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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ______________________


                                    FORM 20-F

                                   (MARK ONE)

[ ]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
         SECURITIES EXCHANGE ACT OF 1934

OR

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the fiscal year ended December 31, 2004

OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                         Commission file number 0-32793

                                WORLD GAMING PLC
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                                England and Wales
                 (Jurisdiction of Incorporation or Organization)
                                  Jasmine Court
                                Friars Hill Road
                          St. Johns, Antigua Tel: (268)
                          480-1650 Fax: (268) 480-1656
                    (Address of Principal Executive Offices)

         Securities registered pursuant to Section 12(b) of the Act: NONE

         Securities registered pursuant to Section 12(g) of the Act: Ordinary
Shares, nominal value (pound)0.002 per share, represented by American Depositary
Shares evidenced by American Depositary Receipts.

         Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: NONE

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report: As of December 31, 2004, the Registrant had 46,331,407 ordinary
shares issued and outstanding, nominal value (pound)0.002 per share.

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]  No  [ ]

         Indicate by check mark which financial statement item the registrant
has elected to follow.

[X] Item 17      [ ] Item 18

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<PAGE>
                                WORLD GAMING PLC

                           ANNUAL REPORT ON FORM 20-F
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                                TABLE OF CONTENTS

Certain Definitions and Conventions............................................1

Special Note Regarding Forward-Looking Statements..............................1

PART I.........................................................................2

   Item 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.............2

   Item 2.   OFFER STATISTICS AND EXPECTED TIMETABLE...........................2

   Item 3.   KEY INFORMATION...................................................2
               Selected Financial Data.........................................2
               Risk Factors....................................................4

   Item 4.   INFORMATION ON THE COMPANY.......................................12
               History and Development........................................12
               Our Operations.................................................14
               Restructuring of Operations....................................15
               Business Strategy..............................................16
               Marketing......................................................16
               Competitive Environment........................................17
               Intellectual Property..........................................17
               Technology.....................................................18
               Products and Services..........................................19
               Gaming Products Under Development..............................21
               Our Licensees..................................................22
               Organizational Structure.......................................23
               Government Licensing and Regulation and Related Risks..........28
               Property, Plants and Equipment.................................30

   Item 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS.....................31
               Change in Fiscal Year..........................................31
               Results of Operations..........................................31
               Operating Results for Fiscal 2004..............................32
               Operating Results for Fiscal 2003..............................33
               Liquidity and Capital Resources................................35
               Contractual obligations........................................36
               Payments due by period.........................................37
               Trend Information..............................................37

   Item 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.......................37
               Directors and Senior Management................................37
               Background Information Concerning Directors....................37
               Background Information Concerning Senior Management
                 and Certain Key Employees....................................39
               Compensation...................................................40
               Board Practices................................................45
               Committees of the Board of Directors...........................45
               Employees......................................................46
               Share Ownership of Senior Management and Directors.............46

                                        i
<PAGE>

   Item 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS................47
               Major Shareholders.............................................47
               Related Party Transactions.....................................48

   Item 8.   FINANCIAL INFORMATION............................................49
               Consolidated Financial Statements..............................49
               Legal Proceedings..............................................49
               Dividend Policy................................................50
               Significant Changes............................................51

   Item 9.   THE OFFER AND LISTING............................................51
               Nature of Trading Market.......................................51
               Registrar, Transfer Agent and Depositary.......................52

   Item 10.  ADDITIONAL INFORMATION...........................................52
               Memorandum of Association and Articles of Association..........52
               Board Action and Powers........................................52
               Description of Share Capital...................................55
               Exchange Controls and Other Limitations Affecting
                 Security Holders.............................................62
               Change of Control..............................................62
               Material Contracts.............................................63
               Employment and Consulting Agreements...........................67
               United Kingdom Tax Consequences................................71
               United States Federal Income Tax Consequences..................75
               Tax Consequences for U.S. Holders..............................75
               Tax Consequences for Non-U.S. holders..........................81
               Taxation of the Company........................................82
               Documents on Display...........................................83

   Item 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......82

   Item 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES...........83

PART II.......................................................................83

   Item 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES..................83

   Item 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
               USE OF PROCEEDS................................................83
             Material Modifications to the Rights of Security Holders.........83
             Use of Proceeds from Offering....................................83

   Item 15.  CONTROLS AND PROCEDURES..........................................84

   Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT.................................84

   Item 16B. CODE OF ETHICS...................................................84

   Item 16C. Principal Accountant Fees and Services...........................86

   Item 16D. Exemptions From the Listing Standards for Audit Committees.......86

   Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
             Purchasers.......................................................86

PART III......................................................................88

   Item 17.  FINANCIAL STATEMENTS.............................................88

   Item 18.  FINANCIAL STATEMENTS.............................................88

   Item 19.  EXHIBITS.........................................................88

                                       ii
<PAGE>
                       CERTAIN DEFINITIONS AND CONVENTIONS

         In this annual report, references to the "Company", "our Company,"
"Group," "our Group," "World Gaming," "we," "us" and "our" refer to World Gaming
plc and one or more of its operating subsidiaries as the context may require.
World Gaming plc and its subsidiary, WG International Ltd., are holding
companies and they conduct their businesses through their operating
subsidiaries. All references to "LVA" refer to one of our subsidiaries, LVA
Holdings, Inc. References to $ and "U.S. dollars" are to United States currency,
any references to "(pound)", "pounds sterling", "pence" or "p" are to U.K.
currency, and any references to "CDN" are references to Canadian currency.
Percentages and certain amounts contained herein have been rounded for ease of
presentation. Any discrepancies in any table between totals and the sums of
amounts listed are due to rounding.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         We make certain forward-looking statements in this Form 20-F within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, relating to our
financial condition, profitability, liquidity, resources, business outlook,
proposed acquisitions (if any), market forces, corporate strategies, contractual
commitments, capital requirements and other matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. To comply with the terms of the safe harbor, we note that a variety
of factors could cause our actual results and experience to differ substantially
from the anticipated results or other expectations expressed in our
forward-looking statements. When words and expressions such as: "believes,"
"expects," "anticipates," "estimates," "plans," "intends," "objectives,"
"goals," "aims," "projects," "forecasts," "possible," "seeks," "may," "could,"
"should," "might," "likely," "enable" or similar words or expressions are used
in this Form 20-F, as well as statements containing phrases such as "in our
view," "there can be no assurance," "although no assurance can be given" or
"there is no way to anticipate with certainty," forward-looking statements are
being made. These forward-looking statements speak as of the date of this Form
20-F.

         The forward-looking statements are not guarantees of future performance
and involve risk and uncertainties. These risks and uncertainties may affect the
operation, performance, development and results of our business and could cause
future outcomes to differ materially from those set forth in our forward-looking
statements. These statements are based on our current beliefs as to the outcome
and timing of future events, and actual results may differ materially from those
projected or implied in the forward looking statements. Further, some
forward-looking statements are based upon assumptions of future events which may
not prove to be accurate. The forward-looking statements involve risks and
uncertainties including, but not limited to, the risks and uncertainties
referred to under "Item 3. Key Information - Risk Factors," and elsewhere within
this Form 20-F and in other of our filings with the Securities and Exchange
Commission.

         We undertake no obligation to publicly update or revise any
forward-looking statements as a result of future developments, events and
conditions outside of our control. New risk factors emerge from time to time and
it is not possible for us to predict all such risk factors, nor can we assess
the impact of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ
significantly from those forecast in any forward-looking statements. Given these
risks and uncertainties, investors should not overly rely or attach undue weight
to our forward-looking statements as an indication of our actual future results.

