International Sports Wagering, Inc. (ISWI) today announced an exclusive licensing deal allowing German-based Global Interactive Gaming, Inc. (GIG) to market, distribute and operate ISWI's interactive SportXction software, technology and patents on the Internet and interactive television, for contests and wagering on sporting events worldwide. The licenses exclude the continued use of SportXction in Nevada for wagering and the application of the company's basic technology and patens to lotteries and financial transactions.
GIG is a joint venture of the Kirch Group, a German media conglomerate, and Multisports Games Development, Inc., a Delaware corporation.
"This is the breakthrough deal that we have been seeking since we introduced our advanced play-by-play game technology," said Bernard Albanese, ISWI president. "We will now have the opportunity, through the Kirch Group's international connections and marketing muscle, plus their relationships, both business and financial, to allow tens of millions of players in countries throughout the world to play SportXction via the Internet and interactive TV. We couldn't have found a more suitable partner."
"We are excited about the potential derived from linking this software with digital TV networks around the world, particularly in Europe, where by 2002 there will be over 63 million interactive homes," said Peter Sprogis, GIG president. "The software will certainly enhance the income potential for both rights holders and broadcasters."
Under terms of the agreement, ISWI will receive 25 percent of gross profit, less direct expenses for the use of its technology. For wagering, ISWI will be paid the lesser of 25 percent of the gross profit or 1 percent of the gross handle, also less direct expenses. The percentage fees are subject to minimum annual license fees, payable quarterly.
License fees minimums are $3 million the first year, increasing to $5 million in the second year, $6 million in the third year, and increasing 20 percent each year thereafter during the 14-year term.
ISWI has its work cut out for it. Terms of the agreement call for some modifications to the software to fill GIG's intended international use. Under a two step plan, ISWI must render the system capable of accommodating 1.5 million simultaneous users in each of 32 interconnected regional (country) systems, with each system able to process 25,000 transactions in a five-second interval. Additionally, the system must support multiple languages and currencies, 10 different sports, and 15 concurrent sporting events.
The first stage, scheduled for completion within 10 months, will facilitate the processing of 10,000 transactions in 5 seconds. It will only be available in English, according to Albanese. ISWI will receive a bonus for early completion, which Albanese said they hope to accomplish.
Albanese indicated that GIG was likely, at least in the beginning, to use SportXction for contests. The agreement also restricts the use of SportXction for nations where wagering is illegal.