscription customers are 40,000 in a country with only 100,000 households. There is a ticket in 35 percent of Icelandic households (some households have more than one customer, i.e. husband and wife). The UIL turnover in the year 1999 was 2,254,231.396 kr.

"The trend in the lottery market over the last decades, both in Iceland and abroad," Jon Oskar Hallgrimsson, UIL's finance and marketing manager, said, "has been that consumers demand more excitement and rapid response to their participation in a lottery. In the first years of operation of the class lottery it was typical to have drawings once a month. In recent years that form has been adapted so that there are three drawings every month. The instant tickets give customers the possibility to see the results of the lottery instantly and the VLT's give the possibility to play interactively against a terminal with a random generator."

UIL Products

A. Class Lottery

The class lottery was launched in 1934 and was a popular form of lottery at that time in Europe. Class lotteries are still operated in Denmark and Germany.

UIL runs one class lottery each year, in which there are 12 classes, one for each month. To have a valid ticket, a customer has to pay for the ticket for every class in the lottery. A ticket owner can pay for his ticket by monthly installments or for a whole year in advance. Therefore new customers enter the lottery in the beginning of each lottery year. Those taking part in the lottery generally subscribe to a certain ticket number and retain that number for years. The system was manual in the sense that all tickets were pre-printed at UIL's headquarters and sent to over 100 agents around the country who delivered them to the ticket owners or subscribers.

Today the class lottery is operated by an on-line system that registers individual purchases in central database. The transactions between UIL and its customers are increasingly getting automated and technical (although a few agents still operate in the old system without an online computer connection). A majority of ticket owners pay their monthly installments automatically with credit cards and get information about drawings and prizes on the Internet, via SMS and WAP on mobile phones. New customers can also purchase tickets on the Internet and pay for them automatically with credit cards or directly form their bank account.

According to the laws about UIL from 1934, 70 percent of gross income are paid out as prizes, which is an unusually high payback ratio, considering that lotto companies around the world typically pay out 40 percent to 50 percent.

B. Instant (Scratch) Tickets

Instant tickets give the customer the opportunity to find out immediately if he has won a prize and the value of the prize. The result of the lottery is predetermined when the ticket is printed but the result is only revealed to the customer after the purchase of the ticket when a latex seal is removed. The tickets are sold by 500 retailers throughout the country and in vending machines. The payback ratio is 50-55 percent.

Security standards in the printing and production of the instant tickets are very important since the result is predetermined and the lottery must maintain its integrity at all times. This form of lottery is very flexible because games can vary with each printing of new tickets.

Video Lottery Terminals (VLTs)

The video lottery is the fastest growing lottery form in both Europe and the United States. UIL launched its VLT operation in 1993 and it has increased its share in sales and profits since then. The VLT operation contributed to 75 percent of UIL's net profits in 1999.

Customers can try their luck in terminals that are interconnected and get the result immediately. Since the VLT's are connected to a central system it's possible to offer jackpot prizes that grow incrementally with the amount of play.

The payback ratio is around 90 percent, but the nature of the game, i.e. repeated purchases at the machine, does in fact prevent a direct comparison with the payback ratio of the more conventional lottery forms. It is UIL's policy to ensure that participants in the VLT's are over 18 years old. Therefore the terminals are located were children do not have access, i.e. bars, liquor-licensed restaurants and special gaming halls.

UIL has entered into another contract with IGT-Europe. After a contract of 400 machines was signed in 1993, a second machine contract of 75 iGames, with a service contract for five years, became effective in mid August 1998. It utilizes IGT's popular iGames like Red Ball, Diamond Mine and Lion Fish. The iGames branded under "Gullregn," or "Gold Rain," have become an instant success.

Product Development and Customer Service

The operation of the class lottery has undergone major technological changes in recent years, which have paved the way for a modern brand image for the 67-year-old product.

Product development and marketing have changed the brand from being old fashioned and passive to a low effort, automated high-tech lotteries.

Automatic bank transfers collect 65 percent of the revenues. Retailers collect the remaining 35 percent, but their share is decreasing. Thirty-four percent of new customers use the Internet to select tickets, method of payment and the level of service they prefer. Thirty-seven percent of new customers make the same choice by calling a toll-free number to the UIL service center.

Customers can get results on the Internet and with a WAP telephone. They can also subscribe to results and various information on e-mail and with SMS messaging. Winners can get prizes paid out directly and automatically on their bank accounts after each drawing.

Distribution Channels and Sales System

The Internet is playing an increasing role in both services to existing customers and in generating new income. The customer base is growing rapidly with product development and marketing that targets younger customers that prefer a low effort lottery participation to that of making the exchange at a retailer.

