July 19, 2013
Dear shareholders and friends of Galaxy Gaming, Inc. (GLXZ):
I am writing to you today to provide new information following the events of last week.
While there are many different ways to communicate, I believe open letters to shareholders are an essential and effective way for me and our company to make certain that everyone associated with GLXZ understands the truth, the facts, and the direction we will travel together in the future.
For me, this letter is especially important. I am grateful for the opportunity to ask for your consideration, to keep your trust and to sustain your support.
Action by the California Gambling Control Commission
During a closed deliberation held last week, the California Commission accepted a proposed decision previously submitted by an Administrative Law Judge and set the stage for further consideration. The proceedings did not directly involve GLXZ but rather a predecessor entity that ceased business operations in 2009 and dissolved.
At GLXZ, it is business as usual and we continue to provide our products and services without any interruption. Our status as a licensee with California tribes is unchanged and in good standing. Likewise, our status in all other jurisdictions we serve is also unchanged and remains in good standing. In fact, we continue to seek and acquire new licenses and approvals in additional jurisdictions in support of our expansion plans.
I have personally been very involved in this ongoing process in California, which has now lasted more than a decade. My personal credibility is being questioned. And so I must respond.
Last week’s closed session was not a regulatory hearing. I have not yet had the procedural ability to appear before the Commission, to directly contact the Commission, or to submit evidence in support of my suitability to the Commission. I expect to now have ample opportunity and a very appropriate forum to do this, and I am totally confident that once the Commission examines my complete career, reputation and character, they will conclude that prior reports were inaccurate and unjustified.
Not for the first time, however, media reports neither fully explained nor even clearly summarized the California proceedings. Although we are keenly aware that sensationalism sells, much of this journalism is removed from reality and lacks an obligation to the truth. In contrast, as the CEO of a publicly traded gaming company, it is my absolute responsibility to report accurate, factual events. The news media is not continuously monitored by various watchdog regulatory agencies such as the SEC, FINRA and hundreds of gaming regulators. We are.
That is why I am compelled to correct some of the truly egregious misstatements and mischaracterizations that have recently appeared in the press:
- The Administrative Law Judge did not deem GLXZ to be unsuitable.
- The Commission did not find GLXZ to be unsuitable.
- The Commission did not rule against GLXZ.
- No “Board” told us to “stay out of California.”
- We are operating in California right now – the same as last week, the week before, and years before that.
- Galaxy Gaming of California, LLC is not a subsidiary of GLXZ.
In addition to the inaccurate reporting pertaining to the California matter, the media erroneously reported other falsehoods. For the record:
- GLXZ did not develop the TableMAX product.
- The Saucier Business Trust did not have “less than $50,000 in assets against nearly $2 million in debts,” as was reported. It actually had less that $50,000 in debts against nearly $2 million in assets. The media also carelessly failed to understand the complex technical nature of the bankruptcy filing, which was used solely to prevent an unwarranted foreclosure connected with a fully performing loan.
- The Saucier Business Trust never transacted business with, and does not owe $1.8 million to, the Bank of America. Indeed, the Trust owes Bank of America nothing.
A Personal Point
Most of all, I welcome the occasion to answer several of the specific statements that were irresponsibly reported about me in the media – an essential step for me to uphold the personal reputation and standing I have worked 40 years to develop and maintain.
The truth is that I was never offered any opportunity to address these allegations with the news media before they appeared in public. While I can accept fair criticism and the differences of opinion that result in business life, the attacks on my character crossed the line. One reporter wrote about me:
“He also allegedly inked licensing deals with several California Indian tribal casinos — collecting as much as $2,000 a month from each in licensing fees — without state approval.”
By including the word “allegedly,” irresponsible reporting can advance almost anything, no matter how divergent from the facts the allegation is.
Let me be absolutely clear on this: No person or entity associated with any Galaxy Gaming company, now or in the past, has ever operated in California without the requisite state and tribal approvals. Period. I challenge anyone to claim differently.
Pertaining to other allegations inaccurately reported about me, I want to set the record straight:
- I do not have a criminal record. The only blemish on my lifetime record is a few traffic citations, the most serious and recent of which (reckless driving), occurred more than a decade ago.
- I did not intentionally fail to disclose any of my business dealings, including any business interests, associated businesses or valid gaming licenses in other jurisdictions.
- I did not lie about my college education.
- I did not “sue myself.”
- I never failed to report that I previously paid child support. Indeed, I am proud of my perfect history of fiscal support for my lovely daughter, who is now attending college full-time in California.
I make you this promise: If anyone has any concerns about my background or any questions about any issue here, I hope you will call or meet with me in person. Your confidence in me is worthy of such a discussion and I will make myself available anytime. This invitation extends to the news media, provided you agree to report only factual and truthful information from that discussion.
BYI Acquisition of SHFL
By now, you have probably heard the industry news concerning Bally’s acquisition of SHFL Entertainment. Since the announcement, I have received numerous inquiries about the significance of this event on GLXZ and our activities. Let me share some of our initial observations.
This transaction did not come as a surprise, since the lines between table game and other casino gaming products are becoming increasingly blurred. Bally’s desire to enter the table game space, however, only underscores the increasing importance of table games in providing a complete product line to the gaming customer. Clearly, Bally’s competitors have taken notice and they must determine their strategic approach pertaining to entering the table game space. This positions GLXZ to move into the spotlight as the leading independent company focused on the ever-expanding table game segment. While we continue to assess the impact the Bally / SHFL transaction will have on GLXZ, at this juncture we can find no negatives and we foresee only significant positives as a result of this transaction.
I want to recognize SHFL’s accomplishments and congratulate their employees for an incredible run. Started more than 25 years ago by a truck driver with a vision, and guided by some early industry pioneers, (four of whom are now with GLXZ), the company matured to reach a $1.3 billion market valuation. Bally has made a good investment and we welcome them to the table game marketplace.
Focus On The Future
So, now it is our turn. The future is bright for GLXZ and we continue to advance our ambitious growth agenda by developing innovative products and new technologies.
I just returned from a successful trade show and exposition: The Northwest Indian Gaming Conference and Expo held this week at the Tulalip Casino Resort, just north of Seattle. We displayed some of our latest products and technologies, which were enthusiastically received by the tribal casino operators in attendance. Our presence in the Pacific Northwest remains strong and is expected to continually increase. This is just one corner of our total distribution network, but one with a very bright future for us.
Like the Pacific Northwest, we believe there are great opportunities for us in the Golden State and we look forward to increasing our presence there as well. We are actively addressing the administrative issue in California and will appropriately respond to every requirement the respective regulators have of us.
Finally, for me, this is a time to reflect on the things that matter most and to devote all of my energy to ensuring that this great company and its outstanding team of people achieve the full measure of success that is the future of Galaxy Gaming.
Thank you for your support.
Robert B. Saucier
Founder and CEO