                                        1
<PAGE>
                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

         Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

         Not applicable.

ITEM 3.  KEY INFORMATION

SELECTED FINANCIAL DATA

         The data below should be read in conjunction with "Item 5. Operating
and Financial Review and Prospects" and our audited consolidated financial
statements and notes relating thereto appearing elsewhere in this annual report,
and which have been audited by our independent auditors, HJ & Associates, as of
and for the years ended December 31, 2004 and 2003, as of and for the eight
months ended December 31, 2001 and as of and for the years ended April 30, 2001
and 2000; and by Baker Tilly, our prior independent auditors, as of and for the
year ended December 31, 2002. The selected financial data for the fiscal year
ended April 30, 2000 is derived from the financial statements of our subsidiary
LVA Holdings Inc., which we acquired subsequent to the fiscal year ended April
30, 2001 pursuant to a holding company reorganization.

         The data below, except for per share information, is in thousands of
U.S. dollars.
<TABLE>
<CAPTION>
                                     FOR THE YEARS ENDED DECEMBER 31,                            FOR THE YEARS ENDED
                                                                                                       APRIL 30,
                      _________________________________________________________________________________________________

                           2004         2003          2002          2001*         EIGHT          2001            2000
                                                                                  MONTHS
                                                                 (UNAUDITED)      ENDED
                                                                                 DECEMBER
                                                                                 31, 2001
                      _________________________________________________________________________________________________
<S>                       <C>          <C>           <C>            <C>           <C>           <C>            <C>
STATEMENT OF
   OPERATIONS DATA:

Net sales                 $16,288      $17,698       $16,777        $18,175       $12,107       $20,153        $17,881

Income (loss) from
   operations               5,183        2,127        (5,410)       (16,465)       (2,371)      (17,019)        (4,886)

Income (loss) from
continuing operations      17,370        2,958        (5,318)       (16,277)       (2,236)      (16,756)        (4,462)

Income (loss) from
operations per share         0.11         0.05         (0.16)         (0.49)        (0.07)        (0.52)         (0.17)

Income (loss) from
continuing operations
per share                    0.38         0.07         (0.16)         (0.50)        (0.07)        (0.52)         (0.16)

Basic Income
(loss)                       0.38         0.07         (0.16)         (0.50)        (0.07)        (0.52)         (0.12)

Basic Income (loss)
per share excluding
non-voting                   0.53         0.07         (0.16)         (0.50)        (0.07)        (0.52)         (0.12)


                                        2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     FOR THE YEARS ENDED DECEMBER 31,                            FOR THE YEARS ENDED
                                                                                                       APRIL 30,
                      _________________________________________________________________________________________________

                           2004         2003          2002          2001*         EIGHT          2001            2000
                                                                                  MONTHS
                                                                 (UNAUDITED)      ENDED
                                                                                 DECEMBER
                                                                                 31, 2001
                      _________________________________________________________________________________________________
<S>                       <C>          <C>           <C>            <C>           <C>           <C>            <C>
Weighted average
number of shares (in
thousands)                 45,981       42,932        34,193         33,442        33,997        32,201         29,625

Weighted average
number of shares (in
thousands) excluding
non-voting **              32,475       42,932        34,193         33,442        33,997        32,201         29,625

Diluted earnings per
   share                  $  0.10      $  0.05       $     -        $     -       $     -       $     -        $     -

Diluted earnings
(loss) per share
excluding non-voting      $  0.46      $  0.05       $     -        $     -       $     -       $     -        $     -
                      _________________________________________________________________________________________________
Cash dividends
   declared per common
   share                  $     -      $     -       $     -        $     -       $     -       $     -        $     -
                      _________________________________________________________________________________________________
</TABLE>

* In connection with the Company's holding company reorganization on May 17,
2001, the Company changed its fiscal year end from April 30 to December 31.
Although the Company has included financial information for the year ended April
30, 2001 and eight months ended December 31, 2001, the Company has also included
unaudited financial information for the year ended December 31, 2001 for
comparative purposes.

** Earnings per share excluding shares with no voting or economic rights refers
to the 13,506,204 shares held by Sportingbet PLC and its affiliates that have
been set aside as a result of the transaction with Sportingbet PLC and may be
repurchased by the Company for an aggregate value of $1 when the Company has
retained earnings to do so. This transaction had no impact on the earnings per
share calculations for 2003 or 2002. (See Item 4: Sportingbet Transaction and
Item 10: Material Contracts)

         Selected balance sheet data as at December 31 and April 30 for the
years indicated (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
                                              AS OF DECEMBER 31,                             AS OF APRIL 30,
                        _______________________________________________________________________________________
                            2004              2003             2002         2001           2001           2000
_______________________________________________________________________________________________________________
<S>                       <C>               <C>              <C>          <C>            <C>            <C>
BALANCE SHEET DATA:
Total assets              $23,379           $12,591          $ 8,377      $12,181        $20,188        $27,983
Net assets                 16,028               828           (3,545)       1,686          2,211         19,376
Debt obligations                -             2,944            3,804        1,083          2,784            979
Capital stock              23,654            25,992           24,192       24,188         22,394         22,143

</TABLE>
                                        3
<PAGE>

RISK FACTORS

         You should carefully consider the following risks in making an
investment decision regarding our Company. If any of the following risks
actually occur, our business, financial condition or results of operations may
suffer. As a result, the trading price of our American Depositary Shares and the
value of our ordinary shares could decline, and you may lose all or part of your
investment.

         WE HAVE TWO CUSTOMERS WHO ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR
         REVENUES, AND THE LOSS OF THESE TWO CUSTOMERS WOULD SIGNIFICANTLY
         DECREASE OUR CASH FLOW.

         The Group relies on its two largest Licensees for the majority of its
consolidated revenues. The loss of either of these Licensees would materially
and adversely affect the Company's business, financial condition, results of
operations and cash flow. (See Item 10. Material Contracts - Software License
Agreements between the Company and Real Entertainment and the Company and
Internet Empire Entertainment dated May 10, 1999 and May 23, 2000 respectively).

         OUR CURRENT BUSINESS IS SUBJECT TO SIGNIFICANT SEASONALITY.

         Because of the current mix of the Group's products and services, its
revenues from Licensees decrease significantly during those periods of the year
when US winter sports, including American professional and college football, are
not being played. This substantially reduces the Group's operating cash flow and
could make it difficult to meet its commitments. The Group is addressing this
risk through the development and licensing of non-event reliant gaming products
and broadening its customer base. However, there is no guarantee that the gaming
market in which the Group operates will continue to respond favorably to these
new products.

         WE MAY NEED ADDITIONAL FINANCING AND THERE IS NO ASSURANCE IT CAN BE
         OBTAINED.

         World Gaming currently has sufficient capital to meet its planned
development objectives and positive cash flow. Should these development
objectives change significantly or current revenue streams decline materially,
the Group may require additional financing. There can be no assurance that any
such capital or additional financing will be available on terms acceptable to
the Company, or at all. Any such additional financing, if available, could
result in further dilution of the equity interests of existing shareholders as a
result of possible further issuance and placement of the Company's ordinary
shares.

         WE HAVE EXPERIENCED SIGNIFICANT TURNOVER AMONG OUR SENIOR MANAGEMENT
         AND DIRECTORS.

