LV company sues over home gambling patent

John Wilen

Friday, April 9, 1999 | 10:30 a.m.

Las Vegas company Home Gambling Network Inc. filed a patent infringement lawsuit against Starnet Communications Inc., an Internet gambling company based in Delaware and Vancouver, Canada.

In the suit filed in U.S. District Court in Las Vegas, Home Gambling Network alleges Starnet is violating an HGN patent on systems that let people participate in live wagering remotely via the Internet or television networks.

"They are taking wagers on live sporting events," said deedee Molnick, president of HGN.

But Starnet says it uses virtual computerized gaming technology, which is not covered by the HGN patent.

"Starnet is and has been aware of HGN's patent for some time, and we have been advised by our patent attorney that Starnet is in no way infringing the patent for several reasons, including the fact that it covers live casino gaming and Starnet uses computerized casino wagering," Starnet said in a statement.

Still, Molnick contends Starnet's activities violate a patent issued HGN last September.

"The patent applies to all live gambling," said Molnick.

HGN does not itself accept wagers. It is a company set up to license its other entities to operate under its patent, said Molnick. In addition to the Starnet suit, HGN is suing three other Internet gambling companies: Internet Television Services Inc. and Internet Gaming Inc., two related companies based in Roswell, Ga., and First Live Casino, based on St. Vincent Island in the Caribbean.

Despite the fact that HGN's patent sounds broad, Molnick said it is narrowly construed so as not to apply to existing activities like casino-based race and sports books or pari-mutuel wagering. Key to the patent is an individual's ability to conduct all wagering activity electronically, including placing and receiving bets.

"We didn't patent anything that's already existing," said Molnick.

The patent is a method patent, meaning it covers any technology used to let individuals wager remotely on live sporting events or casino games. The patent does not apply to virtual gambling, where a gambler wagers on a computer-generated game over the Internet or via a dial-up network.

HGN has not yet licensed companies under its patent, Molnick said. The company is in discussions with several land-based casinos and race tracks in the United States, she said.

HGN will only license regulated gaming companies, said Molnick. HGN has had discussions with Nevada gaming regulators about remote wagering, and stresses that any licensed companies will have to get separate permission from regulators to conduct remote electronic wagering.