The IT Investor

It's been awhile since we did something on gaming.

Two years ago we were bullish on Starnet (SNMM. OTCBB)
and Cryptologic Inc (CRYPT.Nasdaq). We regret bailing
on CRYPT since it rose $3.89 Tuesday to $26.41 per
share after spending several months in the doldrums
at lows ranging to $7.

You should take a look at the chart, which was squashed
flat last September. The stock began a steep rise in
the latter part of May to the $18 range, and really
spiked up in the first part of June. That's when the
Nevada Legislature passed a bill to pave the way for
U.S. casinos to offer on-line gambling. The closely
watched bill passed by a 17-4 vote in the Nevada Senate
earlier this week, the last day the legislature was in
session, and the legislature only sits for 120 days
every two years so Monday's vote was seen as critical
by supporters of on-line gaming. The bill needs to be
approved within 10 days by Nevada Governor Kenny Guinn
before becoming law.

So, we're betting the stock will pull back in the next
few days, and rise again if and when Guinn puts his
John Hancock on the bill. Will he do so? No one knows
for sure.

Even if he doesn't, we're betting on certain volatility
in CryptoLogic stock as the news for gamers (and
companies which supply the software, such as CryptoLogic)
swings from good to bad to good again. CryptoLogic of
Toronto, Canada was one of the earliest gaming success
stories dating back to December 1998,which is when we
first wrote about them. They are now a leading
software supplier to the Internet gaming and e-commerce
industries. With a new chairman (Dennis Wing), the
company looks well positioned for its next growth phase.
Wing, a well known financier and the president of US
investment bank Fahnestock Canada Inc., has been a
director since 1999 and sits on the boards of a handful
of other Canadian public companies including WaveRider
Communications Inc. and Itemus Inc.

CryptoLogic's common shares trade on the Toronto Stock
Exchange under symbol the CRY and on the Nasdaq National
Market under the symbol CRYP. There are currently 13.1
million common shares outstanding (15.7 million shares
fully diluted).

Careful out there.
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