         Between 2001 and 2003 there was significant turnover amongst the
directors and senior managers of the Group, including the appointment of six
successive Chief Executives. Such senior management turnover affected the
Group's operations and relationships with its customers and Licensees. While the
Directors believe otherwise, there is a risk that the Group could again
experience senior management turnover and would not be able to attract and keep
the experienced senior personnel necessary for its stability and development.
Additionally, actions by prior management before 2000 resulted in certain legal
proceedings, now resolved, against the Company which, on occasions, may impact
the perception of the Company within its industry.

         THE INTERNET GAMING INDUSTRY MAY BE SENSITIVE TO ECONOMIC CONDITIONS.

         The Internet gaming industry is relatively new and there is
insufficient history for us to predict the impact that changes in economic
conditions will have on our business over extended time. Although it is

                                        4
<PAGE>

likely that a downturn in the economy may have a negative impact on our
revenues, the extent of such impact is uncertain.

         WE HAVE BEEN INVOLVED IN CIVIL AND IN THE PAST CRIMINAL LITIGATION,
         WHICH HAS RESULTED IN SIGNIFICANT EXPENSES AND OTHER CONSEQUENCES.

         Many of the lawsuits that may have been seriously threatening to our
future have now been settled; however, there are some remaining lawsuits that we
are party to. If we were to lose these pending lawsuits we could be subject to
significant damages, although the aggregate of such damages has been
substantially reduced. There can be no assurances that the Company or its
subsidiaries will not be subject to similar lawsuits or government actions in
the future. (See Item 8. Legal Proceedings).

         WE OR OUR CUSTOMERS MAY BE SUBJECT TO REGULATION OR PROHIBITION OF
         INTERNET GAMING IN CERTAIN JURISDICTIONS, INCLUDING THE UNITED STATES,
         WHICH COULD HAVE A SIGNIFICANT ADVERSE EFFECT ON OUR BUSINESS.

         The Licensees of the Company's software products, and the Company
itself, are subject to applicable laws in various jurisdictions. As companies
and consumers involved in Internet gaming are located around the globe,
including the end-users of our Licensees, there is uncertainty regarding exactly
which governments have jurisdiction or authority to regulate or legislate with
respect to various aspects of the industry. The uncertainty surrounding the
regulation of Internet gaming could have a material adverse effect on the
Company's business, revenues, operating results and financial condition. There
is a risk that criminal and civil proceedings could be initiated in various
jurisdictions against the Company's Licensees, or, less likely, even the
Company, and such proceedings could involve substantial litigation expense,
penalties, fines, diversion of the attention of key executives, injunctions or
other prohibitions being invoked against the Licensee or the Company. Such
proceedings could have a material adverse effect on the Company's business,
revenues, operating results and financial condition. In addition, as electronic
commerce develops further, it may generally be the subject of government
regulation including taxation which could impact the Company's financial
position. Also, current laws that pre-date or are incompatible with Internet
electronic commerce may be enforced in a manner that restricts the electronic
commerce market. Any such developments could have a material adverse effect on
the Company's business, revenues, operating results and financial condition.

         The Company and the industry as a whole are under threat from certain
factions within the United States Congress that seek to ban Internet gambling or
certain aspects thereof. Whilst legislation has been introduced in both houses
of Congress in recent years, no Internet gambling bills have yet been introduced
in the current session of Congress as of April 30, 2005, and thus there are no
bills pending. There is no way of knowing if and when such a bill might be
introduced, and the Company continues to monitor this situation since the
passage of this legislation could have a substantial impact on the business of
the Company's Licensees and, ultimately, the Company. If Internet gambling
prohibition legislation is introduced and becomes law, it would have an
immediate detrimental effect on the industry and would pose a serious threat to
the Company's continued operations.

         In March 2004, the World Trade Organization held in favor of Antigua
and Barbuda and against the United States with regard to unlawful trade
restrictions relating to Internet gaming. In April 2005 the US appeal to this
ruling was heard and the judgment appeared to be in favor of Antigua and
Barbuda, but it is too early to determine what, if any, influence this may have
on the United States Congress' position towards internet gaming.

         The Gambling Bill was introduced to the English Parliament on October
18, 2004. As of April 7, 2005, the bill had passed through the House of Lords
and was passed into law prior to Parliament's

                                        5
<PAGE>

dissolution on April 11, 2005. The Gambling Bill introduces a new regulatory
environment for gambling in the UK, and establishes a new Gambling Commission
with extensive investigative and punitive powers. It also includes specific
provisions relating to "Remote gambling", which includes gambling over the
internet, telephone, television, radio or any other kind of communication
technology. Any operator of a remote gambling system must obtain a remote
operating license. However, there is no regulation or requirement for a remote
gambling license where an operator does not use any remote gambling equipment
(such as its server hardware) in the UK, even if the facilities are partly or
wholly used in the UK.

         As none of the Group's on-line gaming operations are currently run out
of the UK, the proposed new licensing system will therefore not apply to the
Company based on its current operations. However, should the Group in future
decide to conduct any operations from the UK, these provisions would become
relevant and a remote operating license will be required. (See Item 4:
Government Licensing and Regulation and Related Risks)

         WE FACE SIGNIFICANT COMPETITION AND THERE IS NO ASSURANCE THAT WE WILL
         BE ABLE TO COMPETE.

         The Internet gaming industry involves rapid technological change and is
characterized by intense and substantial competition. Some of our competitors
are well established, substantially larger and have substantially greater
resources than we do. It is also likely that other competitors offering gaming
software technology will emerge in the future. Additionally, we will have to
compete with other companies that have greater market recognition, greater
resources and broader distribution capabilities than us. Increased competition
by existing and future competitors could materially and adversely affect our
business, financial condition and results of operations.

         OUR SOFTWARE AND HARDWARE SYSTEMS MAY FACE PROBLEMS IF THE VOLUME OF
         USAGE INCREASES WHICH COULD HARM OUR REPUTATION AND THUS OUR BUSINESS.

         The performance of our online services is critical to our reputation
and to achieving market acceptance. An increase in the volume of usage of online
services could strain the capacity of the software or the hardware employed,
which could lead to slower response time or system failures, thereby adversely
affecting our revenues. Any system failure, including network, software or
hardware failure, that causes interruption or an increase in response time of
our online services provided to our licensees could result in decreased usage of
our services and, if sustained or repeated, could reduce the attractiveness of
our online services to our clients.

         The process of managing traffic within large, high traffic Internet
online services such as those provided by us is an increasingly important and
complex task. Our operations are dependent in part upon our ability to protect
our operating systems against physical damage from acts of God, power loss,
telecommunications failures, physical break-ins and similar events. The
occurrence of any of these events could result in interruptions, delays or
cessation in service to users of our online services, which could have a
material adverse effect on our business, financial condition and results of
operations. A large portion of our network infrastructure is located at a
single, leased facility in Antigua, West Indies. Our systems and operations are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, Internet failure, break-ins, hurricanes and similar
events. We do not presently have redundant facilities at a secondary location in
the event of an emergency, but we have a variety of backup servers at our
primary site to deal with system failures.

         Services based on sophisticated software and computer systems often
encounter development delays and the underlying software may contain undetected
errors ("bugs") that could cause system

                                        6
<PAGE>

failures when introduced. We are also dependent upon search engines, web
browsers, Internet service providers ("ISPs") and online service providers
("OSPs") to provide Internet users access to our web sites. Our clients may
experience difficulties accessing or using our web sites due to system failures
or delays unrelated to our systems. We do not carry business interruption
insurance to compensate us for these types of losses.

         IF WE ARE UNABLE TO SUCCESSFULLY PROTECT OUR COMPUTER SYSTEMS FROM
         ONLINE SECURITY RISKS, OUR BUSINESS COULD SUFFER.

         Despite the implementation of security measures by the Company, our
network may be vulnerable to unauthorized access, computer viruses, denial of
service attacks and other disruptive problems. For example, given the content of
our data storage facilities and network infrastructure, there is an incentive
for "hackers" to penetrate our network security. A party that is able to
circumvent security measures could misappropriate proprietary information and,
perhaps, most critically, cause interruptions in our operations. ISPs and OSPs
have in the past experienced, and may in the future experience, interruptions in
service as a result of the accidental or intentional actions of Internet users,
current and former employees or others. We have been in the past and may be
required in the future to expend significant capital or other resources to
protect against the threat of security breaches or to alleviate problems caused
by such breaches. There can be no assurance that any measures implemented will
not be circumvented in the future. Eliminating computer viruses and alleviating
other security problems may require interruptions, delays or cessation of
service to clients accessing our web sites, which could have a material adverse
effect on our business, results of operations and financial condition.

         OUR LICENSEES RELY ON CREDIT CARDS FOR A SUBSTANTIAL PORTION OF THE
         DEPOSITS BY THEIR CUSTOMERS.

         The Group derives most of its revenues from the revenues of its
Licensees, which are directly dependent on the amounts of funds deposited by
their customers. A substantial portion of these deposits are made by credit
cards. Many U.S. issuing banks of major credit cards (i.e., Visa and MasterCard)
have announced that they may decline authorization to U.S. persons who try to
use their credit cards for on-line gaming.

         Non-U.S. banks processing on-line gaming transactions may become
targets of U.S. criminal proceedings under the Patriot Act. The jurisdiction of
the United States, under the Patriot Act, now extends to all non-U.S. banks that
have correspondent accounts in the United States. The United States can freeze
the non-U.S. bank's U.S. correspondent account, if that bank is processing U.S.
gaming transactions or holding operating funds or the profits of an operator
accepting U.S. wagers, because the U.S. Department of Justice currently views
all offshore gaming funds as tainted, and all offshore gaming as illegal. This
creates a serious disincentive to the banks to process on-line gaming
transactions and adversely impacts the revenues of the Group's Licensees.

         THE MARKET FOR INTERNET SERVICES IS IN A STATE OF RAPID TECHNOLOGICAL
         CHANGE AND WE MAY NOT BE ABLE TO KEEP UP.

         The market for Internet services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require the Group to effectively use leading
technologies, continue to develop the Group's technological expertise, enhance
its current services and continue to improve the performance, features and
reliability of software. In addition, the widespread adoption of new Internet
technologies or standards could require substantial expenditures to modify or
adapt the Group's software.

                                        7
<PAGE>

         WE MUST CONTINUE TO IMPROVE AND EXPAND OUR SKILLS AND PERSONNEL TO
         ENHANCE AND EXPAND OUR BUSINESS OPERATIONS, BUT MAY NOT BE ABLE TO DO
         SO.

         In order to enhance and expand our business operations, we must
continue to improve and expand the expertise of our personnel and must attract,
train and manage qualified managers and employees to oversee and manage our
enhanced operations. There can be no assurance that we will be able to manage
effectively the expansion of our operations or that our current personnel,
systems, procedures and controls will be adequate to support operations.
Although management intends to ensure that our internal controls remain adequate
to meet the demands of further growth, there can be no assurance that our
systems, controls or personnel will be sufficient to meet these demands.
Inadequacies in these areas could have a material adverse effect on our
business, financial condition and results of operations.

         WE HAVE LIMITED INTELLECTUAL PROPERTY PROTECTION AND THERE IS RISK THAT
         PARTIES MAY BE ABLE TO MISAPPROPRIATE OUR TECHNOLOGY.

         We regard our proprietary software, trade secrets and similar
intellectual property as critical to our success. In that context, we rely on a
combination of copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and other contractual provisions.
There is no guarantee that these efforts will be adequate, or that third parties
will not infringe upon or misappropriate our proprietary rights. In addition,
although we rely on copyright and trademark protection, effective copyright and
trademark protection may be unenforceable or limited in certain countries, and
the global nature of the Internet makes it impossible to control the ultimate
destination of our web sites. Since trademark and copyright protections are not
"self-enforcing", future litigation may be necessary to enforce and protect our
secrets and other intellectual property rights. We may also be sued for claims
of infringement of the rights of others or to determine the scope and validity
of the intellectual property rights of others. Such litigation could result in
substantial costs. Any litigation regarding proprietary rights could be costly
and divert management's attention, result in the loss of certain of proprietary
rights, require us to seek licenses from third parties and prevent us from
selling our services, any one of which could have a material adverse effect on
our business, results of operations and financial condition.

         WE MAY BE HELD LIABLE FOR THE CONTENT OF WEB SITES FOR WHICH WE PROVIDE
         CONTENT.

         As a distributor of Internet content, we face potential liability for
negligence, copyright, patent, trademark infringement, defamation, indecency,
disparagement and other claims based on the nature and content of the materials
that we transmit. Any imposition of liability that is not covered by insurance,
is in excess of insurance coverage or is not covered by an indemnification by a
content provider could have a material adverse effect on our business, results
of operations and financial condition.

         THE TRADING MARKET FOR OUR SHARES MAY BE ILLIQUID.

         Potential investors should be aware that the value of shares can go
down as well as up. Our ordinary shares represented in the United States by
American Depositary Shares are presently quoted on the National Association of
Securities Dealers' ("NASD") Over-The-Counter Bulletin Board ("OTC Bulletin
Board"). This quotation system generally supports companies that do not meet the
listing requirements of the NASDAQ SmallCap Market. As a result, investors may
find it more difficult to dispose of or to obtain accurate quotations of our
shares. A lack of volume in the trading of our shares could impact prices for
any shareholder wishing to dispose of such shares. In addition, quotations on
the OTC Bulletin Board depend on the willingness of broker-dealers to make a
market for the shares. Such quotations have been known to have large spreads
between bid and offer prices. There can be no assurance that our shares will
continue to be quoted on the OTC Bulletin Board or that there will continue to
be a market for such shares.

                                        8
<PAGE>

         With respect to our admission to trading on the Alternative Investment
Market ("AIM") operated by the London Stock Exchange (See Item 10: Private
Placement on the Alternative Investment Market ("AIM") of the London Stock
Exchange), investors should be aware that an investment in a share which is to
be traded on AIM may be less realizable and may carry a higher degree of risk
than an investment in a share quoted on the Official List of the London Stock
Exchange. The price which investors may realize upon the sale of their ordinary
share holdings, and when such a realization may occur, may be influenced by a
large number of factors, some of which are specific to the Group such as
industry trends and others of which are extraneous such as economic trends. It
may be difficult for an investor to sell his or her ordinary shares and he or
she may receive less than the amount paid by him or her for them. The ordinary
shares may not be suitable for short-term investment.

         WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, AND WE LACK PRODUCT
         LIABILITY INSURANCE.

         We face an inherent risk of exposure to product liability claims in the
event that the products we develop and license contain errors, "bugs" or
defects. There can be no assurance that we will avoid significant product
liability exposure. We do not currently have product liability insurance, and
there can be no assurance that insurance coverage will be available in the
future on commercially reasonable terms, or at all. Further, there can be no
assurance that such insurance, if obtained, will be adequate to cover potential
product liability claims, or that a loss of insurance coverage or the assertion
of a product liability claim or claims would not materially adversely affect our
business, financial condition and results of operations.

         YOU MAY BE SUBJECT TO TAXES IN JURISDICTIONS OTHER THAN YOUR RESIDENT
         JURISDICTION.

         We strongly urge you to consult with your tax advisors concerning the
consequences of investing in our ordinary shares. Our ordinary shares traded on
the Over the Counter Bulletin Board market represented by American Depositary
Shares are traded in the United States, but we are incorporated under the laws
of England and Wales. In addition we have shares traded on the Alternative
Investment Market of the London Stock Exchange, however these shares have not
been and will not be registered under the Securities Act or under the relevant
securities laws of any state of the United States or any other jurisdiction.
Subject to certain exceptions, such ordinary shares may not be directly or
indirectly offered, sold, resold or otherwise transferred within the United
States or to, or for the account or benefit of, U.S. persons (as defined in
Regulation S), or in any country where to do so may contravene local securities
laws or regulations. A U.S. holder of our American Depositary Shares will be
treated as the owner of the underlying ordinary shares for purposes of U.S. and
U.K. tax laws. Therefore, U.S. federal, state and local tax laws and U.K. tax
laws may apply to ownership of our American Depositary Shares and the underlying
ordinary shares. Tax laws of other jurisdictions may also apply.

         UNITED STATES CIVIL LIABILITIES MAY NOT BE ENFORCEABLE AGAINST US.

         Most of our directors and all of our executive officers named in this
annual report are not residents of the United States, and virtually all of the
assets of these non-U.S. persons, and virtually all of our assets are located
outside the United States. As a result, you may be unable to serve summons and
complaints within the United States upon these persons. Similarly, it may not be
possible to enforce in U.S. courts, against these persons or against us,
judgments of the U.S. courts based upon civil liability provisions of the U.S.
federal or state securities laws. In addition, it may be difficult for you in
original suits or in suits for the enforcement of judgments of U.S. courts to
enforce certain civil liabilities based upon U.S. federal or state securities
laws in England against us, our directors, executive officers, or our experts.

                                        9
<PAGE>

         OUR REPORTING OBLIGATIONS UNDER THE U.S. SECURITIES LAWS DIFFER FROM
         THOSE OF U.S. ISSUERS, AND YOU MAY FIND IT DIFFICULT TO EVALUATE OUR
         PERFORMANCE QUARTERLY.

         We are a foreign private issuer for the purposes of reporting to the
SEC, and we are not required under the Securities Exchange Act of 1934 to file
quarterly reports after the end of each financial quarter, although we have
elected voluntarily thus far to file such quarterly reports. We are exempt from
the SEC rules prescribing the solicitation of proxies and content of annual
reports and proxy statements to our shareholders. Additionally, major
shareholders and insiders are not required to report their transactions in our
stock. As a result it may not be possible for you to evaluate our financial
performance as often as you could for a non-foreign private issuer SEC reporting
company. You may not become aware of trading activities of our insiders and
major shareholders, and may generally be less informed in making a reasonable
decision on how to vote your shares.

         UNDER ENGLISH LAW A VOTE OF THE HOLDERS OF 75% OR MORE OF OUR ISSUED
         ORDINARY SHARES REPRESENTED AT A SHAREHOLDERS MEETING IS REQUIRED TO
         APPROVE CERTAIN CORPORATE MATTERS.

         Under English law, a vote of 75% or more of our issued ordinary shares
represented at a shareholders' meeting is required to complete certain corporate
matters. This supermajority requirement may make it more difficult for
shareholders to approve certain transactions even though the Board recommends
and approves such transactions. (See Item 10. Voting Rights of Ordinary Shares
and Shareholder Meeting.)

         CERTAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION AND OTHER CONTRACTUAL
         RESTRICTIONS TO WHICH WE ARE SUBJECT MAY HAVE THE EFFECT OF DETERRING
         ANY ACQUISITION OR SALE OF THE COMPANY NOT APPROVED BY THE BOARD OR
         CERTAIN OTHER PERSONS.

         We have a "classified" Board of Directors because our directors must
retire by rotation. This means that (if the retiring directors are willing to
continue to act and are approved by the Board and offer themselves for
re-election) only approximately one-third of our directors are eligible for
election each year (in addition to any directors appointed by the Board since
the last annual general meeting).

         In addition to the shareholders rights not to re-appoint retiring
directors who are willing to continue to act and are approved by the Board of
Directors and to re-appoint directors appointed by the Board since the last
annual general meeting, shareholders can remove directors by ordinary resolution
or the holders of 50% of our issued ordinary shares represented at a
shareholders meeting.

         WE MAY BE SUBJECT TO TAX IN A NUMBER OF JURISDICTIONS, FOR WHICH NO
         PROVISION HAS BEEN MADE.

         The Group may be subject to tax in a number of jurisdictions, including
jurisdictions in which the Company's subsidiaries are incorporated, or have a
branch or agency or permanent establishment or office. The Group may also be
subject to tax in jurisdictions where any of its servers or ISPs or computers or
customers or Licensees are situated or operate from. Most laws relating to
taxation in most jurisdictions pre-date or are not drafted with the potential of
their applying to cross-jurisdictional Internet businesses. Consequently, there
is uncertainty as to the jurisdictions in which the Company's subsidiaries could
be subject to tax, the extent to which they could be so subject to tax, and what
their overall tax liability in respect of any income, profit or gain could be.
Subsequent to the filing date in some jurisdictions, the Group has completed
certain material transactions. There can be no guarantee that these transactions
will not give rise to further tax obligations. In late 2004 and early 2005, the
Company engaged in certain transactions involving both unrelated entities
(including its business venture with Sportingbet Plc) and internal restructuring
of various entities within the Group. The Group may undertake additional
restructuring transactions in the near future. These transactions resulted (or
will result) in the

                                       10
<PAGE>

transfer of assets and liabilities outside the Group and shifted (or will shift)
the ownership of assets and business operations among companies within the
Group. While the Company has worked with its tax advisors to achieve a favorable
tax outcome for these transactions, the tax authorities of various jurisdictions
may take a different view resulting in certain material negative consequences
for the Company and members of the Group.

         SIGNIFICANT ADVERSE U.S. FEDERAL TAX CONSEQUENCES COULD ARISE FOR U.S.
         HOLDERS UNDER THE PASSIVE FOREIGN INVESTMENT COMPANY RULES.

         If we are a passive foreign investment company, or PFIC, a U.S. Holder
of our American Depositary Shares or ordinary shares could be subject to
significant adverse U.S. federal tax consequences. Part or all of our
distributions, and gain inherent in our American Depositary Shares or ordinary
shares at the time of a disposition thereof, whether or not that disposition is
a taxable event, could be subject to a special set of rules. In general, those
rules would treat the distributions (whether or not they are dividends paid out
of our earnings and profits) and any gain inherent in the shares of the Company
as being realized ratably over the period the U.S. Holder held, or is treated as
having held, the American Depositary Shares or ordinary shares. Income or gain
allocable to prior years would be taxable at the highest effective rates in
effect in those years, regardless of the rate actually applicable to the U.S.
Holder. The income or gain would be treated as ordinary income and could not be
offset by any losses available in those years, and the foregoing amount would be
subject to an interest charge as if the tax on those amounts were due in the
prior years. Stock in a PFIC is generally not eligible for a step-up in basis on
the death of a U.S. holder.