SIBS Lottery www.sibs.is

The SIBS Lottery is a monthly class lottery. Sixty thousand nine hundred sixty-seven prizes will be awarded this year. Therefore, most numbers (over 85 percent) should receive a prize. The odds of winning are also high; few lotteries can offer the same odds. If the grand prize does not fall on a sold number it is added on to the grand prize of the next month and so on until it strikes a sold number and a lucky ticket owner gets the additive amount of two or more grand prizes.

The SIBS Lottery is much more than a fun game. It was established 51 years ago to pay for the building of a rehabilitation center for the handicapped, sick and injured at Reykjalundur and has since then helped in maintaining Reykjalundur, Mulalundur and other institutions where SIBS--The Icelandic Association of Tuberculosis and Chest Patients--has put its powers to work to support the sick to help themselves. Only Icelandic residents and Icelanders living abroad may participate in this lottery.

www.toto.is

Product: Oddset

The Oddset game was launched by Betware on the Internet in cooperation with the Icelandic Soccer Pools in December 1996 and is therefore the first Internet game run by a WLA member. The Oddset Game has been a great success. Sales on the Net currently account for more than 40 percent of the total sales.

1X2

Another Betware product is 1x2. This game offers 12 to 14 soccer matches each week, with the most popular form offering 13 games. The games are exclusively soccer games. To play, the user marks a score of 1, X or 2, for each game. Each combination of marks represents a single row. The total number of rows is determined by the number of marks for each game. The number of rows determines the price of the coupon.

To play 1x2 the user can play a simple "full cove" system, where each mark on each match has a 100 percent value. However, using betting systems, the user can increase the probability of a winning row without paying for every row. The 1x2 system offers two types of betting systems, the "R-systems" and "U-mark systems." The R-system is a simple reduction system while the U-mark system allows more control over the triples, but uses the same reduction methods as the R-system. The 1x2 game was launched on the Internet in cooperation with the Icelandic Soccer Pools in September 1998. The 1x2 Game has been successful. Sales on the Net currently account for more than 50 percent of the total sales.

Supporting Industry: Betware www.betware.com

Betware, a WLA Associated Member, is a software and service company that specializes in providing technical solutions to gaming companies operating in fully regulated jurisdictions. Betware solutions have been in operation since December 1996. The company does not intend to take any part in betting, but will concentrate on supporting its clients in utilizing the Internet successfully. It has a wide product line, covering most sports betting, lottery and casino games, as well as an online system that is run from a standard PC connected to the Internet. The Gaming Factory allows independent third-party party gaming developers and operators to create their own games. Betware has already implemented a number of its games on WAP and PDA (Palm) and is currently involved in extensive development for interactive television.

Betware's first clients were the Icelandic Soccer Pools (Íslenskar Getraunir), with the first game on the Internet launching in 1996.

The headquarters of Betware are in Reykjavík, the capital of Iceland, although Betware USA Regional Manager Kolbeinn Einarsson points out that the company has established a vast international presence. "Betware has had a presence in the U.S. since 2000--first in Los Angeles and now in New York--and is actively participating in the market here as well as in Scandinavia, Europe and the rest of the world," Einarsson said.

In September 2001 Betware and Dansk Tipstjeneste signed a contract wherein it is agreed upon that Dansk Tipstjeneste will use Betware's interactive gaming system and purchase professional services regarding the setup and maintenance of the Interactive Gaming Center from Betware. The contract is valid for at least five years.

Additional clients include MyLuckyWorld in Norway and Svenska Spel in Sweden

Shareholders:

Margmidlun h.f. (www.margmidlun.is) - one of the largest ISP's and Web development houses in Iceland (the main stockholder).

EFA (www.efa.is www.efa.is ), an Icelandic Investment bank.

Net Entertainment (www.netentertainment.com) - Created in 1996 by Pontus Lindwall, Net Entertainment is a wholly owned subsidiary of the Swedish company Cherryförtagen, one of Scandinavia's leading gaming enterprises. Cherryförtagen is a privately owned Swedish gaming company with more than 2,600 shareholders. Its shares are listed on OM Stockholm Exchange O-list.. Cherry´s operations on Internet, casino and slot machine gaming, with their main activities conducted in restaurants, bingo halls and amusement parks around Sweden, as well as onboard cruise and passenger ships with services in Scandinavia. Cherryförtagen employs nearly 800 people.

Other stockholders include a Swedish investment bank and various small stockholders, as well as staff with stock option plans.

Complete List: