UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. 1)

SPECIAL MEETING OF STOCKHOLDERS—YOUR VOTE IS IMPORTANT

[                    ], 2009

Dear Fellow Stockholder:

You are cordially invited to attend the Special Meeting of Stockholders of WPT Enterprises, Inc. (“the Company”) which will be held at the Renaissance Hollywood Hotel, 1755 North Highland Avenue, Hollywood, California 90028 at 10:00 a.m. on [                   ], 2009.

The Company entered into an asset purchase agreement with Peerless Media Ltd. dated as of August 24, 2009 pursuant to which the Company has agreed to sell to Peerless Media substantially all of the Company’s operating assets, other than cash, investments and certain other assets and Peerless Media has agreed to assume specified Company liabilities. Peerless Media has agreed to pay the Company $12.3 million for the purchased assets and assumed liabilities less the amount of certain obligations of an affiliate of PartyGaming accruing or paid to the Company from July 10, 2009 through the close of the asset sale, as more fully described in Section 2.6 of the asset purchase agreement. In addition, Peerless Media will pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity. A copy of the asset purchase agreement is attached as Annex A to the accompanying proxy statement and you are encouraged to read it in its entirety. ElectraWorks Ltd. has guaranteed all of Peerless Media’s obligations under the asset purchase agreement. Peerless Media and ElectraWorks are owned by PartyGaming Plc. The purchase price will be reduced by the amount of certain obligations of an affiliate of PartyGaming Plc accruing or paid to the Company from July 10, 2009 through the close of the asset sale.

At the Special Meeting, you will be asked to approve the sale of assets pursuant to the asset purchase agreement. After careful consideration, our Board has unanimously approved the asset purchase agreement and determined that the asset sale and the asset purchase agreement are in the best interests of the Company and its stockholders. Our Board unanimously recommends that you vote “FOR” the approval of the asset sale. The proxy statement attached to this letter provides you with information about the asset sale and the Special Meeting. I encourage you to read the entire proxy statement carefully. You may also obtain additional information about the Company from documents filed with the Securities and Exchange Commission.

Your vote is very important. The asset sale cannot be completed unless the asset sale is approved by the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote. If you fail to vote on the asset sale, the effect will be the same as a vote against the approval of the asset sale.

Please complete, sign and date the enclosed proxy card and return it in the envelope provided as soon as possible or submit a proxy through the Internet or by telephone as described on the enclosed proxy card. This action will not limit your right to vote in person if you wish to attend the Special Meeting and vote in person.

Sincerely,

Steven Lipscomb

Founder, Chief Executive Officer and President

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the asset sale, passed upon the merits or fairness of the asset sale or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offence.

This proxy statement is dated [                    ], 2009 and is first being mailed to stockholders on or about [                    ], 2009.

WPT Enterprises, Inc.

5700 Wilshire Boulevard, Suite 350

Los Angeles, California 90036

Notice of Special Meeting of Stockholders to be Held on [                    ], 2009

To the Stockholders:

A Special Meeting of stockholders of WPT Enterprises, Inc., a Delaware corporation, will be held at the Renaissance Hollywood Hotel, 1755 North Highland Avenue, Hollywood, California 90028 at 10:00 a.m. on [                    ], 2009, for the following purposes:

1.                To approve the sale of substantially all of the Company’s operating assets other than cash, investments and certain other assets, pursuant to the asset purchase agreement, dated as of August 24, 2009, by and between Peerless Media Ltd. and the Company, a copy of which is attached as Annex A to the accompanying proxy statement.

2.                To approve an amendment to the Company’s Certificate of Incorporation to change the Company’s name to [                      ] upon the close of the asset sale .

3.                To consider and vote upon an adjournment of the Special Meeting, if necessary for a period of not more than 30 days, to solicit additional proxies if there are not sufficient votes at the time of the Special Meeting to approve the asset sale.

Stockholders will also consider and act on any other matters as may properly come before the Special Meeting or any adjournment or postponement thereof, including any procedural matters incident to the conduct of the Special Meeting.

The Board of Directors of the Company has fixed [                    ], 2009 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting and any adjournment or postponement thereof. Only holders of record of shares of the Company’s common stock at the close of business on the record date are entitled to notice of, and to vote at, the Special Meeting. At the close of business on the record date, the Company had [                    ] shares of common stock outstanding and entitled to vote.

The Company’s Board of Directors unanimously recommends that you vote “FOR” the three proposals. Your vote is important, regardless of the number of shares of our common stock you own. The approval of the asset sale requires the approval of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon. The approval of the proposals to change our name to [                  ] upon closing of the asset sale and to adjourn the Special Meeting, if necessary for up to 30 days, to solicit additional proxies requires the affirmative vote of a majority of the shares present and entitled to vote.

Even if you plan to attend the Special Meeting in person, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares will be represented at the Special Meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote in favor of the approval of the asset sale. If you do attend the Special Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

By order of the Board of Directors

Adam Pliska

General Counsel and Secretary

YOUR VOTE IS IMPORTANT.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED OR SUBMIT A PROXY THROUGH THE INTERNET OR BY TELEPHONE AS DESCRIBED IN THE ENCLOSED PROXY CARD. GIVING YOUR PROXY NOW WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

TABLE OF CONTENTS

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TABLE OF CONTENTS (CONTINUED)

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QUESTIONS AND ANSWERS ABOUT

THE SPECIAL MEETING AND THE ASSET SALE

The following section provides answers to frequently asked questions about the Special Meeting and the asset sale. This section, however, only provides summary information. For a more complete response to these questions and for additional information, please refer to “The Asset Sale”.

Q:                                   What proposals will be voted on at the Company’s Special Meeting?

A:                                    The following proposals will be voted on at the Special Meeting:

1.                The first proposal to be voted on is whether to approve the sale of substantially all of the Company’s operating assets other than cash, investments and certain other assets to Peerless Media Ltd. (“Buyer”) pursuant to the terms of the asset purchase agreement, dated as of August 24, 2009, which is referred to in this proxy statement as the asset purchase agreement, attached as Annex A . The assets the Company proposes to sell to Buyer consists of the Company’s television library, including all related intellectual property rights, brand names, trade names, certain assumed contracts and tangible personal property. See “The Asset Sale” for a more detailed description of the transaction with Buyer.

2.                The second proposal to be voted upon is whether to approve an amendment to the Company’s Certificate of Incorporation to change the Company’s name to [                  ] upon the close of the asset sale .

3.                The third proposal to be voted on is whether to adjourn the meeting, if necessary for a period of not more than 30 days, to solicit additional proxies if there are not sufficient votes in favor of the first proposal.

Q:                                   What is the Company’s Board of Directors’ recommendation with respect to the asset sale proposal?

A:                                    After careful consideration, the Board of Directors has unanimously approved the asset sale and the asset purchase agreement and has determined that it is advisable, fair to and in the best interests of the Company’s stockholders. Accordingly, the Board unanimously recommends that stockholders vote FOR the asset sale proposal.

Q:                                   Why does the Company’s Board of Directors believe the asset sale is in the best interests of the Company’s stockholders?

A:                                    The Company’s Board conducted a process to consider strategic alternatives, the risks and challenges facing the Company in the future as compared to the opportunities available to the Company in the future, as well as the availability of strategic alternatives, and concluded that the asset sale was the best alternative for seeking to maximize value to stockholders. See “The Asset Sale—Reasons for the Asset Sale; Recommendation of the Company’s Board of Directors” for more information.

Q:                                   What factors were considered by the Company’s management and Board of Directors in deciding to sell substantially all of the Company’s assets?

A:                                    The Company’s management and Board considered a number of factors before deciding to enter into the asset purchase agreement, including, but not limited to, the price to be paid including the future participation in the revenues earned by Buyer, the strategic alternative evaluation process that led to entering into the asset purchase agreement, the World Poker Tour’s business prospects and the terms and conditions of the asset purchase agreement. The Board also considered, and balanced against the potential benefits of the asset sale, certain adverse factors. See “The Asset Sale—Reasons for the Asset Sale; Recommendation of the Company’s Board of Directors” for more information.

Q:                                   What is the asset sale?

A:                                    Buyer and the Company have entered into the asset purchase agreement, which contains the terms and conditions of the proposed sale of substantially all of the Company’s operating assets other than cash, investments and certain other assets to Buyer. Under the asset purchase agreement, the Company will sell to Buyer the Company’s television library, including all related intellectual property rights, brand names, trade names, certain assumed contracts and tangible personal property. Buyer will assume from the Company specified liabilities including one of the two corporate leases. In addition to a cash payment on

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the close of the asset purchase agreement, Buyer will also pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity. The proposed sale of assets and assumption of liabilities is referred to in this proxy statement as the asset sale.

Q:                                   What assets and liabilities are being retained?

A:                                    The Company is retaining its cash and cash equivalents, investments in debt securities and put rights, certain other investment and litigation rights, and future foreign sponsorship revenues from the license of Season Seven of the World Poker Tour to PokerStars. We are also retaining the lease liability on one of our two corporate facilities and all employee obligations. Liabilities related to business activities conducted prior to the close of the asset sale will also be retained.

Q:                                   Will Company stockholders receive any distributions from the asset sale?

A:                                    The Company does not currently intend to distribute any of the proceeds from the asset sale or the asset purchase agreement to the Company’s stockholders.

Q:                                   Who is the purchaser?

A:                                    The purchaser of the Company’s assets is Peerless Media Ltd. Buyer is a Gibraltar private limited company that is owned by ElectraWorks Ltd. (“Parent”). Parent is also a Gibraltar private limited company and Parent is owned by PartyGaming Plc (“PartyGaming”). Parent is guaranteeing all of Buyer’s obligations under the asset purchase agreement. A copy of the guaranty agreement is attached as Annex B to this proxy statement.

PartyGaming is a publicly traded company on the London Stock Exchange. PartyGaming is the world’s leading listed online gaming business. Regulated and licensed by the Government of Gibraltar, PartyGaming has over 1,200 employees located in the head office and operations centre in Gibraltar, a business process outsourcing operation in India, and a marketing services subsidiary and multi-lingual customer service operations in Europe. PartyGaming has customers throughout the world. PartyGaming does not accept wagers or deposits for real money games from customers located in the U.S.

Q:                                   Who is Parent?

A:                                    Parent is a Gibraltar private limited company that is the principal operating subsidiary in the PartyGaming Plc group of companies.

Q:                                   What is the purchase price for the Company’s assets?

A:                                    Buyer has agreed to pay the Company $12.3 million less the amount of certain obligations of an affiliate of PartyGaming accruing or paid to the Company from July 10, 2009 through the close of the asset sale, as more fully described in Section 2.6 of the asset purchase agreement. Buyer will also assume specified Company liabilities including one of our two corporate leases.

Buyer has also agreed to pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity. Buyer has agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period.

Q:                                   What will happen if the Company’s stockholders approve the asset sale?

A:                                    If the Company’s stockholders approve the asset sale set forth in the asset purchase agreement, the Company will consummate the sale of assets subject to satisfaction or waiver of the closing conditions set forth in the asset purchase agreement. The Company anticipates that the asset sale will close promptly following the Special Meeting.

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Q:                                   What will happen to the Company after the asset sale?

A:                                    The Company’s Board has considered a number of alternatives with respect to the use of the Company’s assets following the completion of the asset sale. The Company will retain its cash and investments and the other assets and liabilities that are not part of the asset sale. The Company intends to use its cash and investments to acquire or develop another business. The Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction. The Company does not plan to limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses.

The Company does not intend to go private or terminate its Securities Exchange Act of 1934 (“Exchange Act”) reporting obligations. However, the Company may use cash to repurchase blocks of common stock at negotiated prices in private transactions. At this time, the Company does not intend to make any such repurchase of common stock. In addition, if the Company were to affect a reverse split of its common stock, then cash could also be used to repurchase fractional shares.

In connection with the proposed asset sale between the Company and Buyer, the name of the Company will be changed to [              ] and the Company plans to change its trading symbol to “[          ].”

Q:                                   What will happen if the asset sale to Buyer is not approved or the asset sale is not completed for other reasons?

A:                                    If the asset sale to Buyer is not approved or if the Company does not complete the asset sale for other reasons, the Company will continue to execute its current business strategy. If the asset purchase agreement is otherwise terminated in certain circumstances, the Company would be obligated to pay Buyer a $1 million termination fee and/or to reimburse Buyer for the $1 million initial payment of the purchase price.

Q:                                   What are the conditions to closing the asset sale?

A:                                    The Company and Buyer must meet certain conditions or waive them prior to the close of the asset sale. The Company’s stockholders must approve the asset sale. The Company must also reaffirm the representations and warranties that are contained in the asset purchase agreement, no proceeding or litigation may have been initiated to prevent the closing of the asset sale and other customary conditions must be met. Buyer must also reaffirm the representations and warranties that are contained in the asset purchase agreement, there can be no material adverse change in the Company’s financial condition, assets, business or results of operations, and other customary conditions must be met.

Q:                                   What are the material U.S. federal income tax consequences of the asset sale?

A:                                    The Company will recognize a taxable gain on the asset sale equal to the difference between the amount realized from the asset sale and the adjusted tax basis of the assets sold and liabilities assumed. The Company expects to have sufficient federal net operating losses to offset the gain expected to be realized from the asset sale for regular federal income tax purposes. The Company will pay federal alternative minimum tax on the gain on asset sale. The Company will not be able to use California net operating losses to offset the gain from the asset sale because California suspended the use of net operating losses in 2009. The Company expects to pay California regular income tax on the gain on asset sale.

The Company does not expect that the asset sale will result in any federal or state income tax consequences for its stockholders since they will not receive any of the proceeds from the asset sale.

Q:                                   Do the Company’s stockholders have any appraisal rights in connection with the asset sale?

A:                                    No. The Company’s stockholders do not have appraisal rights in connection with the asset sale.

Q:                                   What happened to the asset purchase agreement with Gamynia Limited?

A:                                    The Company entered into an asset purchase agreement with Gamynia Limited (“Gamynia”) on July 28, 2009. Subsequently, Peerless Media submitted an alternative acquisition proposal to the Company’s Board of Directors. The Company’s Board concluded that the alternative acquisition proposal with Peerless Media was financially superior to the Gamynia asset purchase agreement and, on August 21, 2009, the Company terminated the Gamynia asset purchase agreement. A $1 million Gamynia asset purchase agreement termination fee was paid to Gamynia.

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Q:                                   What vote is required to approve the asset sale?

A:                                    The proposal to approve the asset sale to Buyer requires the affirmative vote of holders of a majority of the Company’s outstanding shares in order to be approved by stockholders. An abstention or “broker non-vote” will have the effect of a vote against the proposal to approve the asset sale. Buyer and certain of the Company’s directors, executive officers and their affiliates entered into stockholder voting agreements to vote their shares of Company common stock in favor of approval of the asset sale and against the approval or adoption of any alternative transactions. These directors, executive officers and their affiliates together own or control an aggregate of approximately 39% of the Company’s outstanding common stock. The form of stockholder voting agreement is attached to this proxy statement as Annex C .

Q:                                   What happens if we do not have a quorum or enough affirmative votes at the Special Meeting?

A:                                    If we do not have a quorum at the Special Meeting or if we do not have sufficient affirmative votes in favor of the two proposals, we may seek to adjourn the Special Meeting to a later time to permit further solicitation of proxies if necessary to obtain additional votes in favor of the foregoing items. We may seek to adjourn the Special Meeting without notice, other than by the announcement made at the Special Meeting. Under our Bylaws, we can adjourn the Special Meeting by approval of the holders of a majority of the shares of our common stock present in person or represented by proxy at the Special Meeting and entitled to vote. We are soliciting proxies to vote in favor of the adjournment of the Special Meeting, regardless of whether a quorum is present, if necessary to provide additional time of up to 30 days to solicit votes in favor of approval of the asset sale. If adjourning the Special Meeting does not enable a quorum to be established, the proposals will not pass. Further, if adjourning the Special Meeting does not enable us to attract sufficient affirmative votes in favor of one or more of the proposals, such proposals will not pass.

Q:                                   Why am I receiving this proxy statement?

A:                                    You are receiving this proxy statement because you have been identified as a Company stockholder as of the record date for the Special Meeting, and thus you are entitled to vote at the Special Meeting. This document serves as a proxy statement of the Company, used to solicit proxies for the Company’s Special Meeting of stockholders. This document contains important information about the asset sale and the Special Meeting of stockholders, and you should read it carefully.

Q:                                   Who is soliciting my proxy?

A:                                    This proxy is being solicited by the Company’s Board of Directors.

Q:                                   What do I need to do now?

A:                                    The Company urges you to read this proxy statement carefully, including its annexes, and to consider how the proposed asset sale affects you.

You may provide your proxy instructions in one of three different ways. First, you can mail your signed proxy card in the enclosed return envelope. Alternatively, you can provide your proxy instructions via touch-tone telephone by dialing the toll-free telephone number on your proxy card or voting instruction form. You may also provide your proxy instructions via the Internet by following the instructions on your proxy card or voting instruction form.

Please provide your proxy instructions only once and as soon as possible so that your shares can be voted at the Special Meeting of stockholders.

Q:                                   What happens if I do not return a proxy card or otherwise provide proxy instructions?

A:                                    The failure to return your proxy card or otherwise provide proxy instructions will have the same effect as voting against approval of the asset sale, and your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting.

Q:                                   May I vote in person?

A:                                    If your shares of Company common stock are registered directly in your name with the Company’s transfer agent, you are considered with respect to those shares to be the stockholder of record, and the proxy materials and proxy card are being sent directly to you. If you are a Company stockholder of record, you may attend the Special Meeting of stockholders to be held on [                  ], 2009 and vote your shares in person, rather than signing and returning your proxy.

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If your shares of common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you together with a voting instruction card. As the beneficial owner, you are also invited to attend the Special Meeting. Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Special Meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting.

Q:                                   If my Company shares are held in “street name” by my broker, will my broker vote my shares for me?

A:                                    Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares, following the procedure provided by your broker.

Q:                                   May I change my vote after I have submitted a proxy or provided proxy instructions?

A:                                    Stockholders of record, other than those stockholders who have executed a voting agreement, may change their vote at any time before their proxy is voted at the Special Meeting. Stockholders of record, other than stockholders who have executed a voting agreement, can do this in one of three ways. First, a stockholder of record can send a written notice stating that the stockholder would like to revoke its proxy. Second, a stockholder of record can submit new proxy instructions either on a new proxy card, by telephone or via the Internet. Third, a stockholder of record can attend the Special Meeting and vote in person. Attendance alone will not revoke a proxy. If a stockholder of record has instructed a broker to vote its shares, the stockholder must follow the directions received from its broker to change those instructions.

Q:                                   Who is paying for this proxy solicitation?

A:                                    The Company will pay the cost of soliciting proxies, including the printing, mailing and filing of this proxy statement, the proxy card and any additional information furnished to stockholders. The Company has engaged The Altman Group, a proxy solicitation firm, to solicit proxies from stockholders. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Company common stock for the forwarding of solicitation materials to the beneficial owners of common stock. The Company will reimburse these brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

Q:                                   Who can help answer my questions?

A:                                    If you would like additional copies, without charge, of this proxy statement or if you have questions about the asset sale, including the procedures for voting your shares, you should contact either:

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SUMMARY OF THE ASSET SALE

This summary highlights selected information from this proxy statement and may not contain all of the information that is important to you. To better understand the asset sale and the other proposals being considered at the Special Meeting, you should read this entire proxy statement carefully, including the asset purchase agreement, attached as Annex A, and the other documents to which you are referred herein. See “Where You Can Find More Information” on page 95 of this proxy statement. Page references are included in parentheses to direct you to a more detailed description of the topics presented in this summary.

Information about the Parties

WPT Enterprises, Inc.
5700 Wilshire Blvd., Suite 350
Los Angeles, California 90036
(323) 330-9900

We create internationally branded entertainment and consumer products driven by the development, production and marketing of televised programming based on gaming themes. Our current season of the World Poker Tour, or WPT ®  television series - Season Seven, based on a series of high-stakes poker tournaments, currently airs on Fox Sports Net (“FSN”) in the U.S., and has been licensed for broadcast globally. In January 2008, we launched ClubWPT.com, an innovative subscription-based online poker club targeted to the estimated 60 million poker players in the U.S., which is currently offered in 38 states. Through November 2008, we offered a real-money online gaming website which prohibited wagers from players in the U.S. and other restricted jurisdictions. We also license our brand to companies in the business of poker equipment and instruction, apparel, publishing, electronic and wireless entertainment, DVD/home entertainment, casino games and giftware and are engaged in the sale of corporate sponsorships. Through March 2009, we developed and marketed online and mobile games supporting the WPT China National Traktor Poker Tour TM .

We operate our business through four business segments, WPT Studios, WPT Online, WPT Global Marketing and WPT China, described in greater detail below:

WPT Studios , our multi-media entertainment division, generates revenue through domestic and international television licensing, domestic and international television sponsorship, as well as host fees from casinos and card rooms that host our televised events.

WPT Online includes the online poker club ClubWPT.com that generates revenue from subscriptions, which began operations in January 2008, our international poker and casino real money gaming websites which were terminated in November 2008 and an online merchandise store.

WPT Global Marketing includes branded consumer products, sponsorships and event management. Branded consumer products generate revenue from the licensing of our brand to companies seeking to use the World Poker Tour brand and logo in the retail sales of their consumer products. Sponsorship and event management generates revenue through corporate sponsorship and management of televised and live events.

WPT China produced third-party branding at WPT China National Traktor Poker Tour events, licensed the television broadcast of the WPT China National Traktor Poker Tour and marketed the popular Chinese national card game “Tuo La Ji” or “Traktor Poker”™ in online and mobile games. This segment was shut down in March 2009.

Buyer and Parent are Gibraltar private limited companies and Buyer is a subsidiary of Parent. Parent is the principal operating subsidiary in the PartyGaming Plc group of companies.

PartyGaming is the world’s leading listed online gaming business. PartyGaming offers a variety of games through an integrated Party-branded platform and through a number of secondary brands and alliances with blue

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chip companies. Through a unique operating platform, adults can tune in to a broad range of games, using multiple languages, multiple-currency options and with the tools to ensure they have fun and play within their means.

PartyGaming listed on the London Stock Exchange in June 2005. Regulated and licensed by the Government of Gibraltar, PartyGaming has over 1,200 employees located in the head office and operations centre in Gibraltar, a business process outsourcing operation in India, and a marketing services subsidiary and multi-lingual customer service operations in Europe. PartyGaming has customers throughout the world. PartyGaming does not accept wagers or deposits for real money games from customers located in the U.S.

Summary of the Asset Sale

If the asset sale is completed, the Company will sell to Buyer substantially all of the Company’s operating assets other than cash, investments and certain other assets. Under the asset purchase agreement, the Company will sell to Buyer the Company’s:

·                   television library, including all related intellectual property rights;

·                   brand names;

·                   trade names;

·                   certain assumed contracts; and

·                   tangible personal property.

Buyer will assume from the Company specified liabilities including one of the two corporate leases.

Buyer has agreed to pay the Company for our operating assets:

·                   $12.3 million less the amount of certain obligations of an affiliate of PartyGaming accruing or paid to the Company from July 10, 2009 through the close, as more fully described in Section 2.6 of the asset purchase agreement; and

·                   5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity.

$1 million of the purchase price was delivered by Buyer upon the execution of the asset purchase agreement and the balance shall be delivered at the close of the asset sale. Buyer has agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period.

The Company is not selling its:

·                   cash and cash equivalents;

·                   investments in debt securities and put rights;

·                   certain other investment and litigation rights;

·                   future foreign sponsorship revenues from the license of Season Seven of the World Poker Tour to PokerStars;

·                   lease liability on one of our two corporate facilities; and

·                   all employee obligations.

A copy of the asset purchase agreement is attached as Annex A to this proxy statement and a copy of the guaranty agreement is attached as Annex B to this proxy statement. You are encouraged to read the asset purchase agreement and the guaranty agreement in their entirety because they are the legal documents that govern the asset sale.

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Recommendation of Our Board of Directors (see page 24)

The Company’s Board believes that the sale of substantially all of the Company’s operating assets as described in this proxy statement is advisable, fair to, and in the best interests of the Company and its stockholders and has unanimously approved the asset sale. The Company’s Board unanimously recommends that Company stockholders vote “FOR” Proposal Nos. 1, 2 and 3 to approve the asset sale.

Reasons for the Asset Sale (see page 36)

The Company’s Board considered a number of factors before deciding to enter into the asset purchase agreement, including, but not limited to, the consideration to be received, the strategic alternative evaluation process that led to entering into the asset purchase agreement, the World Poker Tour’s business prospects and the terms and conditions of the asset purchase agreement. The Board also considered, and balanced against the potential benefits of the asset sale, certain adverse factors. See “The Asset Sale—Reasons for the Asset Sale; Recommendation of the Company’s Board of Directors” for more information.

Overview of the Asset Purchase Agreement (see page 40)

Buyer and the Company entered into the asset purchase agreement, dated as of August 24, 2009, pursuant to which the Company will, subject to specified terms and conditions, including approval of the asset sale by the Company’s stockholders at the Special Meeting, sell substantially all of the Company’s operating assets other than cash, investments and certain other assets to Buyer. Buyer will assume from the Company specified liabilities including one of the two corporate leases. Buyer has agreed to pay the Company $12.3 million, less the amount of certain obligations of an affiliate of PartyGaming accruing or paid to the Company from July 10, 2009 through the close of the asset sale, as more fully described in Section 2.6 of the asset purchase agreement. Buyer has also agreed to pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets. Buyer has agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period. Buyer has also assumed affirmative duties to generate such revenues. Parent has guaranteed all of Buyer’s covenants, agreements and other obligations under the asset purchase agreement.

No Solicitation of Conflicting Transaction (see page 42)

In the asset purchase agreement, the Company has agreed not to, and to use reasonable efforts to cause its subsidiaries, directors, officers, employees, affiliates, investment bankers, attorneys, accountants and other advisors or representatives not to, directly or indirectly:

·                   initiate, solicit, or knowingly facilitate or encourage the making, submission or announcement of any inquiries, proposals or offers that constitute or could reasonably be expected to lead to any other acquisition proposal;

·                   approve, endorse or recommend, or publically propose to approve or recommend, any other acquisition proposal;

·                   enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar agreement related to any other acquisition proposal; or

·                   propose to or enter into any agreement related to any other acquisition proposal that requires the Company to abandon, terminate or fail to consummate the asset purchase agreement, or propose to or breach the Company’s obligations under the asset purchase agreement.

The Company also agreed that prior to the Board changing its recommendation to approve the asset purchase agreement, terminating the asset purchase agreement or entering into another asset purchase agreement with another party, the Company would provide Buyer with the opportunity to submit an amended written proposal and would negotiate in good faith to make changes to the terms and conditions of the asset purchase agreement that would result in the Board recommending that Company stockholders approve the amended asset purchase agreement with Buyer.

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Despite this no solicitation of a conflicting transaction provision, the Company may, in response to an unsolicited acquisition proposal that did not result from a breach of the Company’s nonsolicitation obligations under the asset purchase agreement prior to obtaining stockholder approval of the asset sale:

·                   furnish information with respect to the Company to any person making an acquisition proposal that the Company’s Board determines in good faith, after consultation with outside legal counsel, is reasonably likely to lead to a superior proposal, pursuant to a confidentiality and standstill agreement not materially less restrictive than the confidentiality and standstill agreement that the Company entered into with Buyer; and

·                   participate in discussions or negotiations with the person making such an acquisition proposal regarding the acquisition proposal.

However, the asset purchase agreement provides that the Company’s Board may propose to or actually withdraw, modify or qualify its recommendation with respect to stockholder approval of the asset sale or approve or recommend any superior proposal if the Company’s Board determines in good faith, after consultation with outside legal counsel, that failure to do so would be inconsistent with its fiduciary obligations under applicable law. In addition, the Company’s Board may take any action that is required under the Exchange Act and rules and regulations of The Nasdaq Stock Market and any other securities exchange. The Board must publically reaffirm its recommendation to support stockholder approval of the asset purchase agreement within five days of a request by Buyer to do so.

Conditions to the Completion of the Asset Sale (see page 44)

The Company expects to complete the asset sale after all the conditions to the asset sale in the asset purchase agreement are satisfied or waived, including stockholder approval of that asset sale at the Special Meeting. The Company currently expects to complete the asset sale in the fourth quarter of 2009. However, it is possible that factors outside of the Company’s control could require the Company to complete the asset sale at a later time or not to complete it at all.

The obligations of the Company and Buyer to complete the asset sale are subject to the satisfaction or waiver of several conditions set forth in the asset purchase agreement, including the following:

·                   the representations and warranties of each party in the asset purchase agreement are true and correct in all material respects as of the closing date of the asset sale;

·                   the asset sale is approved by the Company stockholders;

·                   no suit, action, claim, proceeding or formal investigation is brought by a governmental entity seeking to prevent the completion of the asset sale and no injunction or other order or statute, rule, regulation or executive order by any government entity prevents the completion of the asset sale;

·                   the bill of sale, assignment and assumption agreement, escrow agreement, license agreement and legal opinion are delivered; and

·                   all required filings with governmental agencies are made and approvals of the asset sale, if any, are obtained.

The obligation of Buyer to complete the asset sale is also subject to the absence of a change that is materially adverse to the Company’s financial condition, assets, business or results of operations compared to the date the asset purchase agreement was signed.

The asset purchase agreement provides that any or all of the conditions described above may be waived. The Company does not currently expect to waive any material condition to the completion of the asset sale.

Termination of the Asset Purchase Agreement (see page 46)

The asset purchase agreement can be terminated under specified circumstances, which would prevent the asset sale from being closed. If the close of the asset sale does not occur by February 24, 2010, if the Company’s stockholders do not approve the asset sale or if a governmental entity prohibits the asset sale, then either party can terminate the asset purchase agreement. The Company may terminate the asset purchase agreement if federal legislation is passed that would result in the legalization of online gaming in the U.S. before the asset purchase

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agreement is closed. In addition, there are other circumstances where either the Company or Buyer can terminate the asset purchase agreement.

Termination Fee (see page 47)

If the asset purchase agreement is terminated under certain circumstances, the Company will be required to pay Buyer a $1 million termination fee.

Reimbursement of Initial Payment (see page 47)

If the asset purchase agreement is terminated under certain circumstances, the Company will be required to reimburse Buyer $1 million for the initial payment of the purchase price that was delivered by Buyer upon the execution of the asset purchase agreement.

Indemnification (see page 50)

The Company and Buyer have agreed to indemnify and hold each other harmless for damages and lost profits as a result of misrepresentation or breach of any representation or warranty or the failure to fulfill and observe any covenant or agreement contained in the asset purchase agreement. The representations and warranties extend for various periods depending on the nature of the claim. An escrow account will be established and Buyer will pay 20% of the future revenues due to the Company into the escrow account for two years to secure the Company’s indemnification obligations to Buyer. Damages must exceed $150,000 before the Company is required to pay the claims and the aggregate damages may not exceed $9 million. Any controversy, dispute or claim regarding the asset purchase agreement, including a claim about misrepresentation or breach of any representation or warranty is to be settled by arbitration.

Material U.S. Federal Income Tax Consequences of the Asset Sale (see page 39)

The Company will recognize a taxable gain on the asset sale equal to the difference between the amount realized from the asset sale and the adjusted tax basis of the assets sold and liabilities assumed. The Company expects to have sufficient federal net operating losses to offset the gain expected to be realized from the asset sale for regular federal income tax purposes. The Company will pay federal alternative minimum tax on the gain on asset sale. The Company will not be able to use California net operating losses to offset the gain from the asset sale because California suspended the use of net operating losses in 2009. The Company expects to pay California regular income tax on the gain on asset sale.

The Company does not expect that the asset sale will result in any federal or state income tax consequences for its stockholders since they will not receive any of the proceeds from the asset sale.

Required Approvals (see page 39)

Corporate approval of the asset sale requires the affirmative vote of the holders of a majority of the Company’s outstanding common stock in favor of the asset sale. Not voting, or abstaining on the vote, has the same effect as a vote against the asset sale.

In connection with the execution of the asset purchase agreement, Buyer and certain directors, executive officers and their affiliates entered into stockholder voting agreements to vote their shares of Company common stock in favor of approval of the asset sale and against the approval or adoption of any alternative transactions. These directors, executive officers and their affiliates also granted to Buyer a proxy to vote their shares of Company common stock in favor of approval of the asset sale and agreed not to transfer its shares of Company common stock prior to the expiration of the stockholder voting agreements. These directors, executive officers and their affiliates together own or control an aggregate of approximately 39% of the Company’s outstanding common stock. The form of stockholder voting agreement is attached to this proxy statement as Annex C .

The asset sale is subject to the absence of any action commenced before any governmental authority challenging the transaction. No filings are required to be made under the Hart-Scott-Rodino Act in connection with the asset sale.

Anticipated Accounting Treatment (see page 39)

For financial reporting purposes, the Company will report a gain from the asset sale based on the amount of the net proceeds received by the Company and the net book value of the assets sold. If the asset sale had closed on June 28, 2009 and had the Company received a $9.8 million payment at closing (this assumes that the

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$12.3 million purchase price is reduced by $1.5 million in sponsorship revenue earned by the Company from PartyGaming for the period from July 10, 2009 until the close of the asset sale and accounts for the $1.0 million asset purchase agreement termination fee that was paid to Gamynia), the gain on the asset sale, net of income taxes, would have been approximately $6.2 million.

Appraisal Rights (see page 39)

Holders of the Company common stock are not entitled to appraisal rights in connection with the asset sale.

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RISK FACTORS

In addition to the other information included in this proxy statement, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Information” beginning on page 23, you should carefully consider each of the risks described below before deciding whether to vote for approval of the asset sale. You should also read and consider the other information in this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 95.

Risks Related to the Asset Sale

If the Company fails to complete the asset sale, it may not be able to successfully complete another strategic transaction.

The consummation of the proposed asset sale with Buyer is subject to a number of closing conditions, including that the Company’s stockholders approve the asset sale. The obligation of Buyer to complete the transaction is also subject to the absence of a change in circumstances that are materially adverse to the Company’s financial condition, assets, business or results of operations. If the closing conditions for the transaction are not satisfied, then the asset purchase agreement can be terminated.

If the Company does not complete the asset sale, it will review all options for continuing operations, including seeking to identify and effect an alternative business combination, sale of assets or another similar strategic transaction or transactions. However, the Company may not be able to consummate such an alternative transaction on favorable terms, if at all, and a third party may not offer to purchase the Company’s assets for a price equal to or greater than the price proposed to be paid by Buyer. If the Company is unable to successfully consummate one or more alternative strategic transactions relating to its business, the Company will continue to execute on its current business plan.

If we fail to complete the Asset Sale, the Company’s business may be harmed.

The Company cannot predict whether it will succeed in obtaining the approval of its stockholders, or that the other conditions to close the asset sale will be satisfied. As a result, the Company cannot guarantee that the asset sale will be completed.

Following the Company’s public announcement of the asset sale, third parties may be unwilling to enter into material agreements with the Company. New and existing customers and business partners may prefer to enter into agreements with the Company’s competitors because such customers and partners perceive that its relationships are likely to be more stable. If the Company fails to complete the asset sale, the failure to maintain existing relationships or enter into new relationships may adversely affect the Company’s business, results of operations and financial condition.

Pending the completion of the asset sale, the Company may not make certain changes in the business and may not be able to enter into a business combination with another party.

Covenants in the asset purchase agreement impede the Company’s ability to enter into specified transactions that are not in the ordinary course of business pending completion of the asset sale. Existing and potential customers and vendors may not enter into sales and purchases transactions until the ownership and management of the business is clarified and employees and other key partners in the business may choose to leave the business due to uncertainties inherent in the asset sale process. Moreover, while the asset purchase agreement is in effect and subject to limited exceptions, the Company is prohibited from soliciting, initiating, encouraging, taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to, or entering into discussions or negotiations with regard to, an acquisition proposal with any third party, subject to specified exceptions. Any such acquisition proposal could be favorable to the Company’s stockholders.

The Company will incur significant expenses in connection with the asset sale and could be required to make significant payments if the asset purchase agreement is terminated under certain conditions.

The Company could be obligated to pay Buyer a $1 million termination fee and/or to reimburse Buyer $1 million for the initial payment of the purchase price if the asset purchase agreement is terminated under certain circumstances. In addition, the Company expects to pay legal fees, accounting fees and proxy costs whether the asset sale closes or not. Any significant expenses or payment obligations incurred by the Company in connection with the asset sale could adversely affect its financial condition and cash position.

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If the asset sale disrupts the operations of the Company’s business and prevents the Company from realizing intended benefits, the business may be harmed.

The asset sale may disrupt the Company’s business and prevent it from realizing intended benefits as a result of a number of obstacles, such as: (i) the loss of key employees, customers or business partners; (ii) the failure to adjust or implement its business strategies; (iii) additional expenditures required to facilitate the asset sale transaction; and (iv) the diversion of management’s attention from the Company’s day-to-day operations.

Risks Related to the Business after the Asset Sale

The Company will become a development stage company with cash and investments, certain international sponsorship agreements and a participation in future WPT and PPT brand revenues, but no operating history on which investors can evaluate its ability to achieve stated business objectives.

After the asset purchase agreement is closed, substantially all of the Company’s operating assets other than cash, investments and certain other assets will be sold to Buyer. We will then become a development stage company with no historic operating results. We will generate revenues from the PokerStars international sponsorship agreements and we will have general and administrative expenses to remain a public company and to search for a new company to develop or acquire. There is no basis on which to evaluate our ability to achieve our business objective of acquiring or developing a new business. The Company does not have any specific merger, asset acquisition, reorganization or other business combination under consideration or contemplation and cannot guarantee that the Company will be able to successfully consummate any such transaction. We have not, nor has anyone on our behalf, had substantive discussions, formal or otherwise, with respect to such a transaction.

Buyer or alternatively Parent may not honor all of their obligations under the asset purchase agreement.

Buyer has made significant representations, warranties and commitments to the Company about various matters including the commitment to pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets. Buyer has agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period. Buyer currently has no operations and Parent has guaranteed all of Buyer’s obligations under the asset purchase agreement. Buyer or alternatively Parent may not honor all of their obligations under the asset purchase agreement.

You will not receive protections afforded stockholders of certain blank check companies.

Until we acquire or develop a business, we may be deemed to be a “blank check” company under U.S. securities laws. Our cash and investments were not, however, obtained through an initial public offering with the intention of being used to acquire or develop a business like other blank check companies. Companies that complete an initial public offering and have less than $5.0 million of net tangible assets are regulated by Securities and Exchange Commission (“SEC”) Rule 419 that is designed to protect stockholders in blank check companies. Accordingly, Company stockholders will not receive the benefits or protections of that rule. Among other things, this means that our common stock is immediately tradable; at least 90% of the initial public offering proceeds are not held in an escrow account; investments are not restricted to deposits under the Federal Deposit Insurance Act, money market funds meeting the requirements of the Investment Company Act of 1940 or investments that are direct obligations of or guaranteed by the U.S.; investors will not have their investment refunded if they disapprove of a proposed acquisition; we are not obligated to spend at lease 80% of the funds held in escrow for an acquisition; and we will have longer than 18 months to complete a business combination.

Large blank check special purpose acquisition companies that complete an initial public offering and have more than $5.0 million of net tangible assets are also not protected by Rule 419. These companies, however, during the initial public offering process usually agree to restrictions in their certificate of incorporation that are similar to restrictions contained in Rule 419. Among other things, large blank check special purpose acquisition companies generally agree to place 85% or more of the initial public offering proceeds in an escrow account; investments are generally restricted to money market funds meeting the requirements of the Investment Company Act of 1940 or short-term U.S. government securities such as treasury bills; investors generally have their investment refunded if they disapprove of a proposed acquisition; they are generally obligated to spend 80% of the funds held in escrow for the acquisition and they generally have 18 to 24 months to complete a business combination. Our cash and investments were not, however, obtained through an initial public offering with the

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intention of being used to acquire or develop a new business like large blank check special purpose acquisition companies and we are not similarly restricted.

If our common stock becomes subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

If at any time we have net tangible assets of $5.0 million or less and our common stock has a market price per share of less than $5.00, transactions in our common stock may be subject to the “penny stock” rules promulgated under the Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

·                   make a special written suitability determination for the purchaser;

·                   receive the purchaser’s written agreement to a transaction prior to sale;

·                   provide the purchaser with risk disclosure documents that identify certain risks associated with investing in “penny stocks” and that describe the market for these “penny stocks,” as well as a purchaser’s legal remedies; and

·                   obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in “penny stock” can be completed.

If our common stock becomes subject to these rules, broker-dealers may find it difficult to effect customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

Until the Company selects a particular industry or target business with which to complete a business combination, you will be unable to ascertain the merits or risks of the industry or business in which we may ultimately operate.

After the close of the asset sale, we intend to develop or acquire a company with principal business operations in an industry that we believe will provide significant opportunities for growth and we are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business or businesses with which we may ultimately enter a business combination. Although we will evaluate the risks inherent in a particular target business, we cannot assure you that all of the significant risks present in that target business will be properly assessed. Even if we properly assess those risks, some of them may be outside of our control or ability to affect.

Resources will be expended in researching potential acquisitions that might not be consummated.

The investigation of target businesses and the negotiation, drafting and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention in addition to costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control.

If an acquired business does not perform up to expectations, our financial condition and results of operations may be negatively impacted.

In order to meet our disclosure and financial reporting obligations under federal securities laws, and in order to develop and seek to execute strategic plans for how we can increase the revenues and/or profitability of a target business, realize operating synergies or capitalize on market opportunities, we must conduct a due diligence investigation of one or more target businesses. Intensive due diligence is time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if we conduct extensive due diligence on a target business with which we combine, we cannot guarantee you that this diligence will surface all material issues or that factors outside of the target business and outside of our control will not later arise. If our diligence fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even

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though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing.

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.

Rule 3a-2 of the Investment Company Act of 1940 allows companies that have a bona fide intent to engage primarily in a business other than that of investing in securities up to a one year period to engage in that other business activity. This exception may only be used once during a three-year period. We plan to seek the exemption under Rule 3a-2 of the Investment Company Act of 1940 to avoid being deemed to be an investment company.

We can invest our investment portfolio in U.S. government securities and other investments that qualify for an exception under Rule 3a-1 of the Investment Company Act of 1940 of the definition of what is an investment security if we believe that we may be deemed to be an investment company. By qualifying under this exception, we do not believe that our anticipated business activities will subject us to the requirements of the Investment Company Act of 1940. One part of our current investment portfolio, however, is a $3,850,000 investment in auction rate securities and related rights to put the securities to the broker holding the securities during the period June 30, 2010 to July 2, 2012 that could be deemed an investment security under the Investment Company Act of 1940. We may not be able to sell the auction rates securities and related put rights near par value until June 30, 2010 and invest the proceeds in investments that qualify for the exception under Rule 3a-1 of the Investment Company Act of 1940.