         Certain elections can be available to change the tax consequences to
U.S. Holders described in the preceding paragraph. One of those elections, the
"qualified electing fund", or QEF, election, however, requires the electing U.S.
Holder to include in income each year his share of our ordinary earnings and
profits and net capital gain, whether or not distributed to him. However, a QEF
election generally is available to U.S. Holders only if we provide certain
information to our U.S. Holders, and we provide no assurance that we will make
that information available. Another election, a mark-to-market election,
requires the electing U.S. Holder to pay U.S. federal income tax as if he sold
his American Depositary Shares or ordinary shares at the end of each year,
recognizing gains and, subject to limitations, certain losses. However, a
mark-to-market election is available only if our American Depositary Shares or
ordinary shares are "marketable stock" as specially defined in Treasury
regulations. We believe that our American Depositary Shares and ordinary share
are not "marketable stock" at this time within the meaning of those Treasury
regulations.

         We have not undertaken any determination of whether we are a PFIC and
therefore cannot provide any assurance that we are not. In addition, we can
provide no assurance that we will make any determination in the future whether
we are a PFIC at that time. In the absence of an analysis of our status as a
PFIC performed by us, any assertion by the IRS with respect to a U.S. Holder
that we are a PFIC could be upheld against that U.S. Holder, whether or not we
are in fact a PFIC.

         Accordingly, U.S. Holders should take into account the risk that they
may be subject to the rules described in the second preceding paragraph. You are
urged to read the more detailed rules regarding PFICs set forth in the
discussion below under the headings "Taxation--United States Federal Income Tax
Consequences--Tax Consequences for U.S. Holders--Tax consequences if we are a
passive foreign investment company." In addition, you are strongly urged to
consult your tax adviser regarding the risk that our American Depositary Shares
and ordinary shares may be treated as stock in a PFIC, whether or not we are a
PFIC, the unavailability of various elections regarding the tax treatment of
stock in PFICs and the tax consequences to you under the PFIC rules with respect
to an investment in our American Depositary Shares or ordinary shares.

                                       11
<PAGE>

ITEM 4.  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT

         World Gaming plc is a public limited company incorporated under the
laws of England and Wales, and, as a holding company, conducts its business
through its operating subsidiaries. As a result of a holding company
reorganization effected in May 2001, which is described below, we have become a
successor to the business of LVA Holdings (formerly Starnet Communications
International Inc.) ("LVA"), which is now one of our subsidiaries. Our other
subsidiaries comprise World Gaming Europe Limited, WG International Ltd., WG
Interactive Inc., Interactive Systems Inc., SSII Limited (formerly Starnet
Systems International Inc.), EFS USA Inc., EFS Caribbean Inc., Inphinity
Interactive Inc., World Gaming Services Inc., EFS St. Kitts Inc., ESCE Inc.
(formerly Starnet Communications Canada Inc.). (See Item 4: "Organization
Structure").

         LVA Holdings Inc. was incorporated on June 28, 1996 in the State of
Nevada as Creative Sports Marketing Inc., and subsequently its name was changed
to Gelato Brats Inc. On February 24, 1997, the name of the Company was changed
to Starnet Communications International Inc. In March of 1997, LVA was
redomiciled in Delaware. On April 19, 2004 the name of the Company was changed
to LVA Holdings Inc.

         On March 25, 1997, LVA entered into a share purchase agreement with
Murray Partners (BVI) Inc. ("Murray Partners"), pursuant to which LVA acquired
all of the outstanding shares of ESCE Inc. ("ESCE"), a company incorporated in
British Columbia. In exchange, Murray Partners received 10,000,000 Class A
Common Voting Shares of LVA. Shares held by Murray Partners were subsequently
distributed to its constituent members. On March 17, 2000, ESCE sold its
business and assets that were not related to the Internet gaming business. On
January 1, 2000, LVA transferred its software development business from ESCE to
Inphinity Interactive, Inc ("Inphinity") and its intellectual property
comprising the Gaming Software to SSII Limited ("SSII"). The Gaming Software
consists of the Company's full suite of on-line gaming products and management
tools. A joint venture agreement (described more fully below) with Sportingbet
Plc ("Sportingbet") was entered into effective October 1, 2004 pursuant to which
the Gaming Software was transferred to an equally owned exempt liability
partnership with Sportingbet called Bullen Road LP, a Cayman Islands
partnership. On January 1, 2005, SSII's interest in the Bullen Road LP was
transferred to Interactive Systems Inc. ("ISI"). In addition, the development
business and assets of Inphinity was transferred to a wholly owned Sportingbet
Subsidiary. The remaining business and assets of Inphinity consisting of
administrative functions were transferred to WG Interactive Inc. Since October
1, 2004, the Gaming Software is being jointly developed with Sportingbet.

         LVA became a wholly-owned subsidiary through a holding company
reorganization completed in May 2001. The reorganization was structured as a
merger, in accordance with the laws of the State of Delaware, of LVA with WG
Reorganization Sub, Inc., our wholly-owned subsidiary, formed for the purposes
of the reorganization, with LVA as the surviving company. The reorganization was
approved by the shareholders of LVA who exchanged their shares of LVA common
stock for our American Depositary Shares (ADSs), each representing one ordinary
share, on a one-for-one basis. Each American Depositary Share issued in
connection with the reorganization was evidenced by one American Depositary
Receipt (ADR) issued in accordance with a Deposit Agreement with Continental
Stock Transfer and Trust Company located in New York, New York, USA.

         Subsequently, all of LVA's stock was exchanged for shares of WG
International Limited, a wholly-owned subsidiary directly owned by the Company.
The acquisition by WG International Limited was effected by way of a share for
share exchange such that the existing shares held by the Company in WG
International Limited were subdivided and re-designated as B shares of

                                       12
<PAGE>

(pound)0.002 each. The balance of the authorized share capital was subdivided
and re-designated as A shares of (pound)0.002 each, 20,000 of which were issued
and allotted to the Company as consideration for the acquisition of LVA's stock.

         Through our wholly-owned subsidiaries, we now focus our business on the
licensing and hosting of Internet technologies for gaming applications of our
licensees. One of our business strategies is to identify and commercialize
leading edge technologies for the online gaming markets.

         On February 11, 2004 we closed two divisions of the business that
detracted from our core software development business and had resulted in losses
for the Company. These divisions provided a customer service solution and
performed transaction processing on behalf of some licensees. The affected
licensees now source these functions through another supplier.

         On May 17, 2005 the Company was admitted to trading its ordinary shares
on the Alternative Investment Market ("AIM") of the London Stock Exchange. The
Company raised (pound)2,499,000 by private placement of 4,760,000 new ordinary
shares of the Company at a placement price of 52.5 pence per share. The new
ordinary shares issued rank pari passu with the existing ordinary shares
including the right to all dividends and distributions declared, made or paid
after the date of their issue (see also: Item 10: Private Placement on the
Alternative Investment Market ("AIM") of the London Stock Exchange).

         Our corporate office is located at Minerva House, 5 Montague Close,
London, England, with operations managed out of our principal business office in
Antigua located at the KFH Building, Liat Rd, Coolidge, Antigua West Indies. The
telephone number is 1 (268) 480-1650.

