All, recent news:
TULSA, Okla. (CBS.MW) -- A federal court in Oklahoma sent shares of Multimedia Games Inc. up 45 percent by ruling its electronic bingo games represent a legal form of gambling for Indian reservations.
The hotly debated case -- the focus of this week's
Legal Options column on
CBS.MarketWatch.com -- may mean a legal
jackpot for the Tulsa, Okla.-based gaming
company (MGAM).
Shares jumped to 1 5/16 to 4 after Tuesday
afternoon's ruling, with trading volume of 444,000
shares -- more than 10 times their daily average. They rose another 5/16
to 4 5/16 on trading of 212,000 shares Wednesday.
The stock remains well off its 52-week high of 17, partly because of a
second federal case on the same issue is pending in San Francisco. "We will move swiftly to notify the court in California of the decision rendered
by the chief judge for the U.S. District Court in the Northern District of Oklahoma," said Gordon Graves, chairman and CEO.
U.S. Attorney Stephen C. Lewis in Tulsa declined to comment on the case, and it wasn't immediately apparent how the Oklahoma ruling would
affect the California case.
Federal law regulating gambling on Indian lands has produced a rash of
Justice Department lawsuits aimed at seizing gambling equipment the government considers illegal.
Multimedia Games, which makes the electronic bingo game MegaMania through its wholly owned subsidiary MegaBingo Inc., reports it has exclusive contracts with 50 Indian nations. But MegaMania, an electronic
bingo game, has been under a legal cloud ever since the government started efforts to seize it along with other allegedly illegal games from some tribes. Multimedia had 20 games on the seizure list in California, and
another 162 game stations in the Tulsa case case.
In California, the stakes are high for everyone in the industry. California is
in the midst of a heated election battle over Indian gaming. There are a dozen federal forfeiture cases involving more than 30 California tribes in which the government wants to seize hundreds of game machines the feds believe are illegal. Legal definition:
The dispute centers on how to define a legal Class
II game, regulated by the National Indian Gaming
Commission, and what crosses the line into an
illegal Class III game.
Class III games are usually banked card games like
baccarat, blackjack and casino-style slot
machines. Class II gambling is generally
nonbanked games in which the player bets against
other gamblers, not the house.
"We said in January that we were confident in our
legal position and that we firmly believed we could
convince the court that MegaMania was a lawful
Class II game," said Graves.
After a San Francisco hearing this month, U.S.
District Judge Charles Breyer showed little
sympathy for the government's arguments that the
game was illegal. He repeatedly quizzed
government lawyers about the legality of ante-up bingo, in which players must add money to continue competing. Breyer said it appeared to him games were legal with ante-up gambling and nothing in the regulations prohibited it. Lewis came to San Francisco to argue the government's position in the California case.
Judge Breyer debated with lawyers throughout the afternoon but he isn't expected to hand down a written decision for several weeks.
Pam MacLean writes about taxes and business law for CBS MarketWatch. |