We may be deemed to be an investment company, as defined under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940, if, prior to the consummation of a business combination, we are viewed as engaging in the business of investing in securities or we own investment securities having a value exceeding 40% of our total assets. If we are deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it difficult for us to complete a business combination, including:

·                   restrictions on the nature of and custodial requirements for holding our investments; and

·                   restrictions on our issuance of securities which may make it difficult for us to complete a business combination.

In addition, we may have imposed upon us burdensome requirements, including:

·                   registration as an investment company;

·                   adoption of a specific form of corporate structure; and

·                   reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

If we become subject to the Investment Company Act of 1940, compliance with these additional regulatory burdens would require additional costs and expenses. There can be no assurance that we are not deemed to be an investment company, as defined under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940 or that we will qualify for the exemptions under Rule 3a-1 or Rule 3a-2 of the Investment Company Act of 1940.

Nasdaq may determine that we are operating as a “public shell” and may decide to subject us to delisting proceedings or additional and more stringent continued listing criteria.

While Nasdaq has no bright-line or qualitative test for determining whether a particular company is a “public shell,” the exchange has expressed the opinion that the securities of companies operating as “public shells” may be subject to market abuses or other violative conduct that is detrimental to the interests of the investing public. Nasdaq has defined a public shell as a company with no or nominal operations and either no or nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets. Nasdaq may perform a facts and circumstances analysis to determine whether they believe that the Company is a “public shell”. Listed companies determined to be public shells by Nasdaq may be subject to delisting proceedings or additional and more stringent continued listing criteria.

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There can be no guarantee that we will quickly identify a potential target business or complete a business combination.

The process to identify potential acquisition targets, to investigate and evaluate the future business prospects thereof and to negotiate an acceptable purchase agreement with one or more target companies can be time consuming and costly. We will incur operating losses, resulting from payroll, rent and other overhead and professional fees, while we are searching for a business to develop or acquire.

We may issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and could cause a change in control of our ownership.

Our Certificate of Incorporation authorizes the issuance of up to 100 million shares of common stock, par value $.001 per share, and 20 million shares of preferred stock, par value $.001 per share. There are approximately 76 million authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding stock options). All of the 20 million shares of preferred stock are available for issuance.

The issuance of additional shares of our common stock or our preferred stock:

·                   may significantly reduce the equity interest of investors;

·                   may subordinate the rights of holders of common stock if we issue preferred stock with rights senior to those afforded to our common stock;

·                   will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards; and

·                   may adversely affect the market price for our common stock.

Similarly, if we issue debt securities, it could result in:

·                   default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;

·                   acceleration of our obligations to repay the indebtedness (even if we make all principal and interest payments when due) if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

·                   our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

·                   our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.

Risks Related to the Current Business

In addition to the other information contained in this proxy statement, you should carefully consider each of the risks described below. Until the close of the proposed asset sale with Buyer, the Company expects to continue to execute its current business strategy. Except as specifically described below, the following discussion of risks related to the Company does not reflect changes to the Company’s business that may occur if it consummates the proposed asset sale with Buyer.

Our broadcast agreement with FSN does not provide for any broadcast fees to be paid to us, which could materially and adversely affect our results of operations.

Over the years, license fees received from U.S. broadcasters have been our most significant source of revenue. Our distribution agreement with FSN to broadcast Season Seven of the WPT television series does not provide for any license fees to be paid to us for the broadcast rights. We generate fees from sponsors by integrating sponsor logos and other advertising materials into our programs and around the broadcast of the shows. The Season Seven sponsors are FullTiltPoker.net in the U.S. and Mexico and PokerStars in Canada, certain European countries, Mexico and South America. We recently sold Season Seven in European countries that are not covered by the PokerStars agreement. In January 2009, we entered into a distribution agreement with FSN to broadcast Season Eight of the WPT television series on terms that are similar to the Season Seven agreement. We do not yet have

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any sponsors for Season Eight. We may be required to pay the cost to produce Season Eight shows for FSN and depending on the amount of sponsor revenues we are able to generate, the lack of license fees in our Season Eight FSN agreement could have a material adverse effect on our financial condition, results of operations and cash flows.

We have had broadcasting agreements with The Travel Channel, Game Show Network (“GSN”) and Fox Sports Net. There is no assurance that FSN will broadcast future seasons of the World Poker Tour, which would materially and adversely affect our results of operations.

In September 2008, we entered into an agreement with FSN to broadcast Season Seven of the WPT television series. In January 2009, FSN agreed to broadcast Season Eight of the WPT television series. If FSN elects to discontinue airing the WPT and we cannot replace our FSN agreement with an agreement with a comparable U.S. broadcaster, it may be difficult for us to obtain sponsorship funds, it will be detrimental to the viability of the WPT brand and, consequently, would have a material adverse effect on our financial condition, results of operations and cash flows.

Our ClubWPT.com business is currently heavily dependent upon television as a primary source for the generation of new subscribers and we need to find a more cost effective marketing tool to generate new subscribers, which if not achieved could materially and adversely affect our results of operations.

We spent $927,000 in the fourth quarter of 2008 and $220,000 in the first quarter of 2009 to produce 13 one-hour ClubWPT.com television shows to build awareness and drive traffic to our online subscription website ClubWPT.com. We were disappointed with the rate at which we converted ClubWPT.com television viewers to paying subscription customers at ClubWPT. In order for the ClubWPT business to become a viable business, we need to identify a more cost efficient marketing tool to generate new subscribers for ClubWPT. The number of paid subscribers at ClubWPT was constant throughout the second quarter of 2009 and increased in July 2009 as a result of a significant promotion by FSN. The number of paid subscribers could decrease in future quarters due to the lack of current spending on marketing for new players.

Our reliance on Centaurus Games, LLC (“Centaurus”) as a third party systems provider is subject to system security risks and business viability risks that could disrupt services provided to ClubWPT.com customers, and any such disruption could reduce our revenue, increase our expenses and harm our reputation.

Experienced computer programmers and hackers may be able to penetrate Centaurus’ network security and misappropriate confidential information, create system disruptions or cause shutdowns. In addition, computer programmers and hackers may be able to develop and deploy viruses, worms and other malicious software programs that attack their products or otherwise exploit security vulnerabilities in their products. As a result, we could lose existing or potential customers. Furthermore, we are Centaurus’ primary source of revenue. If we or other Centaurus customers do not provide sufficient business to them, they will face significant financial pressures. In the fourth quarter of 2008 and the first and second quarters of 2009, Centaurus experienced a cash flow shortfall and we agreed to defer the payment of certain amounts owed by Centaurus to us. It is possible that the deferral of the payment of amounts owed by Centaurus to us will continue throughout 2009. If Centaurus is not able to raise additional funding to finance their business, or if we or other Centaurus customers are not able to generate sufficient business for Centaurus, then Centaurus may not be able to continue to be a viable vendor for us. Our efforts to address these risks could result in business interruptions or delays, or the cessation of service and result in the loss of existing or potential customers that would reduce our revenues, increase our expenses and harm our reputation.

Rules and regulations governing sweepstakes, promotions and giveaways vary by state and country and our compliance with these rules and regulations could restrict or eliminate our ability to generate revenues at ClubWPT.com which could materially and adversely impact the viability of this business.

Changes in laws or regulations in various states or countries over sweepstakes, promotions and giveaways or a negative finding of law regarding the characterization of the type of online activity carried out on ClubWPT.com could result in our inability to obtain subscribers in those jurisdictions, which in turn could significantly impact our ability to generate revenue.

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We may incur additional impairment charges to our auction rate securities portfolio and we are dependent on UBS AG to repurchase these investments from us.

As of June 28, 2009, we had $3,900,000 of principal invested in auction rate securities. The types of ARS investments that we own are backed by student loans, are guaranteed under the Federal Family Education Loan Program and are AAA or Aaa rated. The estimated fair value of our ARS holdings at June 28, 2009 was $3,455,000, which reflects a $445,000 impairment loss.

We entered into an agreement with UBS that requires UBS to buy our ARS at par value during the period June 30, 2010 to July 2, 2012. We have valued that right at $445,000 at June 28, 2009. We have given UBS the right to sell our ARS before that period if they are able to find a buyer that is willing to pay par value for our ARS. UBS has provided a $2,661,000 line of credit to us, secured by the ARS held by them, which we drew down in February 2009. At June 28, 2009, $2,647,000 was outstanding under the line of credit.

UBS’s obligation to repurchase our ARS is not secured by their assets and does not require UBS to obtain any financing to support their performance obligations. UBS has disclaimed any assurance that they will have sufficient financial resources to satisfy their obligations and the obligations are not guaranteed by any other party.

If uncertainties in the capital and credit markets continue, these markets deteriorate further or we experience any ratings downgrades on any ARS investments in our portfolio, we may need to further impair the value of our ARS portfolio, which could negatively affect our financial condition and results of operations. We are also dependant on UBS to repurchase our ARS portfolio at par value and that obligation is subject to performance risk on the part of UBS.

Our success depends on our brands and any future brands we may develop, and if the value of our brands were to diminish, our business would be adversely affected.

Our success depends on our World Poker Tour and Professional Poker Tour brands, which consist of a portfolio of trademarks, service marks and copyrighted materials. Our portfolio includes, but is not limited to, existing and future episodes of the televised programming produced in connection with our existing and future brands and certain elements of these episodes, trade names and other intellectual property rights. In connection with our branding and licensing operations, we entered into agreements with Brandgenuity LLC (“Brandgenuity”) and other licensing agents in international territories to seek licensing opportunities for the WPT brand. While specific contractual provisions require that the licensees brought to us by Brandgenuity maintain the quality of our brand, we cannot be certain that our licensees or their manufacturers and distributors will honor their contractual obligations or that they will not take other actions that will diminish the value of our brand prior to our ability to detect and prevent any such actions.

There is a risk that we may not be able to protect the format of our episodes, our current and future brands and our other proprietary rights.

We are susceptible to others imitating our television show format and other products and infringing on our intellectual property rights. We currently believe that several competitive poker-related television programs use exhibition methods and technology that might infringe on one or more claims of our pending patent applications. We have issued letters to some of the producers of these programs, notifying them that we have intellectual property rights in such technology and that we intend to vigorously enforce such rights in order to protect our proprietary processes. These and other producers of poker-related programming may be well established and may have significantly greater resources than we do. Litigation may be necessary to enforce our intellectual property rights and to determine the validity and scope of our proprietary rights. Any litigation could result in substantial expense, may reduce our profits and may not adequately protect our intellectual property rights upon which we are substantially dependent. In addition, the laws of certain foreign countries do not always protect intellectual property rights to the same extent as the laws of the U.S. Imitation of our television show formats and other products or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our revenues.

Any litigation or claims against us based upon our intellectual property or other third party rights, whether or not successful, could result in substantial costs and harm our reputation. In addition, such litigation or claims could force us to do one or more of the following: to cease exploitation of our television series and related products or portions thereof that violate the potentially infringed third party rights or intellectual property, which would adversely affect our revenue; to negotiate a license from the holder of the intellectual property or other

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right alleged to have been infringed, which license may not be available on reasonable terms, if at all; or to modify our television series and related products or portions thereof to avoid infringing the intellectual property or other rights of a third party, which may be costly and time-consuming or impossible to accomplish.

Early termination of our agreements with member casinos or violation by member casinos of the restrictive covenants contained in these agreements could negatively affect the size of telecast audiences and lead to declines in the performance of our other lines of business.

We entered into written agreements with all of the “member casinos” that host WPT tournament stops. The WPT agreements were originally for a term of five years and, although some member casinos have a bilateral option, most of the agreements provided us with a unilateral option to renew on the same terms for another five years. In September 2004, we exercised our right to renew most of these agreements. However, in each year after its first year of participation, the member casino may elect to withdraw its tournament from the WPT lineup and terminate the agreement by giving us notice by a specified date or, if earlier, a specified length of time before the date of the tournament, which is generally four to six months. While the agreement is in effect and for varying periods of time thereafter, the member casino is prohibited from televising the tournament itself, permitting any third party to televise the tournament or licensing its name, trademarks or likeness to any other party in conjunction with the telecast of a poker tournament. If a significant number of these casinos were to terminate the agreements and/or allow a competing company to telecast their tournaments after their expiration for the restricted time period, this could result in a decline in our future telecast audiences, which in turn would lead to declines in the performance and success of our other lines of business. To date, twelve member casinos that hosted WPT tour stops no longer participate as hosts of WPT events. We replaced each of these venues with other tour stops and do not believe that the change in tour venues has had a significant impact on the quality of the tour or on our business. If one or more member casinos were to breach the exclusivity provisions of their contracts with us by letting a competing company telecast their tournaments within the restricted time period, litigation may be necessary to enforce those rights. Any litigation could result in substantial expense.

Termination or impairment of our relationships with key licensing and strategic partners could adversely affect our revenues and results of operations.

We have developed relationships with key strategic partners in many areas of our business, including poker tournament event sponsorship, merchandise licensing, corporate sponsorship and international distribution. We hope to derive significant income from our licensing arrangements and our agreements with our strategic partners are vital to finding these licensing arrangements. If we were to fail to manage our existing licensing relationships, this failure could have a material adverse effect on our financial condition and results of operations. We would also be materially adversely affected if we were to lose our rights under any of our other key contracts or if the counterparty to any of these contracts were to breach its obligations to us. We rely on a limited number of contracts under which third parties provide us with services vital to our business.

These agreements include:

·                   our agreement with PartyGaming, pursuant to which PartyGaming agreed to pay us fees for sponsoring international broadcasts of our programming in international territories, subject to certain requirements regarding the type and amount of advertising and branding we are able to provide them;

·                   our agreement with Brandgenuity, pursuant to which it negotiates third party consumer product licensing agreements; and

·                   our agreement with Centaurus, pursuant to which they operate and manage our online subscription website, ClubWPT.com.

If our relationship with any of these or certain other third parties were to be interrupted, or the services provided by any of these third parties were to be delayed or deteriorate for any reason without being adequately replaced, our business could be materially adversely affected. If we are forced to find a replacement for any of these strategic partners, this could create disruption in our business and may result in reduced revenues, increased costs or diversion of management’s attention and resources.

In addition, while we have significant control over our licensed products and advertising, we do not have operational and financial control over these third parties, and we have limited influence with respect to the manner

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in which they conduct their businesses. If any of these strategic partners experiences a significant downturn in its business or were otherwise unable to honor its obligations to us, our business could be materially disrupted.

The loss of the services of Steven Lipscomb or other key employees or on-air talent, or our failure to attract key individuals could adversely affect our business.

We are highly dependent on the services of Steven Lipscomb, who is the creator and Executive Producer of the WPT and PPT television series and currently serves as our President and Chief Executive Officer. We do not currently have an employment contract with Mr. Lipscomb and he may elect to decrease the level of his involvement with us or terminate his employment with us altogether.

Our continued success is also dependent upon retention of other key management executives and upon our ability to attract and retain employees and on-air talent to implement our corporate development strategy and our branding and licensing efforts. The loss of some of our senior executives, or an inability to attract or retain other key individuals, could materially adversely affect us. Growth in our business is dependent, to a large degree, on our ability to retain and attract such employees. We seek to compensate and provide incentives to our key executives, as well as other employees, through competitive salaries, stock ownership and bonus plans, but we can make no assurance that these programs will allow us to retain key employees or hire new employees. In addition, our future success may also be affected by the potential need to replace our key on-air talent.

Members of our Board of Directors own a large number of the outstanding shares of our common stock and are able to significantly influence our management and operations.

Three members of our Board own 6,714,492 shares of our common stock, representing approximately 33% of our voting power as of June 28, 2009. As a result, these three individuals have a significant impact on the outcome of all matters requiring stockholder approval, including the future merger, consolidation or sale of all or substantially all of our assets. This concentrated ownership could discourage others from pursuing a potential merger, takeover or other change of control transaction. As a result, the return on investment in our common stock through the market price of our common stock or ultimate sale of our business could be adversely affected.

Our Board of Directors’ ability to issue undesignated preferred stock and the existence of anti-takeover provisions may depress the value of our common stock.

Our authorized capital includes 20 million shares of undesignated preferred stock. Our Board has the power to issue any or all of the shares of preferred stock, including the authority to establish one or more series and to fix the powers, preferences, rights and limitations of such class or series, without seeking stockholder approval, subject to certain limitations on this power under Nasdaq listing requirements. Further, as a Delaware corporation, we are subject to provisions of the Delaware General Corporation Law regarding “business combinations.” We may, in the future, consider adopting additional anti-takeover measures. The authority of our Board to issue undesignated stock and the anti-takeover provisions of Delaware law, as well as any future anti-takeover measures adopted by us, may, in certain circumstances, delay, deter or prevent takeover attempts and other changes in control of our Company that are not approved by our Board. As a result, our stockholders may lose opportunities to dispose of their shares at favorable prices generally available in takeover attempts or that may be available under a merger proposal and the market price, voting and other rights of the holders of common stock may also be affected.

Our quarterly results may fluctuate, causing fluctuation of our stock price that may negatively affect the value of our common stock.

Under our sponsorship agreements for the WPT and PPT, revenues are recognized as each episode is aired. Therefore, our quarterly revenue can fluctuate significantly depending on the number of episodes aired in any one quarter. In addition, the sales of consumer products that utilize our licensed intellectual property vary greatly, due to holiday seasons, school schedules and other outside factors. As a result, our financial results can be expected to fluctuate significantly from quarter to quarter, leading to volatility and a possible adverse effect on the market price of our common stock.

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Risks Related to the Current Industry

Our television programming may be unable to maintain a sufficient audience for a variety of reasons, many of which are beyond our control.

Television production is a speculative business because revenues and income derived from television depend primarily upon the continued acceptance of that programming by the public, which is difficult to predict. Public acceptance of particular programming is dependent upon, among other things, the quality of the programming, the strength of networks on which the programming is telecast, the promotion and scheduling of the programming and the quality and acceptance of competing television programming and other sources of entertainment and information. Popularity of programming can also be negatively impacted by excessive telecasting of the programming beyond viewers’ saturation thresholds.

Our ability to create and sponsor our television programming profitably may be negatively affected by adverse trends that apply to the television production business generally.

Television revenues and income may be affected by a number of factors, many of which are not within our control. These factors include a general decline in television viewers, pricing pressure in the television advertising industry, strength of the stations on which our programming is telecast, general economic conditions, increases in production costs and availability of other forms of entertainment and leisure time activities. All of these factors, as well as others, may quickly change and these changes cannot be predicted with certainty. Our future sponsorship opportunities may also be adversely affected by these changes. Accordingly, if any of these changes were to occur, the revenues we generate from television programming could decline.

A decline in general economic conditions or the popularity of our brand of televised poker tournaments could adversely impact our business.

Because our operations are affected by general economic conditions and consumer tastes, our future success is unpredictable. The demand for entertainment and leisure activities tends to be highly sensitive to consumers’ disposable incomes and thus a decline in general economic conditions could, in turn, have a material adverse effect on our business, operating results and financial condition and the price of our common stock. An economic decline could also adversely affect our corporate sponsorship business, sales of our branded merchandise and other aspects of our business.

The continued popularity of our type of poker entertainment is vital in maintaining the ability to leverage our brand and develop products or services that appeal to our target audiences, which, in turn, is important to our long-term results of operations. Public tastes are unpredictable and subject to change and may be affected by changes in the country’s political and social climate. A change in public opinion could have a material adverse effect on our business, operating results and financial condition and, ultimately, the price of our common stock.

The political or social climate regarding gaming and poker could negatively impact our ability to negotiate future telecast license arrangements and could negatively impact our chances of renewal.

Although the popularity of poker, in particular, and gaming, in general, has continued to grow in the U.S. and abroad, gaming has historically experienced backlash from various constituencies and communities. Currently, the legal operational status of Internet-based casinos and card rooms remains unclear in some countries. The U.S. government has taken steps to curb activities that it believes constitutes unlawful online gaming, through legislation such as the Unlawful Internet Gambling Enforcement Act of 2006 and through arrests of off-shore online gaming operators traveling in the U.S.

Based on the uncertain regulatory environment surrounding the marketing and promotion of Internet-based casinos and card rooms to viewers in the U.S., FSN, the Travel Channel and GSN, which have final edit rights to the shows that they telecast, have indicated that they will not display the “dot net” names or logos of Internet-based casinos and card rooms in their telecasts, although they have expressed a willingness to display names and logos from strictly play-for-free websites and from our member casinos. However, if FSN, the Travel Channel and GSN elect not to allow the display of “dot net” logos on the WPT, we may not be able to attract other Internet-based casino sponsors or retain existing online card rooms sponsoring our tour. Additionally, increased regulatory scrutiny on Internet gambling sites may eliminate these sites as sources of advertising revenue for television networks that exhibit poker-related programming, thereby potentially impacting the value of such programming to these networks.

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The television entertainment market in which we operate is highly competitive and competitors with greater financial resources or marketplace presence may enter our markets to our detriment.

We compete with other poker-related television programming, including ESPN’s coverage of the “World Series of Poker” and its “World Series of Poker” Circuit Events, NBC’s exhibition of the National Heads-Up Poker Championship and Poker After Dark television shows and GSN’s exhibition of the High Stakes Poker, among others. These and other producers of poker-related programming may be well established and may have significantly greater resources than we do. Based on the popularity of these poker-related televised programs, we believe that additional competing televised poker programs may currently be in development or may be developed in the future. Our programming also competes for telecast audiences and advertising revenue with telecasts of mainstream professional and amateur sports, as well as other entertainment and leisure activities. These competing programs and activities, and the brands that they build may decrease the popularity of the WPT or PPT television series and dilute the WPT brand. This would adversely affect our operating results and financial condition and, ultimately, the price of our common stock.

Mixed signals from the United States Justice Department may continue to create an unequal playing field in the U.S. poker market that may adversely affect our ability to monetize our brands.

The United States Department of Justice has publicly expressed its opinion that providing online gaming services (including poker) to U.S. residents violates the Interstate Wire Act of 1961 and perhaps other state and federal statutes. In the last seven years, off-shore companies that provide online poker services have grown a multi-billion dollar market in the U.S. These companies spend tens of millions of dollars a month in the U.S. market to build their brands and the businesses attached to those brands. The largest online businesses that take bets in the U.S. have begun funding their own television shows and land-based poker tours that are directly competitive with Company’s brands. If this trend continues, the extensive resources of these online entities could have an impact on the Company’s future ability to build its brands in the U.S. and other markets.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents to which the Company refers you in this proxy statement, contain forward-looking statements about the Company’s plans, objectives, expectations and intentions. Forward-looking statements include information concerning possible or assumed future results of operations of the Company, the expected completion and timing of the asset sale, the anticipated purchase price to be received by the Company at the close of the asset sale, the participation in gaming and other revenues earned on the future use by Buyer of the purchased assets, other information relating to the asset sale, information relating to the Company’s consideration of strategic alternatives should the asset sale not be completed in a timely manner or at all, and any other statements about management’s future expectations, beliefs, goals, plans or prospects. You can identify these statements by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “forecast,” “potential,” “contemplate,” “could,” “would,” “may,” “will” and “can” or similar words. You should read statements that contain these words carefully. They discuss the Company’s future expectations or state other forward-looking information, and may involve known and unknown risks over which the Company has no control, including, without limitation:

·                   the ability of the Company to complete the proposed asset sale;

·                   the satisfaction of the conditions to consummate the asset sale, including the approval of the asset sale by the Company’s stockholders;

·                   the occurrence of any event, change or other circumstance that could give rise to the termination of the asset purchase agreement;

·                   the outcome of any legal proceeding that may be instituted against the Company or others following the announcement of the asset purchase agreement;

·                   the amount of the costs, fees and expenses related to the asset sale;

·                   indemnification amounts potentially payable by the Company in connection with the asset sale;

·                   the potential value created by the proposed asset sale for the Company’s stockholders;

·                   the Company’s results of operations, financial condition and businesses, and the expected impact of the asset sale on the Company’s financial and operating performance; and

·                   general industry, market and competitive conditions.

These and other risks are described in greater detail in the section entitled “Risk Factors” beginning on page 12 of this proxy statement. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, any forward-looking statements in this proxy statement represent the Company’s views only as of the date of this proxy statement and should not be relied upon as representing the Company’s views as of any subsequent date. The Company anticipates that subsequent events and developments may cause its views to change. However, while the Company may elect to update these forward-looking statements publicly at some point in the future, the Company specifically disclaims any obligation to do so, except as may be required by law, either as a result of new information, future events or otherwise. The Company’s forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, joint ventures or investments it may make. In particular, unless otherwise stated or the context otherwise requires, the Company has prepared this proxy statement as if it were going to remain an independent, standalone company. If the Company consummates the asset sale, the descriptions of its strategy, future operations and financial position, future revenues, projected costs and prospects and the plans and objectives of management in this proxy statement may no longer be applicable.

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THE SPECIAL MEETING

The Company is furnishing this proxy statement to you, as a stockholder of the Company, as part of the solicitation of proxies by the Company’s Board for use at the Special Meeting of stockholders and any adjournments or postponements of the Special Meeting.

Date, Time and Place

The Special Meeting will be held at the Renaissance Hollywood Hotel, 1755 North Highland Avenue, Hollywood, California 90028 at 10:00 a.m. on [               ], 2009. This proxy statement is first being furnished to the Company’s stockholders on or about [                ], 2009.

Purposes of the Special Meeting

The purposes of the Special Meeting are to consider and act upon the following matters:

1.                To approve the sale of substantially all of the Company’s operating assets other than cash, investments and certain other assets pursuant to the asset purchase agreement, dated as of August 24, 2009, by and between Buyer and the Company as described in this proxy statement. A copy of the asset purchase agreement is attached as Annex A to this proxy statement.

2.                To approve an amendment to the Company’s Certificate of Incorporation to change the Company’s name to [                   ] upon the close of the asset sale.

3.                To adjourn the Special Meeting, if necessary for a period of not more than 30 days, to solicit additional proxies if there are not sufficient votes in favor of the proposal to approve the asset sale.

Stockholders will also consider and act on any other matters that may properly come before the Company Special Meeting or any adjournment or postponement thereof.

Recommendation of the Company’s Board of Directors

The Company’s Board believes that the sale of substantially all of the operating assets of the Company other than cash and investments pursuant to the asset purchase agreement as described in this proxy statement is advisable, fair to, and in the best interests of the Company and its stockholders and has unanimously approved the asset sale. The Company’s Board unanimously recommends that Company stockholders vote “FOR” Proposal No. 1 to approve the asset sale. Upon the close of the asset sale, the Company has agreed with Buyer to change the Company’s name and has selected the new name [                   ]. The Company’s Board unanimously recommends that the Company stockholders vote “FOR” Proposal No. 2 to approve an amendment to the Company’s Certificate of Incorporation to change the Company’s name to [               ] upon the close of the asset sale.

The Company’s Board has determined and believes that adjourning the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposal to approve the asset sale is advisable, fair to, and in the best interests of, the Company and its stockholders and has unanimously approved such proposal. The Company’s Board unanimously recommends that stockholders vote “FOR” Proposal No. 3 to adjourn the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the asset sale.

Record Date and Voting Power

Only holders of record of Company common stock at the close of business on the record date, [               ], 2009, are entitled to notice of, and to vote at, the Special Meeting. There were approximately [               ] holders of record of the Company common stock at the close of business on the record date. Because many of such shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders. At the close of business on the record date, [            ] shares of Company common stock were issued and outstanding. Each share of the Company’s common stock entitles the holder thereof to one vote on each matter submitted for stockholder approval. See “Principal Stockholders of the Company” on page 94 of this proxy statement for information regarding persons known to the Company’s management to be the beneficial owners of more than 5% of the outstanding shares of the Company’s common stock.

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Voting and Revocation of Proxies

The proxy accompanying this proxy statement is solicited on behalf of the Company’s Board of Directors for use at the Special Meeting.

If you are a stockholder of record of the Company as of the record date referred to above, you may vote in person at the Special Meeting or vote by proxy over the Internet, by telephone or using the enclosed proxy card. Whether or not you plan to attend the special meeting, the Company urges you to vote by proxy to ensure your vote is counted. You may still attend the Special Meeting if you have already voted by proxy.

If your shares are registered directly in your name, you may vote:

·                   Over the Internet.   Go to the website of the Company’s vote tabulator, Wells Fargo Bank N.A. Shareholder Services, at http://www.eproxy.com/WPTE and follow the instructions you will find there. You must specify how you want your shares voted or your Internet vote cannot be completed and you will receive an error message. Your shares will be voted according to your instructions.

·                   By Telephone.   Call 1-800-560-1965 toll-free from the U.S. or Canada and follow the instructions. You must specify how you want your shares voted and confirm your vote at the end of the call or your telephone vote cannot be completed. Your shares will be voted according to your instructions.

·                   By Mail.   Complete, sign and date the enclosed proxy card and mail it in the enclosed postage-paid envelope to Wells Fargo Bank N.A. Shareholder Services. Your proxy will be voted according to your instructions.

·                   In Person at the Meeting.   If you attend the meeting, you may deliver your completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting.

If your shares are held in “street name” for your account by a bank, broker or other nominee, you may vote:

·                   Over the Internet or By Telephone.   You will receive instructions from your bank, broker or other nominee if you are permitted to vote over the Internet or by telephone.

·                   By Mail.   You will receive instructions from your bank, broker or other nominee explaining how to vote your shares.

·                   In Person at the Meeting.   Contact the bank, broker or other nominee that holds your shares to obtain a proxy card and bring it with you to the meeting. A broker’s proxy is not the form of proxy enclosed with this proxy statement. You will not be able to vote shares you hold in “street name” at the meeting unless you have a proxy from your broker issued in your name giving you the right to vote the shares.

All properly executed proxies that are not revoked will be voted at the Special Meeting and at any adjournments or postponements of the Special Meeting in accordance with the instructions contained in the proxy. If a stockholder executes and returns a proxy and does not specify otherwise, the shares represented by that proxy will be voted “FOR” Proposal No. 1 to approve the asset sale, “FOR” Proposal No. 2 to change the Company’s name to [                   ] and “FOR” Proposal No. 3 to adjourn the Special Meeting, if necessary for a period of not more than 30 days, to solicit additional proxies if there are not sufficient votes in favor of the asset sale proposal in accordance with the recommendation of the Company’s Board.

Any Company stockholder of record voting by proxy, other than those stockholders who have executed a voting agreement, has the right to revoke the proxy at any time before the polls close at the special meeting by sending a written notice stating that it would like to revoke its proxy to the Secretary of the Company, by voting again over the Internet or by telephone, by providing a duly executed proxy card bearing a later date than the proxy being revoked or by attending the Special Meeting and voting in person. Attendance alone at the Special Meeting will not revoke a proxy. A beneficial owner of the Company’s common stock that holds shares in “street name” must follow directions received from the bank, broker or other nominee that holds the shares to change its voting instructions.

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Quorum and Required Vote

The presence, in person or represented by proxy, at the Special Meeting of holders of a majority of the shares of the Company’s common stock outstanding and entitled to vote at the Special Meeting is necessary to constitute a quorum at the meeting. If the Company’s stockholders do not vote by proxy or in person at the Special Meeting, the shares of common stock of such stockholders will not be counted as present for the purpose of determining a quorum. If a quorum is not present at the Special Meeting, the Company expects that the Special Meeting will be adjourned or postponed to solicit additional proxies. Abstentions and broker non-votes will be counted as present for purposes of determining the existence of a quorum. A “broker non-vote” occurs when a broker is not permitted to vote because the broker does not have specific voting instructions from the beneficial owner of the shares.

The affirmative vote of holders of a majority of the outstanding shares of the Company’s common stock as of the record date for the Special Meeting is required to approve Proposal No. 1 relating to the approval of the asset sale. A failure to submit a proxy card or vote at the Company’s Special Meeting, or an abstention, vote withheld or “broker non-vote” for the proposal to approve the asset sale will have the same effect as a vote against the approval of the asset sale. The affirmative vote of the holders of a majority of the Company’s common stock present in person or represented by proxy at the Special Meeting is required to approve the change in the Company’s name to [                      ] and the adjournment of the Special Meeting for a period of not more than 30 days for the purpose of soliciting additional proxies to approve Proposal No. 1 relating to the approval of the asset sale. A failure to submit a proxy card or vote at the Special Meeting, or an abstention, vote withheld or “broker non-vote” will have no effect on the outcome of the proposals to change the Company’s name to [                      ] and to adjourn the Special Meeting for the purpose of soliciting additional proxies.

Solicitation of Proxies

In addition to solicitation by mail, the directors, officers, employees and agents of the Company may solicit proxies from the Company’s stockholders by personal interview, telephone, facsimile or other electronic means. The Company will pay the costs of the solicitation of proxies from stockholders. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of the Company common stock for the forwarding of solicitation materials to the beneficial owners of the Company common stock. The Company will reimburse these brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

The Company has retained The Altman Group, a proxy solicitation firm, to assist in the solicitation of proxies for this Special Meeting for a fee of approximately $6,000 plus reimbursement of out-of-pocket expenses.

Delivery of Proxy Materials to Households Where Two or More Stockholders Reside

As permitted by the Exchange Act, only one copy of this proxy statement is being delivered to stockholders residing at the same address, unless the Company’s stockholders have notified the Company of their desire to receive multiple copies of the proxy statement. This is known as householding.

The Company will promptly deliver, upon oral or written request, a separate copy of this proxy statement to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies of this proxy statement should be directed to: Investor Relations, WPT Enterprises, Inc., 5700 Wilshire Blvd., Suite 350, Los Angeles, CA 90036.

Other Matters

As of the date of this proxy statement, the Company’s Board does not know of any business to be presented at the Special Meeting other than as set forth in the notice accompanying this proxy statement. If any other matters should properly come before the Special Meeting, or any adjournment or postponement of the Special Meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

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THE ASSET SALE

Background of the Asset Sale

The Company’s Board of Directors has from time to time in recent years engaged with senior management in strategic reviews and considered ways to enhance the Company’s performance and prospects. These reviews have included the consideration of potential transactions with third parties to further the Company’s strategic objectives together with the potential benefits and risks of those transactions. These strategic reviews have on several occasions included exploratory discussions regarding potential financing transactions or strategic transactions, including a formal process in early 2006 during which the Company hired Thomas Weisel Partners LLC to openly explore alternative opportunities. That process concluded in September 2006 with no formal offers for the Company.

In the fourth quarter of 2008, a member of the Company’s management provided publically-available data to a number of current and prospective customers in order to develop business opportunities. These companies were comparing the size of the Company’s market capitalization to the amount of proposed WPT television sponsor arrangements and new business venture commitments and they were concluding that it may make more sense to consider purchasing the Company rather than to enter into the proposed business opportunities. These conditions added to the challenge of the sales process for the Company.

On January 6, 2009, Mr. Lipscomb had a telephone call with the Chief Financial Officer of Company A, a non-U.S. online poker company that is a customer of the Company. Mr. Lipscomb described the WPT China business and asked if there was interest in entering into a merger or acquisition transaction with WPT China. The Chief Financial Officer of Company A said that they had recently looked at the China business prospects and they decided not to invest in that market in the short term. Mr. Lipscomb and the Chief Financial Officer then had a discussion about the Company’s business including the international sponsorship of the WPT television series. At the conclusion of this discussion, the Chief Financial Officer of Company A asked if the Company would entertain a merger or acquisition transaction. Mr. Lipscomb responded that the Company was always open to proposals that would maximize stockholder value. Mr. Lipscomb informed the Chief Financial Officer of Company A that the Company was negotiating a non-U.S. online gaming brand licensing deal that would effectively prevent a merger or acquisition transaction with another online gaming company in the short to medium term. The Chief Financial Officer of Company A said he would discuss the situation with the management and owners of Company A.

On January 9, 2009, the Chief Financial Officer of Company A told Mr. Lipscomb that the management and owners of Company A had not yet made a decision about making an offer for the Company. On January 19, 2009, the Chief Financial Officer of Company A sent an email to Mr. Lipscomb again stating the same information. He also asked if the proposed non-U.S online gaming brand licensing deal would be extended to include the U.S. market. Mr. Lipscomb then called the Chief Financial Officer of Company A and was informed that the management and owners of Company A were not able at that time to consider a business combination with the Company.

On January 27, 2009, while attending the International Gaming Exposition to discuss merger and acquisition options for WPT China with interested parties, Mr. Lipscomb and members of the Company’s management met with the management of Buyer. In addition to discussing merger and acquisition options for the WPT China business, the discussion covered future television sponsorship of the WPT television series and other ways of working together. At the conclusion of that discussion, the management of Buyer said that it might make more sense for Buyer to acquire the Company. The Company’s management said that the Company was always open to opportunities that would maximize stockholder value. The meeting ended with the management of Buyer asking for due diligence materials in order to formulate an offer to buy the Company.

On January 27, 2009, Mr. Lipscomb and members of the Company’s management met with the management of Gamynia. The purpose of the meeting was to further ongoing discussions aimed at licensing the WPT brand to Gamynia in exchange for a percentage of online gaming revenues in the non-U.S. online poker market.

On January 28, 2009, Mr. Lipscomb and members of the Company’s management met with the management of Company D, a non-U.S. online gaming company. The purpose of the meeting was to discuss the possibility of Company D entering into a merger or acquisition transaction with WPT China. At the conclusion of those discussions, Mr. Lipscomb met separately with the Chief Executive Officer of Company D. During that meeting,

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the Chief Executive Officer of Company D expressed his interest in entering into a merger or acquisition transaction with the Company. Mr. Lipscomb said that the Company was negotiating a non-U.S. online gaming brand licensing deal that would make such a transaction unlikely in the short or medium term but that the Company’s Board was always interested in opportunities that could maximize stockholder value. The Chief Executive Officer of Company D said that he would consider such a transaction, but he doubted that he would be able to move forward with such a transaction at the present time. The two Chief Executive Officers’ spoke again on January 30, 2009. During that call, the Chief Executive Officer of Company D again expressed his desire to find a way for Company D to acquire the Company. On February 3, 2009, Mr. Lipscomb sent an email to the Chief Executive Officer of Company D letting him know that the non-U.S. online gaming brand licensing discussions were progressing quickly and that he needed to let him know if broader discussions should take place.

On January 30, 2009, the Company’s Board held a telephonic meeting with management to review the latest version of the 2009 budget. At the conclusion of the budget discussion, Mr. Lipscomb updated the Board about the status of the ongoing negotiations with Gamynia to license the Company’s brand in exchange for a share of non-U.S. online gaming revenues, including the potential risks and rewards of such a deal. While Mr. Lipscomb believed the deal could produce significant yearly net revenues, he expressed the concern that it could also negatively impact the Company’s international WPT television series sponsorship revenues. The deal could also restrict the Company ability to enter into a merger or acquisition transaction with other online gaming companies. Mr. Lipscomb also informed the Board about the discussions with Buyer and Company A. The Board directed Mr. Lipscomb to continue the brand licensing discussions with Gamynia and to provide due diligence materials to Buyer.

Later that day, Mr. Lipscomb received a telephone call from a Senior Partner in a media company, Company E. The Senior Partner expressed in that call and in an email the same day that he had an interest in receiving due diligence information about the Company. From February 4, 2009 to April 23, 2009 the Company and Company E engaged in numerous phone calls, meetings and emails where the Company provided due diligence materials to Company E. On February 15, 2009, Mr. Lipscomb informed the Senior Partner of Company E that the Company’s management did not want any representatives of Company E having contact with WPT sponsors or potential sponsors because of the potential to affect those relationships and the deals currently being discussed.

On February 9, 2009, the Company provided due diligence materials to Buyer. On March 20, 2009, the Company responded to due diligence questions raised by Buyer.

On February 10, 2009, the Company’s Audit Committee held one of its two quarterly meetings. During that meeting, Mr. Lipscomb updated the three Board members that are also Audit Committee members on the progress of the potential non-U.S. online gaming brand licensing deal with Gamynia as well as the ongoing discussions with Buyer and Companies A, D and E.

On February 17, 2009, the Company issued its fourth quarter earnings release and disclosed that the Company was having discussions with current and potential customers about strategic ways to maximize the value of the WPT brand in the U.S. and foreign markets. The Company also disclosed that it had provided confidential information to certain of these parties in order to facilitate the discussions, that the Company was not able to predict the outcome of these discussions and that no particular strategic alternative had been chosen.

On February 18, 2009, the Chief Executive Officer of Company F, a non-U.S. online poker company that is a customer of the Company, attempted to contact Mr. Lipscomb and Mr. Lipscomb asked him to call to discuss his interests. On February 25, 2009, Mr. Lipscomb sent an email to the Chief Executive Officer of Company F letting him know that the non-U.S. online gaming brand licensing deal was developing quickly. The Chief Executive Officer of Company F and Mr. Lipscomb held a telephone call later that day and the Chief Executive Officer of Company F asked Mr. Lipscomb if the Company would be open to an offer to acquire the Company. Mr. Lipscomb let the Chief Executive Officer of Company F know that the Board was always open to opportunities that would maximize stockholder value. Later that day, the Chief Executive Officer of Company F sent an email to Mr. Lipscomb offering to pay $3 to $5 million for the Company’s assets and an earn out based on future revenues . Mr. Lipscomb did not receive the email until March 2, 2009.

On February 26, 2009, the Company’s Board met with management to discuss the progress of the third party discussions about WPT China. After completing this presentation, the Board received an update regarding management actions to evaluate strategic alternatives for the Company. Mr. Lipscomb discussed the progress the

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Company is making in transforming from a primarily licensed-based revenue company to a primarily sponsor-based revenue company. He then discussed the risks facing a primarily sponsor-based revenues company. He acknowledged the difficulty in making multi-million dollar sponsor revenue deals when the market capitalization of the Company was $6-8 million. Mr. Lipscomb then updated the Board regarding the discussions with Buyer, Gamynia and Companies A, D and E.

On February 27, 2009, the Chief Financial Officer of Buyer called a member of the Company’s management and told him that the board of directors of Buyer would be meeting in early March 2009 and that, if his Board agreed, he may present an offer to purchase the Company on March 6, 2009.

On March 2, 2009, the Senior Partner in Company E and Mr. Lipscomb spoke about the status of the due diligence performed by Company E and Mr. Lipscomb updated the Senior Partner about the Company’s recent business results. The Senior Partner in Company E told Mr. Lipscomb that a formal offer to purchase certain of the Company’s assets would be sent to Mr. Lipscomb by March 6, 2009.

On March 4, 2009, Mr. Lipscomb sent an email to the Chief Executive Officer of Company F with questions about the details of the offer Company F made to acquire certain of the Company’s assets. On March 5, 2009, Mr. Lipscomb and the Chief Executive Officer of Company F spoke by telephone. In that conversation, Mr. Lipscomb learned that Company F would need to raise cash from its stockholders to fund the up front payment contained in the offer. The Chief Executive Officer of Company F felt that he could raise the purchase price from his stockholders and that he was open to creating a meaningful ongoing participation in future operations of the World Poker Tour brand for the Company. On March 16, 2009, due diligence information was sent to the Chief Executive Officer of Company F.