         SPORTINGBET TRANSACTION

Effective October 1, 2004, joint venture arrangements ("Joint Venture
Arrangements" or "Sportingbet Transaction") with the Company's then most
significant licensee, representing approximately 80% of the Company's royalty
revenues were entered into between World Gaming and Sportingbet. The principle
terms of the arrangements are as follows:

      o  The ownership of the intellectual property comprising the Gaming
         Software was transferred into a new exempt limited partnership, Bullen
         Road LP, based in the Cayman Islands, which was established under the
         equal joint ownership of World Gaming and Sportingbet;

      o  In consideration of this transfer, Sportingbet agreed to pay a total of
         $10 million in cash to World Gaming ($3 million was paid on each of
         October 12, 2004 and March 1, 2005 and the balance of $4 million is
         payable on or before November 1, 2005). In addition, the economic value
         of Sportingbet's then 29.6 per cent shareholding in the Company was
         eliminated by the cancellation of all rights of any value attached to
         the ordinary shares then held by Sportingbet, and a convertible loan
         note representing indebtedness of $900,000 owing from World Gaming to
         Sportingbet was cancelled;

      o  Each of World Gaming and Sportingbet has the right to appoint two
         directors to the four person board of Bullen Road LP which controls the
         development objectives of Alea Software Ltd, a wholly owned subsidiary
         of Sportingbet and the developer of the Gaming Software under the Joint
         Venture Arrangements;

      o  During the period of the Joint Venture Arrangements, Sportingbet is
         responsible for all of Alea's costs associated with the development and
         maintenance of the Gaming Software (with a minimum spend of $4.5
         million per year in the first 3 years and a minimum of $2.5 million in
         the fourth year);

                                       13
<PAGE>

      o  World Gaming retains the right to determine 30 per cent of the
         development time on the Gaming Software;

      o  World Gaming has a worldwide royalty free license allowing it to
         continue to use and sublicense the Gaming Software. In the event that
         World Gaming becomes an operator it would pay a 5 per cent royalty only
         on those revenues to Sportingbet;

      o  Sportingbet has a worldwide royalty free license to use the Gaming
         Software. Royalty payments of five per cent are due from Sportingbet in
         the event that they license the Gaming Software to any new licensees;

      o  Sportingbet pays its proportion of the hosting costs on the Company's
         systems and IT (information technology) services at cost plus 10 per
         cent;

      o  The Joint Venture Arrangements may be terminated by World Gaming on
         three months notice. Except in the event of breach by World Gaming,
         Sportingbet may not terminate the Joint Venture Arrangements for three
         years. Thereafter, Sportingbet may terminate on 12 months notice to the
         Company; and

      o  On any termination of the Joint Venture Arrangements, (a) Sportingbet
         must pay an additional $3 million to World Gaming (which would be
         retrospectively reduced by the amount of consideration if the Company
         sells its rights to the Gaming Software within 2 years thereafter); and
         (b) each of World Gaming and Sportingbet will be granted a perpetual,
         non-exclusive royalty free license to use, sub-license and assign of
         all of the then intellectual property rights underlying the improved
         Gaming Software, and neither party will have the right to any further
         improvements or developments made by the other party.

         Agreements in respect of this transaction have been included as
exhibits to a Report of Foreign Private Issuer on Form 6-K filed with the SEC on
April 4, 2005.

OUR OPERATIONS

         We are a licensor of Internet gaming software systems. Through various
wholly-owned subsidiaries (See Item 4: Organizational Structure below), we
license our software products and online gaming management services to
independent licensees. In addition, we host all data transmitted on our software
at our wholly owned hosting facility in Antigua, West Indies. Our gaming systems
have been designed to:

      o  offer customers a user-friendly interface, high quality interactive
         experience and a wide selection of gaming options;

      o  provide licensees with the tools to potentially generate financial
         returns, easy site maintenance and limited administration; and

      o  protect gaming customers and licensees through our proprietary fully
         integrated technology.

         Until October 2004, our fully integrated gaming software and systems
were developed by our wholly-owned Vancouver-based subsidiary, Inphinity
Interactive Inc. ("Inphinity") and our gaming software was owned by our
wholly-owned Antigua-based licensing subsidiary, SSII which licensed the
software. Subsequent to the transaction with Sportingbet, SSII held the Group's
50% interest in the Bullen Road Partnership which now owns the Gaming Software.
This interest together with the licensing and related services business carried
out by SSII was subsequently transferred to Interactive Systems Inc. ("ISI").
ISI receives a monthly royalty based on the licensee's net revenues in exchange
for the licensee being able to utilize its proprietary software as well as
hosting the licensee's interactive casino and sportsbook on its servers. In
addition, the licensees obtain a gaming license from the Government of

                                       14
<PAGE>

Antigua and Barbuda or another jurisdiction that licenses online gaming systems.
The Company's first license sale closed in March 1998, and as of December 31,
2004, the Company had 11 licensees signed and operating.

         We formerly offered fee-based use of our Electronic Financial Services
("EFS") Internet transaction system until February 11, 2004 when this division
was closed.

         Along with the current suite of gaming products which include over 17
C++ casino games, a variety of "instant play" Java Games and a complete live
sports wagering product line, in March 2004, we released an enhanced horse
racing pari-mutuel betting system and have plans to add a fixed odds Horsebook
in 2004. In addition, we released a virtual games product suite in December 2003
and added a third-party supplied multi-player poker product in August 2004.

         We are able to customize a new licensee's interactive casino to reflect
their intended market segment.

RESTRUCTURING OF OPERATIONS

         In March 2000, our subsidiary, ESCE Holdings, completed the sale of
substantially all of the assets and undertakings outside of our core software
development business. (See Also Item 7. "Related Party Transactions").

         In January 2001, we terminated the employment of 26 employees at
Inphinity's development office in Vancouver, Canada, in order to reduce
expenditure levels and increase operational efficiencies. The employees affected
were in the areas of management, administration, operational support and
production.

         In April 2001, we restructured our operations in St. John's, Antigua
and Vancouver, Canada to decrease our costs by reducing inefficiencies and
eliminating duplicated functions. Reductions in staff were made throughout the
organization and included management and administration, sales, marketing,
software development, production and operations. A total of 29 staff were
terminated, 11 in Antigua and 18 in Canada. The combined cost of the
terminations both in January and April of 2001 was $1,536,000.

         In June 2002, we closed our Toronto sales office and terminated four
employees. This was done as part of the relocation of our administrative
functions to London. In May 2003, we closed our London office and terminated
three staff members. This was done as part of the relocation of our corporate
activity to the Antigua office

         In February 2004, we closed the transaction processing and customer
service divisions in Antigua resulting in the termination of 23 employees. These
closures eliminated two non-core business units that the Company could not
efficiently administer and which had incurred ongoing losses. The cost of the
terminations was $160,000.

         In October 2004, we entered into Joint Venture arrangements with
Sportingbet, our then largest customer. The arrangements transferred the Gaming
Software to a limited partnership owned equally by Sportingbet and SSII and
transferred the development activities and associated costs to a wholly-owned
Sportingbet subsidiary through the term of the arrangement. (See Item 4:
Sportingbet Transaction and Item 10: Material Contracts)

                                       15
<PAGE>

BUSINESS STRATEGY

         The Group intends to grow its revenues both from existing and new
Licensees. The Group's existing Licensees continue to experience strong organic
growth and the Company is developing new products and services to support and
maximize growth opportunities for these Licensees. In addition, World Gaming has
refocused its efforts on licensing the Gaming Software both to additional
established Operators and those businesses with existing internet traffic or
databases who are looking to enter the on-line gaming market through so-called
white-label offerings where the Company generally provides all services except
marketing. Operators are those businesses in the Internet gaming business that
use or may choose to use Gaming Software of, or similar to, that of the Company.
The products and services offered by World Gaming enable the Company to provide
flexible gaming solutions to a wide variety of Operators.

         In January 2005, the Group appointed a Director of Sales and Marketing,
Mr. Jon Moss, previously with WagerLogic Limited (CryptoLogic Inc.'s licensing
subsidiary) to implement this strategy. It is the Company's view that a focused
sales effort targeting mid-sized operators has the greatest opportunity for
success. The Directors expect that these types of Operators will yield higher
operating margins than new entrants and provide a greater return as their
operations reach and exceed critical mass. It is expected that these Operators
will generally be more willing to consider alternative software providers than
the very large and established Operators.

