Better late than never. That's one way of looking at last week's news from Multimedia Games(MGAM, news, msgs), whose Reel Time Bingo game finally got the National Indian Gaming Commission's blessing.
The stock is up 35% since September 17 and really took off after the NIGC announcement. There was never a question about whether the game would be approved as a Class II "bingo parlor" gaming device. Rather, the issue was how watered-down the end-product would be. It's an important question because last quarter, Reel Time Bingo generated 60% of Multimedia's revenue through revenue-sharing agreements.
The company originally said it expected a ruling from regulators by May 15. Since then, Multimedia's comments regarding negotiations have been on the contentious side. With the final opinion letter having come out, it's easy to see why: To secure the bingo parlor game classification, which should make the game legal in more locations, Multimedia says it had to make the new Reel Time Bingo slower: Now every player in a game must hang around until "it is confirmed that an apparent winner of the game-ending pattern has claimed the prize."
Multimedia adds that it believes the time it takes to play the game is unlikely to change for most players. But the company warns that it's up to each tribe to determine whether it wants to switch to the new version. Multimedia goes on to say that "it is our policy to support our tribal customers' sovereign rights to offer versions of games and content that they have determined meet the criteria of a Class II game."
Put another way, it would seem, the company is saying that it won't pull the old games if the tribes don't convert to the new format.
In an interview, Multimedia CEO Clifton Lind disputed the notion that the older games are illegal. He says the NIGC simply has never ruled on earlier versions of the game "and is under no obligation to opine and is unlikely ever to opine on" them.
Still, according to Multimedia's press release, some tribal regulators and operators were "waiting" for the NIGC's ruling before ordering the latest version of Reel Time Bingo. Why wait if the earlier games aren't illegal? Because for various reasons, Lind says, some tribes can't risk being associated with any game that could be deemed illegal. "Those tribes are exercising an abundance of caution," he said.
For good reason: It wasn't that long ago that the NIGC and Multimedia tangled over Multimedia's MegaNanza game. The NIGC ultimately ruled that it was a Class III gambling game -- not Class II, as it had been billed. The game has since been replaced by Reel Time Bingo. Multimedia has 45 days to convert all remaining MegaNanzas to Reel Time Bingos. Lind says there are currently 288 MegaNanzas still in the field. That's a far cry from more than 4,000 several quarters ago.
Meanwhile, even though the new version of Reel Time Bingo is slower than the older versions, Lind says all the versions have "the same" revenue potential. (Right -- assuming players of the newer version don't mind hanging around until the winner has clamed a prize.) The company also says that despite the NIGC's ruling, many tribes may wait for two new games that are expected to be released over the next several months rather than converting to the newest version of Reel Time Bingo. They also may be waiting to see what the competition has in store.
All this means that for those outside the momentum crowd, the ultimate gamble might very well be Multimedia itself.
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