On March 4, 2009, the Company gave permission to Company E to make a proposal to acquire the Company. On March 6, 2009, Company E emailed an offer letter to Mr. Lyle Berman and Mr. Lipscomb. Company E offered to pay $4 million at closing for certain of the Company’s assets and $6 million over six years secured by the assets purchased by Company E. Company E requested a 30 day exclusive period to negotiate a transaction.

Mr. Lipscomb sent an email to the Senior Partner of Company E on March 6, 2009 informing him that the proposal would be discussed with Mr. Berman on March 10, 2009. On March 10, 2009, Mr. Lipscomb informed the Senior Partner of Company E that the conversation with Mr. Lyle Berman was delayed until March 11, 2009. On March 11, 2009 Mr. Lyle Berman and Mr. Lipscomb spoke about the offer made by Company E.

On March 11, 2009, Mr. Lipscomb had a telephone call with Mr. Lyle Berman about the Company F offer. Mr. Berman directed Mr. Lipscomb to provide due diligence to Company F, investigate Company F’s ability to pay the upfront money contained in the offer and evaluate the likelihood that Company F could deliver on any potential upside from using the World Poker Tour brand. Due diligence was sent to Company F on March 16, 2009.

On March 17, 2009, Mr. Lipscomb informed the Senior Partner of Company E that he would speak to Mr. Bradley Berman about the Company E offer. On March 17, 2009, Mr. Lipscomb spoke with Mr. Bradley Berman about the Company E offer. Mr. Lipscomb then emailed a counter offer to the Senior Partner of Company E.

The Senior Partner of Company E called Mr. Lipscomb on March 18, 2009 to discuss the counter offer. The Senior Partner of Company E informed Mr. Lipscomb that he would respond to the counter offer. Mr. Lipscomb spoke with Mr. Lyle Berman later that day. They discussed the offers made by Company E and Company F. Mr. Lyle Berman directed Mr. Lipscomb to contact the Senior Partner of Company E to determine if a structure could be created where Company E and Company F each acquired certain of the Company’s assets. Mr. Lyle Berman and Mr. Lipscomb also discussed the prospective non-U.S. online gaming brand licensing deal with Gamynia. Later that day, the Senior Partner of Company E and Mr. Lipscomb discussed the possibility that Company E and Company F could each acquire certain of the Company’s assets. The Senior Partner of Company E told Mr. Lipscomb that he would consider this alternative structure.

On March 18, 2009, the Chief Financial Officer of Buyer communicated the broad terms of a proposal to a member of the Company’s management. Buyer was offering to acquire all of the Company’s assets other than cash and investments for $7 million. The Chief Financial Officer of Buyer said that this proposal was not a binding offer and that the proposal was subject to the approval of the board of directors of Buyer as well as the completion of due diligence. The terms of the proposal were communicated to Mr. Lipscomb the same day. The

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Chief Financial Officer of Buyer contacted a member of the Company’s management later that day to discuss due diligence issues. On March 19, 2009, Mr. Lipscomb informed Mr. Lyle Berman of the proposal made by the Chief Financial Officer of Buyer. Mr. Lyle Berman directed Mr. Lipscomb to see if Buyer’s proposal could be improved.

On March 19, 2009, the Chief Financial Officer of Buyer informed a member of the Company’s management that due diligence questions would soon be sent to him. On March 20, 2009, Buyer requested and received due diligence information from the Company. On March 31, 2009, members of Buyer’s management discussed due diligence information with members of the Company’s management.

On March 19, 2009, a member of the Company’s management had a conversation with a Director of Gamynia regarding licensing the World Poker Tour brand for use in non-U.S. online gaming. The member of the Company’s management informed the Director of Gamynia that online gaming companies were making offers to purchase the Company’s assets.

On March 23, 2009, a Director of Gamynia called Mr. Lipscomb to discuss the proposed online gaming brand licensing deal. The Director of Gamynia said Gamynia was still very interested in making a non-U.S. online gaming brand licensing deal with the Company, but that he was aware that the Company was having discussions regarding strategic options that could make that brand license arrangement impossible and he asked if he could join the bidders. Mr. Lipscomb told the Director of Gamynia that the Board was always interested in offers that could maximize stockholder value. Mr. Lipscomb then discussed the potential challenges to generating sponsorship revenues from various online gaming companies if the Company licensed its name to another online gaming company. The Director of Gamynia said that he understood the business risk of a brand licensing deal from the Company’s standpoint and he would work on a proposal to acquire the Company’s assets.

On March 23, 2009, the Senior Partner of Company E called Mr. Lipscomb to discuss the counter offer made by Mr. Lipscomb on March 17, 2009. He informed Mr. Lipscomb that Company E was revising their proposal to increase the amount paid at closing to $5 million with $3 million paid over three years from closing secured by the assets sold to Company E. In addition, the Company would receive a 15% equity ownership in the company that acquired the Company’s assets and $1 million if online poker is legalized in the U.S. within 18 months of the close. On March 24, 2009, the Senior Partner of Company E called Mr. Lipscomb to discuss the revised offer made by Company E on March 23, 2009. Mr. Lipscomb informed the Senior Partner of Company E that the Company’s Board would consider the revised offer on March 25, 2009.

On March 24, 2009, a Director of Gamynia informed Mr. Lipscomb by email that he planned to send an offer to purchase the Company’s assets the following morning. On March 25, 2009, a Director of Gamynia sent a non-binding offer to Mr. Lipscomb, subject to due diligence, to purchase the Company’s assets. Gamynia offered to pay $8 million at the close and a specified percentage of net online gaming after tax profits of at least $3 million if online gaming is legalized in the U.S. Gamynia would also pay the Company a percentage of non-gaming revenues for five years.

On March 25, 2009, the Company’s Board held a telephonic meeting with the Company’s management. One item on the agenda for the meeting was an update of management actions to evaluate strategic alternatives for the Company. Mr. Lipscomb explained the proposals submitted by Buyer, Gamynia and Companies E and F to the Board. Mr. Lipscomb also explained the proposed non-U.S. online gaming brand license deal with Gamynia. The Board and management deliberated the risks and rewards of the various proposals. The Board directed management to see if the asset acquisition proposals could be improved. At the same time, the Board directed management to negotiate the terms of a non-U.S. online gaming brand licensing deal with Gamynia.

After the Board call, Mr. Lipscomb called the Senior Partner of Company E and let him know that the Company E revised proposal was better, but that the Board concluded that the offer was not yet adequate. Mr. Lipscomb agreed to meet with the Senior Partner of Company E.

After the Board call, Mr. Lipscomb also spoke with a Director of Gamynia expressing the Board’s decision to evaluate the terms of the non-U.S. online gaming brand licensing deal prior to negotiating an asset sale with Gamynia. Mr. Lipscomb told the Director of Gamynia that the Company would provide comments on the proposed brand license agreements prepared by Gamynia as soon as possible.

On April 4, 2009, the Company’s management sent comments to Gamynia on the proposed non-U.S. online gaming brand license agreements prepared by Gamynia.

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On April 6, 2009, a member of the Company’s management met with management of Company G, a non-U.S. online gaming company that is a customer of the Company. During those discussions, a member of Company G’s management asked the member of the Company’s management why Company G should not buy the Company. After contemplating the thought for a period of time, the Company G representative said that he would not be interested in acquiring the Company but would rather benefit from making television sponsorship arrangements that help build his brand.

On April 6, 2009, Mr. Lipscomb received an email from a Director of Gamynia asking for a phone conversation about the proposed non-U.S. online gaming brand license agreements prepared by Gamynia. On April 8, 2009, Mr. Lipscomb spoke with a Director of Gamynia. The Director of Gamynia expressed his belief that there were fundamental issues that may make it hard to conclude the non-U.S. online gaming brand license agreement. The Director of Gamynia suggested an asset purchase transaction might be better for both companies. The Director of Gamynia said that he would let Mr. Lipscomb know what they were going to do.

Mr. Lipscomb met with two of the Senior Partners of Company E on April 7, 2009. Mr. Lipscomb told the two Senior Partners that the Board’s plan was to come back to them with a definitive response from the Board very soon that would either say the Board was not interested in their proposal or provide an outline of a deal that the Board believed they could support. The two Senior Partners of Company E asked Mr. Lipscomb if they could discuss their proposal with Mr. Lyle Berman and Mr. Bradley Berman.

On April 9, 2009, two of the Senior Partners of Company E spoke with Mr. Lipscomb, Mr. Lyle Berman and Mr. Bradley Berman about the Company E proposal and their plans for the business after the asset sale closed.

On April 9, 2009, a Director of Gamynia sent an asset purchase proposal to Mr. Lipscomb. Gamynia offered to pay $8 million for the Company’s assets other than cash and investments. Gamynia also offered to pay the Company 5% of future non-gaming brand revenues, as defined.

On April 10, 2009, Mr. Lipscomb called the Chief Financial Officer of Buyer and left a message for him that he planned to discuss Buyer’s offer with the Board. The Chief Financial Officer of Buyer returned the telephone call during the Board meeting but did not speak to Mr. Lipscomb.

On April 10, 2009, the Company’s Board met with management to discuss strategic alternatives. Mr. Lipscomb described the new issues that appeared to stand in the way of a non-U.S. online gaming brand licensing deal with Gamynia. The Board then discussed the state of the Company’s business and the risks and rewards of potential alternatives. The Board then discussed the proposals made by Buyer, Gamynia and Companies E and F. The Board then concluded that Gamynia’s and Company E’s proposals were the most attractive and the most likely to result in a completed transaction. Mr. Lipscomb then informed the Board that Mr. Lyle Berman had asked him to prepare two counter offers to present to Gamynia and Company E. Mr. Lipscomb then described the major terms of the proposed two counter offers and the Board directed Mr. Lipscomb to present the two counter offers to the two companies.

After the Board meeting, Mr. Lipscomb and a member of the Company’s management called the Chief Financial Officer of Buyer. The Chief Financial Officer of Buyer said that he was not authorized to increase their prior offer.

On April 10, 2009, Mr. Lipscomb sent the counter offer discussed in the April 10, 2009 Board meeting to the Senior Partner in Company E. On April 11, 2009, Mr. Lipscomb met with the Senior Partner in Company E to discuss the counter offer. During the week of April 13, 2009, Mr. Lipscomb spoke by telephone and communicated by email a number of times with the Senior Partner in Company E and with Mr. Lyle Berman regarding the counter offer. On April 22, 2009, the Senior Partner in Company E met with a member of the Company’s management to discuss due diligence information and potential employment if Company E acquired the Company’s assets.

On April 11, 2009, Mr. Lipscomb sent the counter offer discussed in the April 10, 2009 Board meeting to a Director of Gamynia. The Director of Gamynia responded to the counter offer the same day and asked for clarification of certain points. Mr. Lipscomb then had a number of conversations with the Director of Gamynia to negotiate certain aspects of the Company’s ongoing participation in gaming and non-gaming revenues.

On April 13, 2009, the Company provided due diligence materials to Gamynia and to a new interested party, Company H, a non-U.S. online gaming company that is a customer of the Company.

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On April 20, 2009, the Chief Financial Officer of Buyer sent a message to a member of the Company’s management asking for a meeting. On April 21, 2009, the Chief Executive Officer and the Chief Financial Officer of Buyer met with a member of the Company’s management and were informed that Buyer’s offer needed to be increased if Buyer wanted to be a viable bidder for the Company.

On April 23, 2009 the Chief Financial Officer of Buyer informed Mr. Lipscomb that Buyer’s offer was increased to $7.5 million at the close of the asset sale and $1.5 million one year after the closing subject to the achievement of agreed operational targets.

On April 24, 2009, the Chief Financial Officer of Buyer had a conference call with Mr. Lyle Berman, Mr. Lipscomb and members of the Company’s management. In that call, the Chief Financial Officer of Buyer described the reasons why his offer should be accepted. Mr. Lipscomb informed the Chief Financial Officer of Buyer that their offer would be carefully considered by the Company’s Board.

On April 24, 2009, a Director of Gamynia met with Mr. Lyle Berman, Mr. Lipscomb and members of the Company’s management to discuss the Board’s counter offer. Later that evening, Mr. Lipscomb met separately with the Director of Gamynia to negotiate certain aspects of the Company’s ongoing participation in gaming and non-gaming revenues. Mr. Lipscomb then asked the Director of Gamynia to consider improving their offer in order to meet the Board’s expectations.

On April 24, 2009, the two Senior Partners of Company E met with Mr. Lyle Berman, Mr. Lipscomb and members of the Company’s management. The two Senior Partners of Company E presented a revised offer for the Company’s assets. Company E offered to pay $6 million at closing of the asset purchase and $3 million over three years thereafter secured by the assets sold to Company E. Alternatively, Company E offered to pay $5 million at the close of the asset purchase, $3.99 million over three years and $500,000 in year four thereafter secured by the assets sold to Company E. In addition, the Company would receive 25% of the equity in the entity formed by Company E to acquire the Company’s assets. Company E wanted to escrow a portion of the proceeds until a U.S. sponsor for Season Eight of the WPT television series was signed.

Mr. Lipscomb met with the two Senior Partners of Company E on April 25, 2009 and again with one of the two Senior Partners of Company E later that day. In those meetings, the two Senior Partners of Company E said that if it would make a difference, the Company might be able to get more equity in exchange for lowering the upfront cash payment. Members of the Company’s management also separately met with the two Senior Partners of Company E to discuss possible employment if Company E purchased the Company’s assets. From April 25, 2009 to May 19, 2009, Mr. Lipscomb spoke regularly with one of the two Senior Partners of Company E updating him on the Board’s decision-making process. In addition, Company E provided offer materials to Mr. Lipscomb for inclusion in a Board presentation that Mr. Lipscomb was preparing.

On April 25, 2009, a Director of Gamynia met with Mr. Lipscomb and the Director proposed a revised offer to purchase the Company’s assets. He proposed to pay $9 million for the Company’s assets other than cash and investments. He also proposed to pay 4% of future online gaming revenues and 5% of future sponsorship and other revenues, as defined, to the Company and to allow the Company to receive the payments from certain existing sponsorship contracts. He also proposed the terms for a break up fee and a right to terminate the agreement if online gaming is legalized in the U.S. before the asset purchase is completed.

On May 4, 2009, Mr. Lipscomb met with the Chief Executive Officer of Company H to discuss strategic options for the two companies.

On May 10, 2009, Gamynia sent the Company a draft of the proposed asset purchase agreement. On May 15, 2009, Company management provided comments on the proposed asset purchase agreement to Gamynia.

On May 20, 2009, the Company’s Board and management met after the annual stockholders’ meeting. Management updated the Board on financial and business results for the first four months of 2009 and the prospects for each of the Company’s business units. Management and the Board also discussed long term prospects for the Company’s business and its competitors. The Board then met separately without management to discuss the offers made by Buyer, Gamynia and Company E. The Board then directed Mr. Lipscomb to see if an asset purchase agreement with Gamynia could be negotiated. The Board also instructed Mr. Lipscomb to inform Company E that their offer was not likely to result in a completed transaction and to see if Gamynia could improve their offer. Later that day, Mr. Lipscomb informed a Senior Partner of Company E that the Board

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concluded that their offer was not likely to result in a completed transaction. Mr. Lipscomb also sent an email to the Chief Financial Officer of Buyer to see if they could improve their offer.

From May 20 to June 1, 2009, Mr. Lipscomb had numerous emails and phone calls with a Director of Gamynia to coordinate a meeting to negotiate the asset purchase agreement. On May 23, 2009, the Company delivered due diligence materials to Gamynia.

On May 25, 2009, the Chief Financial Officer of Buyer called a member of the Company’s management to discuss the Board’s concerns about Buyer’s offer and the Chief Financial Officer was asked to call Mr. Lipscomb. On May 25, 2009, the Chief Financial Officer of Buyer sent a revised offer to Mr. Lipscomb. Buyer offered to pay $12 million for the Company’s operating assets or alternatively, $9 million and 5% of future subscription gaming, sponsorship and other revenues for a limited number of years.

On May 26, 2009, Mr. Lipscomb had two conversations with executive management at Buyer to negotiate the terms of their offer. Buyer agreed to include all gaming revenues in the future 5% revenue participation. Buyer also agreed to decrease the proposed termination fee to $1 or $2 million and they would guarantee an additional $3 million in future revenue participation. Other transaction terms were also negotiated.

Later that day, the Company’s Board met to discuss the status of the negotiations of the asset purchase agreement with Gamynia and the status of the offer made by Buyer. The Board instructed Mr. Lipscomb to continue to negotiate the asset purchase agreement with Gamynia and to see if the terms of an agreement with Buyer could be further defined. On May 26, 2009, Mr. Lipscomb sent an email to the executive management at Buyer outlining the proposed terms of an asset sale that the Board felt could result in a completed transaction. Among the many detail terms proposed, Mr. Lipscomb proposed a $9 million purchase price and a 5% participation in future gaming, sponsorship and other revenues.

On May 29, 2009, Mr. Lipscomb received a counter offer from the Chief Financial Officer of Buyer. The terms of the counter offer were similar to the offer Buyer made on May 25, 2009, except that the termination fee was reduced to $2 million. On June 1, 2009, Mr. Lipscomb exchanged emails with the executive management of Buyer regarding how long their offer was effective. Later that day, Mr. Lipscomb sent an email to the executive management of Buyer to clarify the terms of the counter offer that Buyer made. On June 3, 2009 Mr. Lipscomb exchanged emails with the executive management of Buyer clarifying the terms of Buyer’s offer. On June 4, 2009, Mr. Lipscomb sent an email to the Chief Financial Officer of Buyer asking that the Board be given until June 12, 2009 to respond to their counter offer.

From June 2 to June 8, 2009, the Company’s management negotiated the terms of the asset purchase agreement with Gamynia. On June 5, 2009, a draft of the asset purchase agreement with Gamynia was sent to the Company’s Board along with a list of unresolved issues. On June 8, 2009, Mr. Lipscomb sent a list of unresolved issues to the executive management of Gamynia. From June 9 to June 12, 2009, Mr. Lipscomb and executive management of Gamynia negotiated the unresolved issues.

On June 9, 2009, the Company’s Board met to discuss the status of the negotiation of the asset purchase agreement with Gamynia and the status of the offer by Buyer. The Board directed Mr. Lipscomb to continue to negotiate the asset purchase agreement with Gamynia and to complete the negotiations, if possible, before the June 12, 2009 expiration of Buyer’s offer.

On June 11, 2009, Mr. Lipscomb and a Director of Gamynia exchanged emails about how to resolve open issues. Later that day, the Company’s Board met to discuss the status of the negotiation of the asset purchase agreement with Gamynia and the status of the offer by Buyer.

On June 12, 2009, Mr. Lipscomb received an email from the Chief Financial Officer of Buyer proposing changes to their previous offer. Later that day, Mr. Lipscomb forwarded the terms of the revised offer to the Company’s Board along with a proposed response to the revised offer. From June 12 to June 13, 2009, Board members considered the proposed communication and then authorized Mr. Lipscomb to inform the Chief Financial Officer of Buyer that they rejected the revised offer. Mr. Lipscomb communicated the Board’s decision to the executive management of Buyer on June 12, 2009.

From June 12 to June 18, 2009, Mr. Lipscomb and the executive management of Gamynia discussed the unresolved issues. On June 21, 2009 the Director of Gamynia sent Mr. Lipscomb an email about the unresolved issues and the Company and Gamynia did not communicate further until July 2, 2009.

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On June 25, 2009, the Company’s Board met to discuss the status of the negotiation of the asset purchase agreement with Gamynia and the status of the offer by Buyer.

From June 13 to June 29, 2009, the Company’s management and the Chief Financial Officer of Buyer had a number of conversations about Buyer’s offer. On June 30, 2009, Mr. Lipscomb send a summary of the terms of a proposed transaction with Buyer and a draft of a proposed asset purchase agreement to the Chief Financial Officer of Buyer.

On July 2, 2009, a Director of Gamynia informed Mr. Lipscomb that, rather than an asset purchase arrangement with the Company, Gamynia preferred a joint venture arrangement. On July 5, 2009, the Company’s management met with the Director of Gamynia to discuss the proposed joint venture.

From July 3 to July 12, 2009, the Company’s management met with the executive management of Buyer to negotiate the terms of an asset purchase agreement. On July 9, 2009, the Company’s Board met to discuss the status of the negotiation of the asset purchase agreement with Buyer and they were informed that the asset purchase agreement was nearly fully negotiated. After the Board meeting, the Chief Financial Officer of Buyer informed the Company’s management that they would need a two week delay prior to signing the asset purchase agreement to seek information from a U.S. Government agency. On July 13, 2009, the Company’s Board met to discuss the status of the asset purchase agreement with Buyer. From July 14 to July 27, 2009, the Company’s management and the executive management of Buyer regularly spoke about the status of the communications with a U.S. Government agency.

From July 22 to July 24, 2009, the Company’s management and the executive management of Gamynia negotiated the unresolved issues in the asset purchase agreement. A fully negotiated asset purchase agreement with Gamynia was then delivered to the Company’s Board. On July 24, 2009, the Company’s Board met to discuss the two asset purchase agreements with Buyer and Gamynia. The Board then directed management to execute an asset purchase agreement with the first company willing to sign their agreement.

On July 24, 2009, Mr. Lipscomb met with the executive management of Company I, an online gaming company that is not a customer of the Company. The purpose of the meeting was to discuss potential business opportunities with Company I. In those conversations, the executive management of Company I learned about the strategic alternative process that the Company had previously announced to stockholders. From July 25 to July 28, 2009, the Company had some preliminary discussions with the executive management of Company I. On July 29, 2009, a member of the Company’s management informed the President of Company I that the Company had signed an asset purchase agreement.

