The parties agreed to a settlement of the suit, along with three related lawsuits, pursuant to which the Company paid $1 million in November 1998. The related charge is reflected as loss from shareholder suit in the consolidated statement of operations. The entire settlement fund was $5 million in cash.

The original complaint, which was filed in December 1996 in the United States District Court, District of Nevada, by Gary A. Edwards against the Company and certain present and former Company executives, alleges that the market price of the Company's common stock was artificially inflated during the class period due to misrepresentations and omissions in press releases and other statements made by Company's executives to the investing public. Three additional purported shareholder class actions were filed in 1997 in connection with the same drop in stock price following the December 16, 1996 press release. The Company won a motion to dismiss the First Amended Complaint filed by Edwards. The court, however, granted Edwards leave to amend his Complaint. On July 13, 1998, Edwards filed a Second Amended Complaint. Pending settlement, the parties stipulated to stay the Company's response to this complaint. On May 29, 1997, SCHWARTZ V. CASINO DATA SYSTEMS, was filed in the United States District Court for the District of Nevada, alleging violations of Sections 10(b) and 20(a) of the 1934 ACT and SEC Rule 10b-5 and seeking economic recovery on behalf of the same alleged class of investors. On December 16, 1997, GRANT V. CASINO DATA SYSTEMS, was filed in the District Court of the State of Nevada alleging common law fraud and seeking economic recovery on behalf of the same alleged class of investors. On December 9, 1997, GIOVANNONI V. CASINO DATA SYSTEMS, was filed in the Superior Court of the State of California in San Francisco alleging violation of California Corporations Code Sections 25400 and 25500 and California Business and Professions Code Sections 17200 and 17500.