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FAIRGROUND BECOMES FIRST ISLAND CASUALTY OF US BAN

November 29, 2006

FAIRGROUND Gaming has become the first Manx casualty of the online gaming ban introduced into the USA by the Senate in October.

The company has announced plans to dispose of its gaming operations, cease trading on AIM and liquidate the business, returning cash to shareholders.

The business started out last year as a cash shell with an AIM listing, intending to grow quickly by acquiring active online gaming operations and consolidating a fragmented industry.

It made its first acquisition of The Spin Palace Group, just six months ago, for $46m, but will dispose of it again to the original vendors, Seahouses Holdings, for just £11m - a heavy loss.

The disposal is due to be completed on December 15, with liquidation planned to be completed by the end of February next year. The company estimates that it will have around £6m left following wind-up costs to distribute to shareholders. This represents 21.5p per ordinary share.

Evan Hoff, CEO of Fairground Gaming, said: 'The closure of our US-facing activity and the impact of that legislation on the listed company environment continues to be deeply felt, with our business now only marginally profitable. Accordingly, in the interests of maximising value for our shareholders, we believe it is in the best interests of all our shareholders to accept this offer for The Spin Palace Group and for the company to proceed along the lines announced.'

A press release to the City said the US ruling (UIGEA) had reduced the income from Spin Palace operations by 70 per cent, and profits by more than that, due to fixed costs.

A statement said: 'Without revenue and momentum from the US, prospects for non-US revenue are, in fact, weakened and subsequent to the termination of participation by US-based customers in the Spin Palace Group's casino and poker activities, there is no longer an opportunity to leverage the US-generated profits into other territories.'

Neteller is another AIM-listed Island firm struggling to change its business model since the US ban on online gaming.

The online payment provider's share price took a huge knock after the announcement, falling from 355p to 140p overnight. The share price has failed to recover and currently sits around 147p. Market capitalisation now sits at £177m.

The company is working hard to diversify its business model into different areas and has been very shrewd with its acquisition strategy during the last couple of years.

Last year it acquired NetBanx for £12.36m which is the online equivalent of the card swipe machines used by retailers when processing payment by credit or debit cards it has recently secured a deal with Lloyds TSB to be the payment service provider for the bank's Cardnet clients.

In 2005 it spent £6.6m acquiring Macau-based Quick Access. The strategic purchase gives Neteller access to the Far Eastern market, which is unaffected by the US ruling on gambling.

Now it is believed that Neteller are in the market to buy Moneybookers, a UK-based payment provider with 2.3 million account holders, valued at £100m.

The acquisition of Moneybookers, would increase Neteller's presence in the European gaming market and bring in income from non-gaming operations such as CD-WOW.

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