From July 25 to July 28, 2009, the Company’s management and Gamynia completed the documentation of the asset purchase agreement and on July 28, 2009, Gamynia and the Company executed the asset purchase agreement.

On July 27, 2009, Mr. Lipscomb informed the executive management of Buyer that the Company’s Board had directed the Company’s management to sign the asset purchase agreement with the first company willing to complete the transaction. On July 29, 2009, Mr. Lipscomb informed the executive management of Buyer that an agreement with Gamynia had been signed. On July 31, 2009, the Company’s Board met to discuss claims raised by Buyer’s attorneys regarding Company’s right to enter into an agreement with Gamynia. The Board instructed management to move ahead with the process.

On August 6, 2009, Mr. Lipscomb informed the President of Company I that he could not communicate further with him and directed him to the Company’s Current Report on Form 8-K regarding the Gamynia deal. On August 7, 2009 Mr. Lipscomb did not return a call from the President of Company I and directed him by email to the Company’s Current Report on Form 8-K regarding the Gamynia transaction. Also on August 7, 2009, Mr. Lipscomb informed the Chief Executive Officer of Buyer that they could no longer communicate due to the signing of the asset purchase agreement with Gamynia. On August 10, 2009, Mr. Lipscomb again informed the President of Company I that they could no longer communicate due to the signing of the asset purchase agreement with Gamynia.

On August 6, 2009, the Chief Financial Officer of Buyer informed Mr. Lipscomb that Buyer intended to make another offer to purchase the Company’s assets. On August 7, 2009, Mr. Lipscomb received a revised offer from Buyer for certain of the Company’s assets. Buyer offered to execute the negotiated asset purchase agreement and to raise the cash payment at closing by $1 million. The revised offer highlighted the reasons why Buyer’s

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Board believed that the revised offer was superior to the asset purchase agreement with Gamynia. On August 8, 2009, the Company’s Board met to review Buyer’s revised offer and to compare the revised offer to the asset purchase agreement with Gamynia. The Company’s Board concluded that Buyer’s revised offer was reasonably likely to result in an alternative acquisition proposal that was superior to the asset purchase agreement with Gamynia and the Company’s Board directed Company management to inform Gamynia of the receipt of the revised offer and the Board’s conclusions about the revised offer. On August 9, 2009, the Company notified Gamynia of the receipt of the revised offer and the conclusions reached by the Company’s Board.

From August 10 to August 12, 2009, Company executive management and executive management of Gamynia discussed various matters concerning the process to follow when the Company receives an alternative acquisition proposal. Over the same period, Company executive management and executive management of Buyer discussed various matters concerning the process to follow when the Company receives an alternative acquisition proposal and Buyer clarified various aspects of their revised proposal.

On August 12, 2009, Company I sent Mr. Lipscomb an offer to purchase certain of the Company’s assets. The offer was conditioned upon diligence to be performed by Company I, agreement of final transaction documentation and Company I board approval. The proposal was for $18 million at the close of the asset purchase agreement, and 4% of online gaming revenues and 5% of sponsorship and other revenues for five years. Later that day, the Company’s Board met to discuss Company I’s offer and other matters related to Buyer’s revised offer. The Company’s Board directed management to prepare a financial analysis of the projected cash flows from the asset purchase agreement with Gamynia, the revised offer by Buyer and the offer by Company I. The financial analysis of the projected cash flows of the three proposals was sent to the Company’s Board later that day.

On August 13, 2008, Buyer resolved a difference in interpretation of its revised offer by increasing the purchase price from $11.9 to $12.3 million. Buyer also delivered the proposed signed asset purchase agreement to the Company as a gesture of good faith. Later that day, the Company’s Board met to discuss the financial analysis of the projected cash flows of the three proposals and to hear presentations from senior executives of Buyer and Gamynia about their plans to generate future revenues using the Company’s brands. The Company’s Board concluded that Buyer’s recently revised offer was superior to the asset purchase agreement with Gamynia as well as the alternative offer from Company I and the Company’s Board directed Company management to inform Gamynia, Company I and Buyer of their conclusions.

The Board’s discussion of the offers from each of Buyer, Company I and Gamynia involved a lengthy financial analysis and consideration of, among other things, Buyer’s ability to exploit the purchased assets and generate future revenues for the Company, as compared to the other bidders, and the likelihood of completing a transaction. The Board also identified a number of significant differences between the terms of the revenue participations under the various offers.  First, the revenue participation offered by Company I would last for only 5 years while the revenue participation offered by Buyer and Gamynia would continue without expiration.  Second, Buyer agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period.  The revenue participation offered by Company I did not contain an agreement regarding minimum revenues.  Third, Company I and Gamynia only offered a 4% participation with respect to online gaming revenues, as opposed to 5% offered by Buyer.

The Board considered that PartyGaming Plc, the ultimate parent of Buyer, is in a unique position as the world’s leading online gaming company that does not take bets in the United States. PartyGaming, Plc has an integrated branding platform, secondary brands and alliances with blue chip companies.   PartyGaming Plc controls approximately eight percent (8%) of the global market share of online poker player traffic (as indicated in the 2008 Annual Report of PartyGaming Plc and subject to the terms and qualifications therein).  Poker is the largest revenue generating segment of PartyGaming Plc’s business (according to revenues reported in the 2008 Annual Report of PartyGaming, Plc and subject to the terms and qualifications therein).  Due to its strategic position in the marketplace, the Company’s Board estimates that Buyer would be able to exploit the purchased assets and generate superior revenues, as compared to both Company I and Gamynia.

The Board also considered additional terms of the proposals including, among other things, the indemnification and guarantee being provided, if any.  The offers from Buyer and Gamynia included guarantees from certain affiliated entities and the Board analyzed the financial viability of such guarantors.  However, Company I’s offer did not contain any guarantee.  The transaction documents with Buyer are governed by California law and disputes thereunder would be settled by binding arbitration in California.  However, the transaction documents with Gamynia would be governed by English law and enforced in the courts of England.  The offer from Company I did not specify the governing law or method for dispute resolution. 

The Board considered the estimated total financial consideration offered by each bidder by analyzing, among other things, the cash payments made at closing, the projected value of each revenue participation and the $1 million termination fee that would be owed to Gamynia.  After performing this financial analysis and considering the various other factors described herein, the Board determined that Buyer’s offer was superior to the offers from Gamynia and Company I.

For purposes of the financial analysis described above the Board valued the Company’s assets by considering, among other things, the book value of the assets, the level of interest expressed by prospective buyers and the potential ability of a prospective buyer to exploit the assets and generate future revenues.

On August 14, 2009, the Company sent a copy of Buyer’s recently revised offer and a copy of the negotiated asset purchase agreement with Buyer to Gamynia. Later that day, the Company informed Buyer of the process that was underway with Gamynia.

On August 15, 2009, Mr. Lipscomb received multiple attempts from the President of Company I to enquire about the Board’s response. Mr. Lipscomb responded in writing apologizing for the formality of the process and telling him that a formal response was being drafted by counsel. The Board’s conclusion about Company I’s alternative acquisition proposal was communicated by the Company’s outside counsel to Company I on August 16, 2009. On August 17, 2009, the Company received a letter from Company I asking for more information regarding the Board’s deliberations. The Company’s outside counsel responded to Company I and indicated that the Company was unable to provide more information regarding the Board’s deliberations.

On August 17, 2009, a Director of Gamynia informed Mr. Lipscomb that Gamynia was not likely to increase their acquisition proposal to be competitive with Buyer’s acquisition proposal. The Company delivered a notice of termination of the asset purchase agreement with Gamynia on August 21, 2009. Gamynia subsequently acknowledged the termination of the asset purchase agreement with Gamynia. The Company entered into the asset purchase agreement with Buyer, dated as of August 24, 2009.

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Reasons for the Asset Sale; Recommendation of the Company’s Board of Directors

In the last few years, the Company experienced a significant transformation of its business from a primarily U.S. centric network television license business to a non-U.S. centric sponsored television business. The transformation began with declining U.S. license fees for the WPT television series in Seasons Five and Six as a result of the lucrative online gaming market making television a loss leader for online player signups. Currently, a U.S. facing online information site sponsors Season Seven in the U.S. market and an online gaming company sponsors Season Seven in Canada, certain European countries, Mexico and South America. Television sponsor fees were 59% of the Company’s total revenues in the six months ended June 28, 2009. Knowing that future revenues would be dominated by the online industry, the Company attempted to enter the lucrative online poker and casino gaming business from 2005 to 2008. Three different attempts were unsuccessful because of the significant handicap placed on the Company due to its risk profile as a U.S. public company with gaming licenses. As a part of its long-term online strategy, the Company developed an online and mobile poker gaming business in China. In 2008, the Company’s Board of Directors was informed by management that without a major alliance with one of the large online brands, the Company likely did not have the resources or the risk profile to be successful in the now very competitive and maturing global online poker and gaming markets. Facing the reality that excluding a gain on the sale of a minority interest in another company in 2006, the Company lost money from 2005 to 2008 and the first quarter of 2009, the Company downsized operations, exited unprofitable businesses and increased foreign sponsorship revenues that resulted in the Company having positive cash flows from operating activities of continuing operations in the first and second quarters of 2009. While this strategy eliminated the Company’s losses, the new sponsorship model is by its nature dependent on many things that are not within the Company’s control in a volatile and quickly evolving marketplace. The Company has been searching for a less risky, strategic way to continue growing the brands it has created and disseminated for seven and a half years while generating revenue growth in sponsorship, consumer products and online gaming.

The last few years has also seen significant growth in the non-U.S. online poker and casino gaming market. A small number of non-U.S. online gaming companies now control a large percentage of the market. These online gaming companies have at times been asked by the Company to pay sponsor fees that were larger than the Company’s market capitalization at the time. This has complicated the sales process and has resulted in a number of these companies making inquiries to see if they could enter into a transaction to acquire the Company or certain or all of its assets. The Company’s Board decided to provide confidential information to certain of these companies. In addition, the Company made public disclosures on February 17, 2009, April 22, 2009 and July 29, 2009 that confidential information was being provided to customers and others in order to facilitate strategic discussions. This disclosure had the effect of notifying other interested parties that the Board was exploring strategic alternatives.

In connection with the strategic discussions with interested parties, the Company received preliminary indications of interest for the sale of the entire company or for the sale of some or substantially all of the Company’s assets from several parties. After careful review and consideration of the preliminary indications of interest for either the Company or its assets, the Board directed management to determine the best terms offered by the interested parties. Management then met with and provided due diligence information to interested parties and attempted to determine the best terms that were offered by each party. The terms offered by three of the interested parties were considered by the Board and the Board instructed management to negotiate the terms of an asset purchase agreement with Gamynia and Buyer. The Board decided to sign an asset purchase agreement with Gamynia because Buyer needed additional time to seek information from a U.S. Government agency. Buyer later obtained information from a U.S. Government agency and made a revised offer for certain of the Company’s assets. The Company’s Board considered the asset purchase agreement with Gamynia and the revised offer from Buyer and concluded that the revised offer from Buyer was superior to Gamynia’s asset purchase agreement. Gamynia did not make revised offer for the Company’s assets and the Company signed an asset purchase agreement with Buyer.

The Board presently intends to use the Company’s cash to buy or develop a new business and to receive from Buyer future participation in the revenues earned with the purchased assets. The Board determined that this alternative would provide the Company’s stockholders with a greater potential opportunity to realize a return on their investment for the long term.

The Board considered a number of alternatives with respect to the Company’s remaining assets following the completion of the asset sale, including 1) the liquidation of its remaining assets, the discharge of its remaining

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liabilities and the distribution of remaining assets to the Company’s stockholders, 2) merging or otherwise combining the remaining public entity with a private company and using the value of the Company’s status as a public company and cash on hand to secure an equity position in the newly combined corporate entity, or 3) developing a new business.

In connection with the asset sale, the name of the Company will be changed to [                     ] and the Company plans to change its trading symbol to “[       ].” Following the close of the asset sale, the Company will relocate its headquarters to the other office suite that is currently leased but is not used by the Company in Los Angeles, California. The Company’s only remaining employees after the close of the asset sale will be the Company’s current President and Chief Executive Officer, Mr. Lipscomb and a small number of support staff.

In the course of reaching its decision to approve the asset purchase agreement and the asset sale, the Company’s Board consulted with senior management and reviewed a significant amount of information and considered a number of factors, including the following:

·                   the value of the consideration to be received by the Company pursuant to the asset purchase agreement, as well as the fact that the Company will receive the consideration in cash, which provides certainty of value to the Company;

·                   the asset sale is the result of an active evaluation of strategic alternatives in which the Company had contact with most of the large non-U.S. online gaming companies to assess potential interest;

·                   the Boards’ belief that the asset sale was more favorable to the Company’s stockholders than any other alternative reasonably available to the Company and its stockholders, including the alternative of remaining a stand-alone, independent company with continuing operations and the proposals made by other parties during the Company’s strategic alternative evaluation process, as well as the risks and uncertainties associated with those alternatives;

·                   the then current financial market conditions, current and historical market prices, volatility and trading information with respect to the Company’s common stock;

·                   historical and current information concerning the Company’s business, financial performance and condition, operations and current industry, economic and market conditions, including the Company’s prospects if it were to remain an independent company that managed the WPT television series and the World Poker Tour and Professional Poker Tour brands;

·                   the financial and other terms and conditions of the asset purchase agreement and the fact that they were the product of negotiations between the parties; and

·                   the terms of the asset purchase agreement, including without limitation:

1.                the Company’s perpetual participation in future gaming and other revenues that Buyer earns with the purchased assets;

2.                the affirmative duties Buyer accepts to generate future revenues for the Company and the expressed intent of Buyer to exploit the purchased assets;

3.                the Company retains significant revenues from the PokerStars sponsorship agreements and significant working capital at the close of the asset sale;

4.                the Company retains the right to the potentially significant recovery from the Company’s ongoing litigation with Deloitte & Touche, LLP;

5.                the assurance that any future Buyer ownership change will not affect the Company’s ongoing revenue participation;

6.                the guarantee of Buyer’s obligations by a company with significant assets;

7.                the ongoing liabilities and obligations Buyer will assume and the impact that will have on the Company’s future risk profile and underlying costs;

8.                procedures for resolution of disputes with buyer;

9.                Buyer’s intent to keep key management continuity with regards to existing businesses;

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10.          the conclusion of the Board that the requirement to pay Buyer a termination fee in the event that the asset purchase agreement is terminated under certain circumstances was reasonable in light of the benefits of the asset sale, the strategic alternatives evaluation process conducted by the Company and commercial practice;

11.          the Board’s ability to terminate the asset purchase agreement in order to accept a financially superior proposal (subject to certain conditions contained in the asset purchase agreement and the payment to Buyer of a termination fee); and

12.          the requirement that the asset sale be approved by the holders of a majority of the Company’s common stock outstanding on the record date.

In the course of its deliberations, the Board also identified and considered a number of uncertainties, risks and other potentially negative factors, including the following:

·                   the risk that the asset sale might not be completed in a timely manner, or at all;

·                   the Company will for some time become a development stage company;

·                   the restrictions on the conduct of the Company’s business prior to completion of the asset sale, requiring the Company to conduct its business only in the ordinary course, subject to specific limitations or Buyer’s consent, which may delay or prevent the Company from undertaking business opportunities that may arise pending completion of the asset sale;

·                   the conditions to the close of the asset sale must be satisfied or waived;

·                   the restrictions on the Board’s ability to solicit or engage in discussions or negotiations with a third party regarding specified transactions involving the Company and the requirement that, in certain circumstances, the Company pay Buyer $1 million in the event of a termination of the asset purchase agreement and, in certain circumstances, reimburse Buyer $1 million for the initial payment of the purchase price delivered by Buyer upon the execution of the asset purchase agreement;

·                   the risk of diverting management focus and resources from other strategic opportunities and from operational matters while working to implement the asset sale; and

·                   the risk that the Company may be unable to identify a suitable company with which to engage in a business combination following the asset sale or that future operating results from that business combination meet expectations.

The foregoing discussion of the factors considered by the Company’s Board is not intended to be exhaustive, but does set forth the principal factors considered by the Board. The Board collectively reached the unanimous conclusion to approve the asset purchase agreement and the asset sale in light of the various factors described above, as well as other factors that each member of the Company’s Board felt was appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the asset sale and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board. Rather, the Board made its recommendation based on the totality of information presented to, and the investigation conducted by, the Board. In considering the factors discussed above, individual directors may have given different weights to different factors.

After evaluating these factors and consulting with its outside legal counsel, the Company’s Board unanimously approved the asset purchase agreement and the asset sale and determined that the asset sale is advisable, fair to and in the best interests of the Company’s stockholders. Accordingly, the Board of Directors unanimously recommends that stockholders vote “FOR” the asset sale proposal.

Buyer and Parent

Buyer and Parent are Gibraltar private limited companies and Buyer is a subsidiary of Parent. Parent is the principal operating subsidiary in the PartyGaming Plc group of companies.

PartyGaming is the world’s leading listed online gaming business. PartyGaming offers a variety of games through an integrated Party-branded platform and through a number of secondary brands and alliances with blue

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chip companies. Through a unique operating platform, adults can tune into a broad range of games, using multiple languages, multiple-currency options and with the tools to ensure they have fun and play within their means.

PartyGaming listed on the London Stock Exchange in June 2005. Regulated and licensed by the Government of Gibraltar, PartyGaming has over 1,200 employees located in the head office and operations centre in Gibraltar, a business process outsourcing operation in India, and a marketing services subsidiary and multi-lingual customer service operations in Europe. PartyGaming has customers throughout the world. PartyGaming does not accept wagers or deposits for real money games from customers located in the U.S.

Required Approvals

Corporate approval of the proposed asset sale requires the affirmative vote of the holders of a majority of the Company’s outstanding common stock. Not voting, or abstaining on the vote, has the same effect as a vote against the asset sale.

In connection with the execution of the asset purchase agreement, Buyer and certain of the Company’s directors, executive officers and their affiliates entered into stockholder voting agreements to vote their shares of Company common stock in favor of approval of the asset sale and against the approval or adoption of any alternative transactions. The directors, executive officers and their affiliates also granted to Buyer a proxy to vote their shares of Company common stock in favor of approval of the asset sale and agreed not to transfer its shares of Company common stock prior to the expiration of the stockholder voting agreements. The directors, executive officers and their affiliates that entered into the stockholder voting agreements are Mr. Lyle Berman and the Bradley Berman Irrevocable Trust, Julie Berman Irrevocable Trust, Jessie Lynn Berman Irrevocable Trust and Amy Berman Irrevocable Trust; Mr. Steven Lipscomb and the Lipscomb Viscoli Children’s Trust; and Mr. Bradley Berman. These directors, executive officers and their affiliates together own or control an aggregate of approximately 39% of the Company’s outstanding common stock. The form of stockholder voting agreement is attached to this proxy statement as Annex C .

The asset sale is subject to the absence of any action commenced before any governmental authority challenging the transaction. No filings are required to be made under the Hart-Scott-Rodino Act in connection with the asset sale.

Material U.S. Federal Income Tax Consequences of the Asset Sale

The Company will recognize a taxable gain on the asset sale equal to the difference between the amount realized from the asset sale and the adjusted tax basis of the assets sold and liabilities assumed. The Company expects to have sufficient federal net operating losses to offset the gain expected to be realized from the asset sale for regular federal income tax purposes. The Company will pay federal alternative minimum tax on the gain on asset sale. The Company will not be able to use California net operating losses to offset the gain from the asset sale because California has suspended the use of net operating losses in 2009. The Company expects to pay California regular income tax on the gain on asset sale.

The Company does not expect that the asset sale will result in any federal or state income tax consequences for its stockholders since they will not receive any of the proceeds from the asset sale.

Anticipated Accounting Treatment

For financial reporting purposes, the Company will report a gain from the asset sale based on the amount of the net proceeds received by the Company and the net book value of the assets sold. If the asset sale had closed on June 28, 2009 and had the Company received a $9.8 million payment at closing (this assumes that the $12.3 million purchase price is reduced by $1.5 million in sponsorship revenue earned by the Company from PartyGaming for the period from July 10, 2009 until the close of the asset sale and accounts for the $1.0 million asset purchase agreement termination fee that was paid to Gamynia), the gain on the asset sale, net of income taxes, would have been approximately $6.2 million.

Appraisal Rights

Holders of the Company common stock are not entitled to appraisal rights in connection with the asset sale.

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THE ASSET PURCHASE AGREEMENT

Buyer and the Company entered into the asset purchase agreement as of August 24, 2009. The full text of the asset purchase agreement is attached as Annex A to this proxy statement and is incorporated by reference into this proxy statement. The Company urges you to read the asset purchase agreement in its entirety for a more complete description of the terms and conditions of the asset sale and related matters.

The representations and warranties described below and included in the asset purchase agreement and the guaranty agreement were made by the Company and Buyer and Parent to each other as of a specific date. The assertions embodied in those representations and warranties were made solely for purposes of the asset purchase agreement and the guaranty agreement and may be subject to important qualifications and limitations agreed to by the Company and Buyer and Parent in connection with negotiating the terms of the asset purchase agreement and the guaranty agreement. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the Company and Buyer and Parent rather than establishing matters as facts. The asset purchase agreement is described in this proxy statement and is included as Annex A only to provide you with information regarding the terms and conditions of the asset purchase agreement, and not to provide any other factual information regarding the Company or Buyer or their respective businesses. The guaranty agreement is described in this proxy statement and is included as Annex B only to provide you with information regarding the terms and conditions of the guaranty agreement, and not to provide any other factual information regarding the Company or Parent or their respective businesses. Accordingly, you should not rely on the representations and warranties in the asset purchase agreement or the guaranty agreement as characterizations of the actual state of facts about the Company or Buyer or Parent, and you should read the information provided elsewhere in this proxy statement for information regarding the Company and its business. See “Where You Can Find More Information” beginning on page 95 of this proxy statement.

