Jason, Jay, and All: The interview: Mark Dohlen
November 19, 1997 Interviews Homepage
The world of "internet gaming" is in its infancy with no established
leaders to date and very few companies online who are fully
operational. One such company who is currently operational and
attempting to establish itself on the internet is Starnet
Communications International Inc. [SNMM.OTC:BB].
We were lucky enough to catch up with Starnet's CEO, Mark
Dohlen, recently at Starnet's head office in Vancouver, Canada.
StockHouse (SH): How did Starnet start out?
Mark Dohlen (MD): We incorporated privately in summer 1995...there were only the four founding partners sharing a laptop at the time. Our grassroots are in the on-line adult entertainment business, and we've worked up to a current paying audience of about 100,000 users - that's approximately 6 million hits per day, and that means substantial cashflow. Our offices are almost 20,000 square feet now, and our payroll has doubled in the last quarter.
SH: Impressive growth. What's your company's mission from this point?
MD: We took Starnet International, the parent company, public so it can act as a high-tech investment and holding company. Our goal is to identify established markets and create Internet applications for them, then operate these applications through wholly owned subsidiaries. A recent example is World Gaming, our Internet gambling
site.
SH: Tell me a little bit about World Gaming.
MD: World Gaming is a business that accepts, processes
and manages real-money wagers through the Internet.
We've got casino-style games like Black Jack and
Roulette, we offer a "sports book" with live lines from Las
Vegas and Europe for betting on world sporting events,
and we're on-line brokers of international lottery tickets.
We also have live video and audio Internet broadcasting of
horseracing from the Ontario Jockey Club's Woodbine Racetrack in Toronto, and we're working on alliances with other major tracks so that we can broadcast horseracing around the clock.
SH: How have your World Gaming numbers been to date?
MD: Very good. There were almost 300 international wagering accounts set up within hours of World Gaming's launch.
SH: So, players can wager real money on-line? And that's safe?
MD: That's right. We've engaged our sister subsidiary,
EFS Caribbean Inc., as the secure transaction processor
for the World Gaming network. We designed the EFS
(Electronic Financial Service) system in-house, using
features like 128-bit encryption and our proprietary
encoding system, STAR-MX. In plain English, it's an
on-line system where people can make credit card
transactions with guaranteed security; we were the first
company in Canada to be certified by a Chartered bank -
the Bank of Montreal - to process credit card transactions on the Internet. World Gaming customers use the EFS system to put "V-Chips" into their personal accounts, or cash out any winnings.
SH: I see you're currently not accepting wagers from North Americans. Why?
MD: Well, while there's no official Internet gaming legislation established in either the US or Canada, our standpoint is that Internet gaming - as interpreted through existing, related laws - may currently be illegal on the continent. So, while we wait for the
clarification of North American on-line wagering policies, we're going to pursue the legal European and Asian on-line gamblers. We read in PC Computing magazine that the Internet gaming market could reach $10 billion, maybe even $20 billion US in revenues within three years. Meanwhile, we're also going to let North American gamers
"play for fun" - without real cash in their accounts.
SH: Where do you see Internet gaming going in the future?
MD: The big issue will be legality. We can only wait and
see what policies will be established on our continent, and
around the world. For example, what about some Middle
Eastern countries, where gambling is outlawed altogether?
Will there be an on-line clampdown, or a cultural upheaval
from the desktops of the Middle East? Our job will be to
remain apprised of events as they unfold, and react quickly to any opportunities that may come out of them.
SH: How can someone try your World Gaming system?
MD: They should go to the World Gaming website at worldgaming.net, where they can either download or mail-order a CD-ROM containing the World Gaming
software. Once the software is installed on their computer, they can let the games begin!
SH: And now you're licensing this gaming software to third parties?
MD: That's correct. We just announced the incorporation of our newest subsidiary, Softec Systems Caribbean Inc. Softec licenses complete, customized, Internet gaming systems similar to World Gaming, to those who want to participate in this market.
SH: What do potential licensees need to get started?
MD: I usually say the essential ingredients are a valid gaming license in a country where Internet gaming is legal, a credit card merchant number, and a budget to address general overhead, accounting and marketing. Softec will provide everything else...customized software, web site development and management on our network, custom database systems to manage customers' accounts, 24-hour technical support
for you and your customers, and an EFS gateway to facilitate on-line wagers.
SH: What are the costs?
MD: We charge an upfront fee to customize your software with your name and graphics, set up your transaction processing system, register your website name and set the website up, and establish your database and network. Softec then participates in your on-line gaming revenues under a licensing agreement.
SH: So this may broaden your revenue source.
MD: Right. We plan to be a "House of Houses" in the on-line gaming business.
SH: I notice a lot of your subsidiaries are based in Antigua. What's your rationale?
MD: Well, we operate on the premise that information is what's relevant on the Internet - not its physical, geographical source. Therefore, we feel the major factor in locating Internet operations is tax effectiveness. World Gaming, EFS Caribbean and Softec Systems Caribbean all operate within the Antigua/Barbuda Free Trade Zone, a region with a very favourable tax structure.
SH: Why Antigua?
MD: We hand picked Antigua from a list of 40 countries worldwide, based on factors like legislative feasibility, the availability of acceptable telecommunications infrastructure, overhead, business climate and tax considerations.
SH: You're trading on the NASD OTC; how's it going? Will there be an IPO?
MD: We've been working diligently on securing the funds required to complete our business plan, and we anticipate a successful outcome from our efforts. Stay tuned.
SH: What's next?
MD: Well, keep an eye out for new gaming licensees as they come on, and watch for a major announcement involving a top-tier thoroughbred track in the U.S.
SH: How can people get investment info on Starnet?
MD: Visit our corporate website at starnetcommunications.com or call our
Investor Relations staff at 1-888-777-6458. Our ticker symbol is SNMM.
SH: Thank you for your time Mark.
MD: My pleasure.
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