Toronto – CryptoLogic Inc., a leading software supplier to the Internet gaming and e-commerce industries, is pleased to announce that an amicable settlement has been reached in respect of a civil action filed by the New Jersey Divisions of Gaming Enforcement and Consumer Affairs on October 16, 2001. The settlement agreement expressly acknowledges that CryptoLogic, WagerLogic, and the Wagerlogic licensees named in the civil action have not violated any law, statute, ordinance, contract, duty or obligation whatsoever.

“As a leading advocate of safe, secure, responsible and regulated online gaming, we are very pleased that this issue has been resolved and is now behind us,” said Jean Noelting, President and CEO of CryptoLogic. “CryptoLogic is committed to compliance with the laws and regulations governing Internet gaming, and continues to invest considerable resources in maintaining a leadership position with respect to regulatory issues worldwide.”

A major point of difference for CryptoLogic, and part of the Company’s global growth strategy, is a focus on having its products certified to the highest standards in the industry – on par with those adhered to by land-based casinos.

“We are one of the only suppliers to undergo the software certification process in the Tier-one jurisdictions of Australia, the Isle of Man and Alderney,” Noelting said. “These efforts have helped us to attract some of the biggest brands in the business, and position us to move forward quickly once the U.K. puts in place its new regulatory framework.”

Further to this focus, the Company is pleased to announce the addition of John Chalmers to its management team as Vice-President, Legal Affairs and Compliance. A highly seasoned lawyer specializing in the area of gaming law, Mr. Chalmers is considered one of Canada’s leading authorities on gambling law, regulation and enforcement.

“Adding an industry veteran of John’s caliber to our team is further evidence of CryptoLogic’s commitment to remaining at the forefront of the industry as jurisdictions around the world move toward a fully-regulated Internet gaming environment,” Noelting said.

A former officer with the Ontario Provincial Police, Mr. Chalmers received his law degree from Queen’s University in Kingston, Ont. Mr. Chalmers has held numerous senior positions throughout his career, including Senior Counsel in the Ministry of the Solicitor General of Ontario, Director of the Entertainment Standards Branch of the Ministry of Consumer and Commercial Relations and Director of Policy and Aboriginal Gaming for the Ontario Casino Project. Mr. Chalmers also co-developed and teaches the only accredited program in Canada on gaming law at Queen’s University Law School.

Mr. Chalmers is a former member of the Board of Directors of the North American Gaming Regulators Association, and a founding member of the Canadian Thaibet Gaming Regulators Association. He is also a member of the International Association of Gaming Attorneys, where he works closely with representatives of major casino corporations throughout North America.

As Vice-President, Legal Affairs & Compliance, Mr. Chalmers will serve as corporate counsel, and spearhead CryptoLogic’s regulatory and compliance initiatives worldwide.

Currently more than 50 jurisdictions worldwide regulate or are in the process of legalizing some form of Internet gaming. CryptoLogic is one of the few companies undergoing testing and certification of its gaming software in multiple Tier-one jurisdictions. As an industry leader, CryptoLogic welcomes the measures taken recently by the U.K. government’s Department of Culture, Media and Sport to overhaul that country’s gambling laws and pave the way for a fully regulated and licensed environment for all forms of Internet gaming.

“The proposal by the U.K. government to create a well-defined regulatory framework benefits everyone involved in Internet gaming, from the player on down the line,” said Noelting. “CryptoLogic has always taken the position that strict regulation will protect consumers and enable the industry to reach its full potential. Greater acceptance of online gaming in Europe has led CryptoLogic to focus its growth initiatives in this region, particularly the U.K., in the near term. This announcement endorses the Company’s direction, and sends out a clear signal to other jurisdictions around the globe.”

The proposals put forth, if implemented, would allow British-based operators to locate gaming servers in the U.K., and offer all types of online gaming over all manner of media, including the Internet and interactive television. In its Report entitled A Safe Bet For Success – Modernizing Britain’s Gambling Laws, the Department for Culture, Media and Sport has placed a premium on consumer protection. Specific areas of focus include strict probity checks and certification of operators, software testing, player identification, the identification of government licensed sites, problem gambling and the prohibition of gambling by minors.

“This landmark move heralds the emergence of the U.K. as a world leader in the regulation and legislation of online gaming,” said Noelting. “This and other progressive initiatives, such as the recent decision by the Senate and General Assembly of New Jersey to establish an Internet Gaming Study Commission, are very positive steps toward a fully-regulated future for our industry.”