Assets to be Sold and Liabilities to be Assumed

Buyer is purchasing substantially all of the Company’s operating assets other than cash, investments and certain other assets. Specifically, Buyer is purchasing all of the Company’s right, title and interest in and to the operating assets used in the Company’s business (other than the excluded assets described below), including:

·                   all of the Company’s library of television content;

·                   all trademarks, service marks, trade names, brand names, logos, slogans and trade references;

·                   all graphics and graphic elements, art work, copy, design, look or appearance, flow charts and software;

·                   all domain names;

·                   all information collected about users of the Company’s websites;

·                   all works of authorship or other intellectual property rights;

·                   all software or other intellectual property rights that the Company has licensed from third parties;

·                   any other intellectual or intangible property embodied in or pertaining to the Company’s business;

·                   substantially all tangible personal property owned by the Company;

·                   all rights in and under any contracts relating to the Company’s business;

·                   all permits, authorizations, consents and approvals of any governmental entity to the extent transferable by applicable law;

·                   all books, records, files and papers, whether in hard copy or electronic format, used in the business;

·                   all goodwill associated with the business or the purchased assets;

·                   all accounts receivable due from PartyGaming and Centaurus Games, LLC as of the close of the asset sale; and

·                   the ClubWPT.com subscription business.

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Buyer is also assuming certain Company liabilities used in the Company’s business (other than the excluded liabilities described below), including:

·                   all domestic broadcaster, domestic sponsorship, foreign distribution, foreign sponsorship, Internet broadcast, televised event host, brand, foreign licensed event, Brandgenuity, super affiliate, affiliate, Centaurus Games, collective bargaining, website, talent, office and warehouse, satellite host, foreign program, exhibitor, WPT Season Eight purchase orders and vendor services, and miscellaneous licenses and agreements; and

·                   one of the two Los Angeles corporate office leases and a related telephone lease.

Assets and Liabilities to be Retained by the Company

The Company is retaining the following assets:

·                   all documents relating to the organization, maintenance and existence of the Company and each of its subsidiaries;

·                   all taxpayer and other identification numbers, and all tax returns and rights to refunds or claims to overpayments attributed to tax payments made;

·                   all cash, cash balances, deposits, cash equivalents and investments and the line of credit with UBS Bank USA and UBS Financial Services;

·                   all insurance policies and bonds and all prepaid expenses and deposits related thereto and all prepaid expenses relating to the operation of the business or the purchased assets;

·                   all rights relating to the case entitled WPT Enterprises, Inc., et. al. v. Deloitte & Touche, LLP and the rights from the bankruptcy proceeding with Xyience, Inc.;

·                   investments in WPT Asia (Beijing) Consulting Co., Ltd. and Cecure Gaming Ltd., and the marketing agreement with Poker Royalty, LLC;

·                   all public company related contracts;

·                   license agreements with Rational Services Limited (PokerStars) for the license of Season Seven of the WPT television series; and

·                   all accounts receivable as of the closing date, other than accounts receivable due from PartyGaming and Centaurus Games, LLC as of the close of the asset sale.

The Company is retaining the following liabilities:

·                   any obligation, duty or liability relating to the Company’s business and the purchased assets as of the closing date;

·                   all employment obligations including all employee benefit plans and employee severance arrangements, and all director and officer indemnification obligations;

·                   one of the two Los Angeles corporate office leases and the tangible personal property located in that suite;

·                   any obligation, duty or liability under the contracts and assets retained by the Company;

·                   the Company’s fees and expenses of creating the asset purchase agreement and related ancillary agreements; and

·                   any liability or obligation for taxes for the period prior to the closing date.

Purchase Price and Future Payments

Buyer has agreed to pay the Company $12.3 million for our operating assets and has agreed to assume certain of our contracts. Buyer will also assume specified Company liabilities including one of our two corporate leases at the close of the asset sale. The purchase price will be reduced by the amount of certain obligations of an affiliate of PartyGaming accruing or paid to the Company from July 10, 2009 through the close of the asset sale, as more

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fully described below. Buyer delivered a $1 million initial payment of the purchase price to the Company upon the execution of the asset purchase agreement and will pay the balance of the purchase price at the close of the asset sale.

The amounts paid by iGlobalMedia Marketing (Gibraltar) Limited, a subsidiary of PartyGaming, to the Company from July 10, 2009 through the close of the asset sale pursuant to a sponsorship agreement with the Company for Seasons Four, Five and Six of the World Poker Tour and Season One of the Professional Poker Tour and certain related documents, will be deposited into an escrow account. The sponsorship agreement with iGlobalMedia is an exhibit to the Company’s Annual Report on Form 10-K, filed with the SEC on March 15, 2007. The amounts held in escrow will be used to satisfy claims made by Buyer under the asset purchase agreement prior to the close of the asset sale, if any. The funds held in escrow will not be the sole source of recovery for such claims. At the close of the asset sale, all amounts on deposit in the escrow account will be distributed to the Company and credited on a dollar for dollar basis against the purchase price to be paid at the closing.

Buyer has also agreed to pay the Company 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity. Certain taxes are defined as value added tax, gaming tax or other revenue-related tax and costs are defined as out-of-pocket costs. Buyer has agreed that the future gaming and other revenue-based participation amount will be at least $3 million over the three year period following the close of the asset purchase agreement, or otherwise Buyer will make up the shortfall to $3 million at the end of the period. As further explained in “indemnification,” an escrow account will be established and Buyer will pay 20% of the future revenues due to the Company into the escrow account for two years to secure the Company’s indemnification and certain other obligations to Buyer. The funds in the escrow accounts are not the sole source of recovery for the Company’s indemnification obligations to Buyer.

In the event that Buyer is involved in the acquisition, license, pledge or other disposal of any portion of the acquired business, purchased assets or a 25% or higher interest in Buyer’s capital stock, Buyer had agreed to use its best efforts to ensure that the future gaming and other revenue participation is transferred to the prospective purchaser, transferee, pledgee, licensee or other acquiring party.

No Solicitation of Conflicting Transaction

In the asset purchase agreement, the Company has agreed not to, and to use reasonable efforts to cause its subsidiaries, directors, officers, employees, affiliates, investment bankers, attorneys, accountants and other advisors not to:

·                   initiate, solicit, or knowingly facilitate or encourage the making, submission or announcement of any inquiries, proposals or offers that constitute or could reasonably be expected to lead to any other acquisition proposal;

·                   approve, endorse or recommend, or publically propose to approve or recommend, any other acquisition proposal;

·                   enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar agreement related to any other acquisition proposal; or

·                   propose to or enter into any agreement related to any other acquisition proposal that requires the Company to abandon, terminate or fail to consummate the asset purchase agreement, or propose to or breach the Company’s obligations under the asset purchase agreement.

As used in the asset purchase agreement, an acquisition proposal means any inquiry, offer or proposal:

·                   to acquire more than 10% of the Company’s assets;

·                   to acquire more than 10% of the Company’s outstanding equity securities;

·                   that if consummated would result in any party owning more than 10% of any class of the Company’s outstanding equity securities; or

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·                   for a merger, consolidation, or other business combination, recapitalization or similar transaction, including any single or multi-step transaction or series of related transactions.

The Company also agreed that prior to the Board changing its recommendation to approve the asset purchase agreement, terminating the asset purchase agreement or entering into another asset purchase agreement with another party, the Company would provide Buyer with the opportunity to submit an amended written proposal and would negotiate in good faith to make changes to the terms and conditions of the asset purchase agreement that would result in the Board recommending that Company stockholders approve the amended asset purchase agreement with Buyer.

Despite this no solicitation of a conflicting transaction provision, the Company may, in response to an unsolicited acquisition proposal that did not result from a breach of the Company’s nonsolicitation obligations under the asset purchase agreement prior to obtaining stockholder approval of the asset sale:

·                   furnish information with respect to the Company to any person making an acquisition proposal that the Company’s Board determines in good faith, after consultation with outside legal counsel, is reasonably likely to lead to a superior proposal, pursuant to a confidentiality and standstill agreement not materially less restrictive than the confidentiality and standstill agreement that the Company entered into with Buyer; and

·                   participate in discussions or negotiations with the person making such an acquisition proposal regarding the acquisition proposal.

As used in the asset purchase agreement, a superior proposal means any bona fide written proposal made by a third party on terms that the Company’s Board determines in good faith, after consultation with outside legal counsel, to be more favorable to the Company’s stockholders from a financial point of view than the asset purchase agreement and is reasonably likely to be consummated, if accepted after consideration of any modifications to the asset purchase agreement proposed by Buyer, if any.

In addition, the Company has agreed to promptly notify Buyer of the receipt of any written acquisition proposal, the identity of the person making the acquisition proposal, and the material terms and conditions of the acquisition proposal prior to furnishing information to or entering into discussions with the person.

However, the asset purchase agreement provides that the Company’s Board may propose to or actually withdraw, modify or qualify its recommendation with respect to stockholder approval of the asset sale or approve or recommend any superior proposal if the Company’s Board determines in good faith, after consultation with outside legal counsel, that failure to do so would be inconsistent with its fiduciary obligations under applicable law. In addition, the Company’s Board may take any action that is required under the Exchange Act and rules and regulations of The NASDAQ Stock Market and any other securities exchange. The Board must publically reaffirm its recommendation to support stockholder approval of the asset purchase agreement within five days of a request by Buyer to do so.

Conduct of Business Pending the Completion of the Asset Sale

Under the asset purchase agreement, the Company has agreed to operate the business in the ordinary and usual course in all material respects, consistent with past practice, and will use commercially reasonable efforts to retain its employees and consultants and to maintain its relationships with licensors, licensees, suppliers, contractors, distributors and customers.

The asset purchase agreement also contains a number of specific restrictions on the Company and its operations during the period between the signing of the asset purchase agreement and the close of the asset sale. The Company has agreed:

·                   to not incur any obligation which would result in a material adverse effect on the business, the purchased assets or Buyer’s ability to conduct the business;

·                   to not increase the compensation of, or agree to provide additional benefits to, or enter into any employment agreement with, any employee;

·                   to maintain insurance coverage;

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·                   to not sell or encumber any material portion of the purchased assets or license any purchased assets to any person;

·                   to not enter into any material agreements or commitments relating to the business;

·                   to comply in all material respects with all laws applicable to the business;

·                   to not enter into any agreement with any third party for the distribution of any of the purchased assets;

·                   to not make any material change or announce any such change to the products or services sold by the business;

·                   to not expand the use of the purchased assets within the organization of the Company;

·                   to not violate the terms of any material contracts in any material respect or enter into any material amendment to any material contracts;

·                   to not commence a lawsuit related to or involving the purchased assets; and

·                   to reasonably cooperate with Buyer in its efforts to employ the Company’s employees.

The restrictions described above do not prohibit specified actions in the ordinary course of business consistent with past practice that are described with each restriction in the asset purchase agreement and do not prohibit other actions for which the Company receives the prior written consent of Buyer.

Conditions to the Completion of the Asset Sale

The obligation of Buyer to complete the asset sale is subject to the satisfaction or waiver of several conditions set forth in the asset purchase agreement, including the following:

·                   the Company’s representations and warranties in the asset purchase agreement are true and correct in all material respects as of the closing date of the asset sale;

·                   the asset sale is approved by the Company’s stockholders;

·                   no suit, action, claim, proceeding or formal investigation is brought by a governmental entity seeking to prevent the completion of the asset sale and no injunction or other order or statute, rule, regulation or executive order by any government entity prevents the completion of the asset sale;

·                   the bill of sale, assignment and assumption agreement, escrow agreement and license agreement are delivered;

·                   all required filings with governmental agencies are made and approvals of the asset sale, if any, are obtained; and

·                   there is the absence of a change in the purchased assets or in the Company’s financial condition or results of operations that is materially adverse to the Company’s business or the purchased assets compared to the date the asset purchase agreement was signed.

The obligation of the Company to complete the asset sale is subject to the satisfaction or waiver of several conditions set forth in the asset purchase agreement, including the following:

·                   Buyer’s representations and warranties in the asset purchase agreement are true and correct in all material respects as of the closing date of the asset sale;

·                   the asset sale is approved by the Company’s stockholders;

·                   no suit, action, claim, proceeding or formal investigation is brought by a governmental entity seeking to prevent the completion of the asset sale and no injunction or other order or statute, rule, regulation or executive order by any government entity prevents the completion of the asset sale;

·                   the bill of sale, assignment and assumption agreement, escrow agreement, license agreement and legal opinion are delivered; and

·                   all required filings with governmental agencies are made and approvals of the asset sale, if any, are obtained.

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The asset purchase agreement provides that any or all of the conditions described above may be waived, in whole or in part. The Company’s Board is authorized in its discretion to waive any of the conditions to the Company’s performance without the consent of the Company’s stockholders to the extent allowed by law. The Company does not currently expect to waive any material condition to the completion of the asset sale.

Other Agreements

The asset purchase agreement also contains the following provisions or other agreements have been or will be entered into in connection with the asset purchase agreement:

Proxy Statement.   The Company agreed to file with the SEC this proxy statement relating to the Special Meeting of Company’s stockholders and to use its reasonable best efforts to have the proxy statement cleared by the SEC.

Stockholder Meeting.   The Company agreed to duly call, give notice of and hold a meeting of its stockholders to consider the proposal to approve the asset sale and to solicit proxies from Company stockholders in favor of the proposal. The Company’s Board will also recommend that the Company’s stockholders approve the asset sale at the Special Meeting.

Access to information.  The Company has agreed to permit Buyer to make a full and complete investigation of the business and the purchased assets and to receive all reasonably requested information relating to the purchased assets or the Company’s conduct of the business prior to the close of the asset purchase agreement. After the close of the asset purchase agreement, the Company and Buyer have agreed to provide each other with reasonable assistance, including the provision of available relevant records or other information, as may be reasonably requested in connection with the preparation of any financial statement or tax return, any audit or examination by any taxing authority, or any judicial or administrative proceeding relating to liability for taxes. The Company will retain a copy of the Company’s books and records and the original books and records will be transferred to Buyer at the close of the asset purchase agreement.

Regulatory Approvals and Consents.   There are no federal or state regulatory requirements that must be complied with or approval that must be obtained in connection with the asset sale or asset purchase agreement.

Guaranty Agreement.  Parent has entered into an agreement with the Company to unconditionally and irrevocably guarantee as primary obligor the performance when due of any and all covenants, agreements and other obligations of Buyer under the asset purchase agreement and related ancillary agreements. The full text of the guaranty agreement is attached as Annex B to this proxy statement and is incorporated by reference into this proxy statement. The Company urges you to read the guaranty agreement in its entirety for a more complete description of the terms and conditions of the guaranty and related matters.

Non-Competition and Non-Solicitation Agreements.   The Company has agreed, for a period of three years after the close of the asset sale not to, without the prior written consent of Buyer, participate in or create any land based poker tours, any televised poker programs and/or any online poker sites. In addition, for a period of 18 months after the closing of the asset sale, the Company and Mr. Lipscomb have agreed to not solicit or employ any employee hired by Buyer. Mr. Lipscomb has also agreed that he will not, without the prior written consent of Buyer, participate in (other than as a player not branded by a competitive online poker site) or create any land based poker tours, any televised poker programs and/or any online poker site for 18 months after the closing of the asset purchase agreement.

Invitational Seats.  Buyer has agreed to provide the Company with six invitational seats per year for the WPT Celebrity Invitational, or, if such event is not held in a given year, a substantially similar event to the extent such an event is being operated by Buyer or its affiliates. Any person taking one of these invitational seats will wear the branding designated by Buyer.

Name Change.   After the close of the asset sale, the Company has agreed to change its name to another name that does not include the purchased assets.

Other Transaction Documents.   The Company and Buyer have agreed to execute and deliver other documents in connection with the asset sale including a bill of sale, an assignment and assumption agreement, an escrow agreement and a license agreement. The Company has also agreed to provide a legal opinion at the closing.

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Termination of the Asset Purchase Agreement

The Company and Buyer can mutually agree to terminate the asset purchase agreement at any time.

The Company or Buyer may terminate the asset purchase agreement if:

·                   the close does not occur by February 24, 2010, even if the Company’s stockholders have approved the asset sale, provided that the right to terminate the asset purchase agreement is not available to any party whose failure to take any action required to fulfill any obligation under the asset purchase agreement is the reason for the failure of the closing to occur by that date;

·                   the Company’s stockholders do not approve the asset sale; or

·                   if any governmental entity issues a final and non-appealable order, decree or ruling or takes any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by the asset purchase agreement, provided that such party used its reasonable best efforts to oppose the actions of the governmental entity.

Buyer may terminate the asset purchase agreement if:

·                   the Company breaches certain of the covenants or agreements or any of the representations or warranties set forth in the asset purchase agreement if the effect of the breach is expected to result in the failure of Buyer to satisfy certain of the conditions to close the asset purchase agreement that are not cured by the earlier of February 24, 2010 or 30 days following written notice to the Company, provided that Buyer may not terminate the asset purchase agreement if Buyer is in material breach of any of its covenants or agreements or representations and warranties contained in the asset purchase agreement;

·                   the Company’s Board, or any committee thereof, announces its intention to or decides to approve, adopt or recommend an alternative acquisition proposal that the Board decides is superior to the asset sale to Buyer;

·                   the Company’s Board announces its intention to or withholds, withdraws, qualifies, modifies or amends the Board’s recommendation to the Company’s stockholders to approve the asset sale to Buyer;

·                   the Company announces its intention to or executes any letter of intent, memorandum of understanding or similar contract relating to any alternative acquisition proposal;

·                   with the prior consent of the Company’s Board any person or group acquires beneficial ownership of more than 25% of the Company’s outstanding shares of capital stock; or

·                   the Company breaches its obligation to hold the Special Meeting other than solely as a result of actions by the SEC.

The Company may terminate the asset purchase agreement if:

·                   Buyer breaches certain of the covenants or agreements or any of the representations or warranties set forth in the asset purchase agreement if the effect of the breach is expected to result in the failure of the Company to satisfy certain of the conditions to close the asset purchase agreement that are not cured by the earlier of February 24, 2010 or 30 days following written notice to Buyer; provided that the Company may not terminate the asset purchase agreement if the Company is in material breach of any of its covenants or agreements or representations and warranties contained in the asset purchase agreement;

·                   the Company’s Board decides to accept an alternative acquisition proposal that the Board decides is superior to the asset sale to Buyer; or

·                   federal legislation is passed in the U.S. which the Company’s Board determines in good faith, after consultation with outside legal counsel, would result in the legalization of online gaming in the U.S.

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Effect of Termination of the Asset Purchase Agreement

In the event of the termination of the asset purchase agreement as described above, the asset purchase agreement will be of no further force or effect, except:

·                   designated provisions of the asset purchase agreement, including if applicable, the termination fees described below, will survive termination;

·                   termination of the asset purchase agreement will not affect the obligations of the parties contained in their confidentiality agreement, which will survive termination of the asset purchase agreement in accordance with its terms; and

·                   if the termination of the asset purchase agreement is a result of the willful failure of any party to perform a material obligation or a material covenant, then such party is liable for damages suffered by the other party.

Termination Fee

The Company would owe Buyer a $1 million termination fee if Buyer terminates the asset purchase agreement because:

·                   the Company breaches certain of the covenants or agreements or any of the representations or warranties set forth in the asset purchase agreement if the effect of the breach is expected to result in the failure of Buyer to satisfy certain of the conditions to close the asset purchase agreement that are not cured by the earlier of February 24, 2010 or 30 days following written notice to the Company, provided that Buyer may not terminate the asset purchase agreement if Buyer is in material breach of any of its covenants or agreements or representations and warranties contained in the asset purchase agreement;

·                   the Company’s Board, or any committee thereof, announces its intention to or decides to approve, adopt or recommend an alternative acquisition proposal that the Board decides is superior to the asset sale to Buyer;

·                   the Company’s Board announces its intention to or withholds, withdraws, qualifies, modifies or amends the Board’s recommendation to the Company’s stockholders to approve the asset sale to Buyer;

·                   the Company announces its intention to or executes any letter of intent, memorandum of understanding or similar contract relating to any alternative acquisition proposal;

·                   with the prior consent of the Company’s Board any person or group acquires beneficial ownership of more than 25% of the Company’s outstanding shares of common stock; or

·                   the Company Breaches its obligation to hold the Stockholder Meeting other than solely as a result of actions by the SEC.

Buyer would owe the Company a $1 million termination fee if the Company terminates the asset purchase agreement because Buyer breaches any of the covenants or agreements or any of the representations or warranties set forth in the asset purchase agreement if the effect of the breach is expected to result in the failure of the Company to satisfy any of the conditions to close the asset purchase agreement that are not cured by the earlier of February 24, 2010 or 30 days following written notice to Buyer; provided that the Company may not terminate the asset purchase agreement if it is in material breach of any of the Company’s covenants or agreements or representations and warranties contained in the asset purchase agreement. In addition, the Company and Buyer have agreed to reimburse each other for reasonable and documented costs and expenses incurred in connection with the collection and enforcement of the requirement to pay the $1 million termination fee if the Company or Buyer terminates the asset purchase agreement.

Reimbursement of Initial Payment

Buyer delivered a $1 million initial payment of the purchase price to the Company upon the execution of the asset purchase agreement. The Company will be obligated to reimburse Buyer for the $1 million initial payment if the asset purchase agreement is terminated because:

·                   the Special Meeting is held and the Company’s stockholders do not approve the asset sale;

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·                   the Company breaches certain of the covenants or agreements or any of the representations or warranties set forth in the asset purchase agreement if the effect of the breach is expected to result in the failure of the Company to satisfy certain of the conditions to close the asset purchase agreement that are not cured by the earlier of February 24, 2010 or 30 days following written notice to the Company, provided that Buyer may not terminate the asset purchase agreement if Buyer is in material breach of any of its covenants or agreements or representations and warranties contained in the asset purchase agreement;

·                   the Company’s Board, or any committee thereof, announces its intention to or decides to approve, adopt or recommend an alternative acquisition proposal that the Board decides is superior to the asset sale to Buyer;

·                   the Company’s Board announces its intention to or withhold, withdraw, qualify, modify or amend the Board’s recommendation to the Company’s stockholders to approve the asset sale to Buyer;

·                   the Company announces its intention to or executes any letter of intent, memorandum of understanding or similar contract relating to any alternative acquisition proposal;

·                   with the prior consent of the Company’s Board any person or group acquires beneficial ownership of more than 25% of the Company’s outstanding shares of common stock;

·                   the Company terminates the asset purchase agreement in connection with a change in federal law which would result in the legalization of online gambling in the U.S.;

·                   the close of the asset sale does not occur by February 24, 2010 and either the Company’s failure to fulfill its obligations is the cause of the failure to close and the agreement is terminated by Buyer or the asset purchase agreement is terminated by the Company and the failure to close was not as a result of Buyer’s failure to fulfill its obligations; or

·                   a governmental entity issues an order, decree or ruling which prohibits the transaction from closing and such government action is caused by the Company’s failure to comply with any applicable law.

The Company will be obligated to reimburse Buyer for $500,000 if the asset purchase agreement is terminated because:

·                   the agreement is terminated by mutual consent of Buyer and the Company; or

·                   a governmental entity issues an order, decree or ruling which prohibits the asset sale from closing and such governmental action is not caused by either the Company’s or Buyer’s failure to comply with any applicable law.

If the asset purchase agreement is terminated for any reason other than those listed above, the Company will retain the full amount of the initial payment.

Representations and Warranties

The asset purchase agreement contains representations and warranties made by the Company to Buyer. These representations and warranties relate to, among other things:

·                   our corporation is duly organized, validly existing and in good standing under the laws of the State of Delaware, we have the requisite corporate power and authority to own, lease and operate our properties and to carry on the business as now being conducted, and we are duly qualified or licensed as foreign corporations to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by us or the nature of our business makes such qualification or licensing necessary;

·                   the asset purchase agreement and the other documents to be signed at the close of the asset purchase agreement were authorized by the Company’s Board, were validly signed and are binding on the Company;

·                   other than filings under the Exchange Act or the rules of the Nasdaq, the Company does not need any permit, authorization, consent or approval of any government entity to close the asset sale;

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·                   the asset purchase agreement and other documents to be signed at the close of the asset sale will not breach the terms of our Certificate of Incorporation or Bylaws, breach the terms of material contracts that were sold to Buyer or violate any law, order, writ, injunction or decree of any governmental entity;

·                   the assets sold to Buyer include all properties currently used by us in the operation of our business and Buyer can operate our business after the close of the asset sale in the way we currently do;

·                   we have valid title, license or leasehold interest in the assets sold to Buyer and these assets are in good operating condition;

·                   the asset sale agreement does not breach, violate or conflict with any of our intellectual property rights and our intellectual property rights do not infringe on the intellectual property rights of others;

·                   we have all material consents, approvals, registrations, certifications, authorizations, permits and licenses to operate our business;

·                   we have disclosed all of our employee and contractor compensation, benefits and benefit plans and we have materially complied with all employment laws and collective bargaining agreements;

·                   we have paid all of our income and other taxes when due;

·                   we have complied with all applicable laws;

·                   we have disclosed all contracts that are material to our business, our contracts are binding obligations to the parties thereto and the aggregate financial obligation of contracts that were not disclosed to Buyer is less than $500,000;

·                   there are no claims, actions, suits, inquiries, proceedings, or investigations against us and there are no grievance or arbitration proceedings pending against us;

·                   we are not in default with respect to any judgment, order, writ, injunction or decree of any court or any governmental entity;

·                   we have disclosed all insurance policies and fidelity bonds covering the assets we are selling to Buyer and there are no pending claims under any of our insurance policies or fidelity bonds;

·                   the schedules to the asset purchase agreement are true and correct;

·                   we have not employed a broker or finder in connection with this asset sale; and

·                   we have disclosed all of our subsidiaries to Buyer.

The asset purchase agreement also contains representations and warranties made by Buyer to the Company. These representations and warranties relate to, among other things:

·                   the corporation is duly organized, validly existing and in good standing under the laws of Gibraltar;

·                   the asset purchase agreement and the other documents to be signed at the close of the asset purchase agreement were authorized by Buyer’s board of directors, were validly signed and are binding on Buyer;

·                   other than the Gibraltar regulatory requirement to approve organizational changes to Parent, Buyer does not need any permit, authorization, consent or approval of any government entity to close the asset sale;

·                   the asset purchase agreement and other documents to be signed at the close of the asset sale will not breach the terms of its Certificate of Incorporation or Bylaws or violate any law, order, writ, injunction or decree of any governmental entity;

·                   no consents are required to enter into the asset purchase agreement; and

·                   Buyer did not employ a broker or finder in connection with this asset sale.

The agreement covering Parent’s guarantee of Buyer obligations also contains representations and warranties made by Parent to the Company. These representations and warranties relate to, among other things:

·                   the corporation is duly organized, validly existing and in good standing under the laws of Gibraltar;

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·                   the guaranty agreement and the other documents to be signed by Parent at the close of the asset sale were authorized by Parent’s board of directors, were validly signed and are binding on Parent;

·                   other than the Gibraltar regulatory requirement to approve organizational changes to Parent, no consents are required to enter into the guarantee of Buyer obligations;

·                   the guarantee of Buyer obligations will not breach the terms of its Certificate of Incorporation or Bylaws or violate any law, order, writ, injunction or decree of any governmental entity; and

·                   no consents are required to enter into the guaranty agreement.

Indemnification

The representations and warranties in the asset purchase agreement generally survive for three years after the asset sale closes. Representations and warranties about taxes survive for the period of the applicable statute of limitations and representations and warranties about organization, standing and power, authority, and execution and binding effect survive forever. All covenants in the asset purchase agreement and all claims related to fraud survive forever unless the covenants have specific terms in the asset purchase agreement.

The Company has agreed to indemnify and hold Buyer harmless from all damages due to misrepresentation or breach of any of the Company’s representations and warranties, from a failure to fulfill any covenant or agreement made, and from a failure to pay any claim or liability that is a retained liability. The Company has no indemnification obligations to Buyer for taxes that arise from and are created by the asset purchase agreement. Damages are net of the amount of any insurance proceeds recovered by Buyer.

Buyer has agreed to indemnify and hold the Company harmless from all damages due to misrepresentation or breach of any of Buyer’s representations and warranties, from a failure to fulfill any covenant or agreement made, from a failure to pay any claim or liability that is an assumed liability, and from liabilities that result from the confidential treatment of Buyer’s customers. Buyer has no indemnification obligations to the Company for taxes that arise from and are created by the asset purchase agreement. Damages are net of the amount of any insurance proceeds recovered by the Company.

An escrow account will be established and Buyer will pay 20% of the future gaming and other revenue participation due to the Company into the escrow account for two years to secure the Company’s indemnification obligations to Buyer. The escrow period can exceed two years if additional time is needed to determine the appropriate amounts to be disbursed from the escrow account. Damages must exceed $150,000 before the Company is required to pay the claims, other than claims for breaches of certain fundamental or tax representations and warranties, breaches of covenants, or claims associated with the operation of the business or the use of the purchased assets prior to the closing date. The aggregate damages may not exceed $9 million.

Any controversy, dispute or claim regarding the asset purchase agreement, including a claim about misrepresentation or breach of any representation or warranty is to be settled by arbitration.

The Company has not obtained any insurance policies covering the matters as to which it will indemnify Buyer. The Company’s indemnification covenants to its directors and officers will remain in effect following the asset sale.

Material U.S. Federal Income Tax Consequences

The Company will recognize a taxable gain on the asset sale equal to the difference between the amount realized from the asset sale and the adjusted tax basis of the assets sold and liabilities assumed. The Company expects to have sufficient federal net operating losses to offset the gain expected to be realized from the asset sale for regular federal income tax purposes. The Company will pay federal alternative minimum tax on the gain on asset sale. The Company will not be able to use California net operating losses to offset the gain on asset sale because California suspended the use of net operating losses in 2009. The Company expects to pay California regular income tax on the gain on asset sale.

The Company does not expect that the asset sale will result in any federal or state income tax consequences for its stockholders since they will not receive any of the proceeds from the asset sale.

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Amendment

Subject to applicable laws, the Company and Buyer may mutually amend or waive any provision of the asset purchase agreement at any time. The Company does not currently expect to waive any material provision of the asset sale.

Governing Law

The asset purchase agreement is governed by the laws of the State of California.

Interests of Management and the Board of Directors

In February 2009, the Company’s Board of Directors authorized an exchange of stock options, a bonus arrangement and a severance arrangement with Mr. Lipscomb. The Board offered to exchange and Mr. Lipscomb accepted 500,000 new stock options priced at $0.49 if Mr. Lipscomb returned 600,000 fully vested stock options with an exercise price of $8.00 per share to the Company. The vesting of the new stock options was restarted and one quarter of the stock options vests annually on January 1 of each year. Vesting of the new stock options does not accelerate on a change in control, this asset sale transaction or if Mr. Lipscomb’s employment terminates. The Board also authorized a new bonus arrangement with Mr. Lipscomb in the event a change in control occurs due to the sale of the Company in 2009. Mr. Lipscomb will be paid 5% of the gross proceeds from the sale in 2009 of all or substantially all of the assets or equity interests in the Company in excess of the fair market value of cash, cash equivalents and debt securities held by the Company on the date the transaction is closed. If the asset sale with Buyer is closed in 2009, it is estimated that Mr. Lipscomb will be paid approximately $490,000 under this bonus arrangement as well as 5% of future gross gaming revenues less certain taxes and 5% of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity. The estimated amount is $50,000 less as a result of Mr. Lipscomb’s offer to subtract any breakage fees actually paid by the Company from the purchase price amount used to calculate his bonus.

Mr. Lipscomb has agreed to enter into an 18 month non-solicitation and non-compete agreement with Buyer. Mr. Lipscomb has agreed to not solicit or employ any employee hired by Buyer. Mr. Lipscomb has also agreed that he will not, without the prior written consent of Buyer, participate in (other than as a player not branded by a competitive online poker site) or create any land based poker tours, any televised poker programs and/or any online poker site.

In May 2009, the Company’s Board of Directors authorized an increase in the change in control payments to two executive officers if a sale of the Company’s assets to Buyer or Gamynia closed in 2009. Previously, these two officers were to receive six months severance if their employment was terminated without cause. The arrangement was further modified by the Company’s Board of Directors in September 2009 to apply in connection with the closing of the contemplated transaction with Buyer or any subsequent topping offer which leads to the closing of a similar transaction, regardless of when such closing occurs. Previously, the two officers would only have received the severance payments if the transaction closed in 2009. Under the new change in control arrangements, Mr. Rohin Malhotra will receive $412,500 and Mr. Adam Pliska will receive $345,000 if a sale of the Company’s assets to Buyer closes.

Mr. Pliska has entered into an employment agreement with an affiliate of Buyer that is effective upon the close of the asset purchase agreement.

The sale of the Company’s operating assets to Buyer will result in an acceleration of the vesting of stock options held by the Company’s Board of Directors, executive officers and all other Company employees, other than Mr. Lipscomb.

The Company’s only remaining employees after the close of the asset sale will be the Company’s current President and Chief Executive Officer Steve Lipscomb and a small number of support staff.

Except as disclosed in this proxy statement, there are no present or proposed material agreements, arrangements, understandings or relationships among the Company, Buyer or Parent or any of their respective executive officers, directors, controlling persons or subsidiaries.

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DESCRIPTION OF WPT ENTERPRISES, INC.

WPT Enterprises, Inc.

5700 Wilshire Blvd., Suite 350

Los Angeles, CA 90036

(323) 330-9900

The Company creates internationally branded entertainment and consumer products driven by the development, production and marketing of televised programming based on gaming themes. Our current season of the World Poker Tour, or WPT television series - Season Seven, based on a series of high-stakes poker tournaments, currently airs on Fox Sports Net in the U.S., and has been licensed for broadcast globally. In January 2008, we launched ClubWPT.com, an innovative subscription-based online poker club targeted to the estimated 60 million poker players in the U.S., which is currently offered in 38 states. Through November 2008, we offered a real-money online gaming website which prohibited wagers from players in the U.S. and other restricted jurisdictions. We also license our brand to companies in the business of poker equipment and instruction, apparel, publishing, electronic and wireless entertainment, DVD/home entertainment, casino games and giftware and are engaged in the sale of corporate sponsorships. Through March 2009, we developed and marketed online and mobile games supporting the WPT China National Traktor Poker Tour.

We operate through four business segments, WPT Studios, WPT Online, WPT Global Marketing and WPT China, described in greater detail below:

WPT Studios , our multi-media entertainment division, generates revenue through domestic and international television licensing, domestic and international television sponsorship, as well as host fees from casinos and card rooms that host our televised events.

WPT Online includes the online poker club ClubWPT.com that generates revenue from subscriptions, which began operations in January 2008, our international poker and casino real money gaming websites which were terminated in November 2008 and an online merchandise store.

WPT Global Marketing includes branded consumer products, sponsorships and event management. Branded consumer products generate revenue from the licensing of our brand to companies seeking to use the World Poker Tour brand and logo in the retail sales of their consumer products. Sponsorship and event management generates revenue through corporate sponsorship and management of televised and live events.

WPT China produced third-party branding at WPT China National Traktor Poker Tour events, licensed the television broadcast of the WPT China National Traktor Poker Tour and marketed the popular Chinese national card game “Tuo La Ji” or “Traktor Poker” in online and mobile games. This segment was shut down in March 2009.

DESCRIPTION OF PEERLESS MEDIA LTD. AND ELECTRAWORKS LTD.

Buyer and Parent are Gibraltar private limited companies and Buyer is a subsidiary of Parent. Parent is the principal operating subsidiary in the PartyGaming Plc group of companies.

PartyGaming is the world’s leading listed online gaming business. PartyGaming offers a variety of games through an integrated Party-branded platform and through a number of secondary brands and alliances with blue chip companies. Through a unique operating platform, adults can tune in to a broad range of games, using multiple languages, multiple-currency options and with the tools to ensure they have fun and play within their means.

PartyGaming listed on the London Stock Exchange in June 2005. Regulated and licensed by the Government of Gibraltar, PartyGaming has over 1,200 employees located in the head office and operations centre in Gibraltar, a business process outsourcing operation in India, and a marketing services subsidiary and multi-lingual customer

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service operations in Europe. PartyGaming has customers throughout the world. PartyGaming does not accept wagers or deposits for real money games from customers located in the U.S.

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SELECTED FINANCIAL DATA

The selected financial data as of December 28, 2008 and December 30, 2007 and for the years ended December 28, 2008, December 30, 2007 and December 31, 2006 are derived from the Company’s audited financial statements, which have been audited by Piercy, Bowler, Taylor & Kern, an independent registered public accounting firm, and are included in this proxy statement beginning on page F-1. The selected financial data as of December 31, 2006, January 1, 2006 and January 2, 2005 and for the years ended January 1, 2006 and January 2, 2005 are derived from the Company’s audited financial statements, which have been audited by Piercy, Bowler, Taylor & Kern, an independent registered public accounting firm, and are not included in this proxy statement. The statement of operations data for the six months ended June 28, 2009 and June 29, 2008, as well as the balance sheet data as of June 28, 2009 are derived from the Company’s unaudited financial statements included in this proxy statement beginning on page F-20. The financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s consolidated financial statements and related notes appearing elsewhere in this proxy statement. The historical results are not necessarily indicative of results to be expected in any future period (in thousands, except per share data).

Statements of Net Earnings (Loss) Data

(1)  This is the 2009 and 2008 impairment of the Company’s investment in Cecure Gaming and the 2007 write off of online gaming assets.

(2)  This is the 2006 sale of the Company’s investment in PokerTek, Inc.

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Balance Sheet Data

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BUSINESS

Proposed Asset Sale to Buyer

Until the close of the proposed asset sale with Buyer, the Company expects to continue to execute its existing business strategy.

Overview of Business

WPT Studios

Background

The WPT is a sports league of affiliated poker tournaments that are open to the public. Season Seven of the WPT had 13 regular WPT tournaments or tour stops on the circuit, which were hosted by prestigious casinos and poker rooms. Each season of tour stops culminates in the WPT World Championship at the Bellagio Hotel and Casino in Las Vegas, Nevada, which includes the winners of each of that season’s previous WPT tournaments. The WPT stops have attracted well-known and established professional and amateur poker players on the poker circuit. We also make our tour stops accessible to the mainstream poker player by partnering with casinos and poker rooms which host “satellite” and “super satellite” poker tournaments in which the winner or winners may ultimately earn a paid entry into a WPT event. At our tour stops, we film the final table of six participants competing for some of the poker world’s largest tournament prize pools. We then edit the footage from each tour stop into a one-hour or two-hour episode, resulting in a series of one-hour or two-hour episodes which are distributed for telecast to both domestic and international television audiences. In addition, we film and produce special episodes based on a variety of non-traditional poker tournaments, which we also distribute for telecast along with the episodes based on our regular tour stops.

Season Seven of the WPT television series aired on Fox Sports Net in the U.S. Season Six aired on the Game Show Network in the U.S. and Seasons One through Five aired on the Travel Channel in the U.S. The following table describes the timing of the production and U.S. licensing of Seasons One through Seven of the WPT television series, including the production and initial exhibition of the episodes in each season:

WPT Tour Stops

Poker tournaments have been hosted by many casinos and card rooms around the world for many years. To gain a seat at the table in these tournaments, competitors “buy-in” by paying an entry fee, some or all of which goes into the tournaments’ prize pools (that is, the amount of money that the winners take home). This buy-in amount at major tournaments ranges from $10,000 to as much as $25,000 at the largest and best known tournaments. At the WPT’s regular season events and the WPT World Championship, anyone is eligible to buy-in and play, subject to the house rules of the host casino and to the laws of the jurisdiction where the tournament is held.

The style of poker played at all WPT events is Texas Hold ‘Em. Players are assigned to different tables at which each player competes against the others until being eliminated by losing all of his or her chips. Tables are combined as players are eliminated and the players holding chips continue to compete until six players remain. On the last day of the tournament, these six players compete at the “final table” located in a designated WPT arena

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until only one player, the champion, remains. Professional and amateur poker players may be drawn to established tournaments based on the size of a poker tournament’s prize pool, the prestigious nature of the casino or card room hosting the event, the history and tradition of the tournament itself and the level of the competition drawn to the event.

While many of WPT’s tournaments have been in existence for years, we have turned them into a circuit of events that is affiliated under the WPT brand. The inaugural season of the WPT consisted of 12 tour stops and the season ending WPT World Championship, and we have added additional tournaments to the WPT’s list of tour stops in the subsequent seasons. Currently, the WPT consists of the following 13 poker tournaments, which comprise our Season Seven tour stops:

·                   Bellagio Cup IV—Bellagio (Las Vegas, Nevada);

·                   Legends of Poker—Bicycle Casino (Bell Gardens, California);

·                   Borgata Poker Open—Borgata Hotel Casino and Spa (Atlantic City, New Jersey);

·                   North American Poker Championship—Fallsview Casino Resort (Niagara Falls, Canada);

·                   Festa Al Lago—Bellagio (Las Vegas, Nevada);

·                   World Poker Finals—Foxwoods Resort Casino (Mashantucket, Connecticut);

·                   Doyle Brunson Five Diamond World Poker Classic—Bellagio (Las Vegas, Nevada);

·                   Gulf Coast Poker Championship—Beau Rivage (Biloxi, Mississippi);

·                   LA Poker Classic—Commerce Casino (Commerce, California);

·                   WPT Celebrity Invitational—Commerce Casino (Commerce, California);

·                   Bay 101 Shooting Star—Bay 101 Casino (San Jose, California);

·                   Foxwoods Poker Classic—Foxwoods Resort Casino (Mashantucket, Connecticut);

·                   WPT World Championship—Bellagio (Las Vegas, Nevada).

WPT Specials

In addition to filming and producing content for distribution and exhibition based on the final tables of the WPT’s regular tour stops, we also film and produce non-tournament WPT episodes. We did not produce any special episodes in 2008, but in the past these special episodes have included the following:

·                   WPT Ladies Night

·                   WPT Battle of Champions

·                   WPT Hollywood Home Game

·                   WPT Bad Boys of Poker

·                   WPT Poker by the Book

·                   WPT Young Guns of Poker

·                   WPT American Chopper vs. Trading Spaces

·                   WPT Fathers and Sons

Access to the WPT—Our Satellite and Super Satellite Tournaments

To have a successful buy-in tournament event like the regular WPT events or the WPT World Championship, “satellite” and “super satellite” tournaments are important in ensuring a large field of players that will generate a substantial prize pool for the winners. Satellites are tournaments that allow players to buy-in for a fraction of the cost of a major event in hopes of winning a seat in other satellites or the major event itself. For example, assuming that a WPT event costs $10,000 to enter, a one-table satellite (ten players) for this event would cost $1,000 to play and the winner of the satellite would receive a paid entry into the $10,000 event. Most casinos