         In addition, the Directors will continue to examine opportunities which
allow them to exploit the Group's existing assets and businesses to further
enhance shareholder value. This may well include acquisitions of existing
Internet gaming businesses or strategic alliances where it is considered such
alliances will add value and profitability to the Group. While the Directors
will continue to look for appropriate opportunities, no specific acquisition
opportunities, investments, or new markets have been decided upon. It is
expected that the Company's admission to AIM effective May 17, 2005 will assist
in providing further capital, where required, for corporate transactions.

MARKETING

       As we concentrate our marketing on attracting new licensees, the
licensees, in turn, advertise their sites to the end user. The Group offers two
basic forms of license. Under both of these licensing models the Group can adapt
to an Operator's specific requirements with a variety of flexible options.

      1. Independent Operator Model. This model is best suited for existing
         Operators looking to move to a new software platform or those with
         sufficient operational knowledge wishing to enter the on-line gaming
         business. Other than existing Operators, potential licensees attracted
         to this option would include affiliate marketing websites. The
         Independent Operator generally manages the majority of the services
         itself, including end-user customer services and e-commerce (such as
         transaction processing). Marketing including customer acquisition and
         retention strategies would be entirely the responsibility of the
         Independent Operator. Under this model, World Gaming generally provides
         the Gaming Software, hosting services, plus management information
         systems to establish and monitor the Licensees business.

      2. Full Service Model. This model is aimed at non-gaming websites with an
         existing database of users who are looking for a white label solution.
         With the Full Service Model, Licensees generally have their own high
         traffic websites and have substantial databases but do not have the
         skills or resources to run an on-line gaming operation. Such sites may
         include large media portals and experienced on-line brands. These
         Operators would generally perform marketing and customer acquisition
         and retention themselves, but outsource the remaining functions of the
         operation to World Gaming.

                                       16
<PAGE>

         World Gaming has evolved an operating model over the past two years
which focuses on its core skills. It out-sources certain other functions to
specialist third parties who can provide the standard of service required by the
Group and its Licensees more cost effectively. These outsourced services include
end user customer service, e-commerce processing for Licensees, customer
deposits and withdrawals, risk management and fraud monitoring. These services
are still overseen and monitored on the Licensee's behalf by World Gaming. The
Group has hosting equipment in a secure leased facility in the licensed gaming
jurisdiction of Antigua on whose servers all gaming activity takes place. The
Directors believe that hosting Licensee data is critical to maintaining system
integrity, enables substantial cost control through maintaining a single site
and provides security in the event of default by a Licensee.

         Our licensees utilize Internet based marketing activities, such as
e-mail broadcasts and affiliate programs, as well as traditional media, such as
print in industry publications. In addition to potential licensees, we seek
strategic partnerships for content as well as other entertainment and media
opportunities.

COMPETITIVE ENVIRONMENT

         The competition for World Gaming's products and services comes from two
major sources. These are other Gaming software companies and Operators who are
seeking to further license their own software (this is primarily competition in
the white label market place). Several of the very largest sports betting
Operators have developed their own software, or acquired their software
providers, but this option is not usually cost effective for mid size Operators.

         There are a number of software and service suppliers to the on-line
gaming market. However, the Directors believe that World Gaming maintains a
differentiated product, primarily because such competitors are generally more
product specific and do not offer the full range of products and services that
can be provided by World Gaming.

         The Company's largest competitors for casino and multi-payer poker
products - Boss Media, Cryptologic, and Microgaming - do not offer any
complementary products such as sportsbook. Because these competitors presently
focus on delivering limited products, as opposed to a full suite of products as
we do, the competition may offer an equivalent or superior single product
compared to ours. However, it is believed that the Company currently has a
competitive advantage by offering complementary products with the flexibility to
be packaged as an entire product suite.

         One company, IQ-Ludorum, is a competitor in the sportsbook product
segment. It is also now offering a downloadable casino software package, which
increases its competitive threat.

         We also face increased competition from name brand land based
sportsbooks and casinos. European companies, such as William Hill, already have
an online presence and compete for end-users. This is a direct threat to our
licensees and therefore also to us.

         We expect to compete directly with all the companies discussed above,
as well as other established companies that may enter the industry. Several of
our current and potential competitors have far greater resources than us.

INTELLECTUAL PROPERTY

         The intellectual property relating to the Gaming Software is owned by
Bullen Road LP an exempt limited liability partnership formed in the Cayman
Islands of which the Company (through a wholly owned subsidiary) has a 50 per
cent membership interest and Sportingbet (through a wholly owned subsidiary) has
a 50 per cent membership interest, pursuant to the Joint Venture Arrangements.
World Gaming has an unrestricted license to use, sub-license and assign its
rights to the Gaming Software and the intellectual property underlying it for

                                       17
<PAGE>

all of its current business operations and all currently anticipated
developments of its business operations. Software that is completed and in
development is protected through a combination of non-disclosure and
non-competition agreements with employees, restricted and controlled use of
third party developers, a check in/check out system for code, and copyright law
(though no software is registered). (See Item 4: Sportingbet Transaction and
Item 10: Material Contracts)

TECHNOLOGY

         HIGH-SPEED NETWORK AND REDUNDANCY

         World Gaming's computing systems have been designed to eliminate single
points of failure where possible. For example, World Gaming utilizes "high
availability" computer servers and duplicate disk subsystems. The network
infrastructure is intended to ensure reliable and responsive game play for
Licensees and their customers. Most of the critical system components, such as
the game servers and web servers, are distributed across multiple machines,
which helps protect the gaming service from failures due to malfunctioning
equipment. The highly scalable nature of the design of the system makes
provisioning for additional capacity relatively easy. The network monitoring
staff track the system at all times to maintain constant awareness of the
system's operating parameters. New equipment is installed when necessary to
compensate for increased activity or anticipated peak demands for popular
events.

         The internet connection at World Gaming's network facility in Antigua
is provided by an international service provider. Each gaming transaction is
stored on a database that is replicated for redundancy and backed up daily to
prevent data loss.

         The Group's hardware and software platform is provided by leading
suppliers such as Sun Microsystems and Oracle.

         SECURITY MEASURES

         We offer four protective security layers of prevention, protection, and
response. These components, available 24 hours a day, 7 days a week, 365 days a
year consist of:

         Software. Our engines are designed to assume that all communication is
         from "hostile" clients so that only specific message types from a known
         game client are acknowledged. The software incorporates industry "de
         facto" security standards such as industry leading firewall protection,
         128 bit encryption and SSL. The `n-tier' software architecture has been
         designed with security at the forefront and is monitored through
         `real-time' System and Game event monitoring and logging.

         The Gaming Client Application is a casino graphical interface. The game
         server performs gaming calculations, while the client application
         displays the results and accepts input from the player for further
         interaction. Communications between the client and server are encrypted
         using the SSL protocol. The SSL prevents hackers from monitoring a
         gaming session should they be able to intercept communications.

         Fraud Detection and Legal Compliance. Legal compliance and player
         protection through industry leading financial fraud prevention and
         address verification software. Address Verification Services (AVS), a
         basic fraud detection system offered by the financial industry, is
         incorporated into our fraud detection solution for players.

                                       18
<PAGE>

         While no system is 100% secure, we believe that we have the ability to
         identify attempts and prevent attacks such as Denial of Service and
         `Invasive' hacks into game payout code or customer information.
         Specifically, Denial of Service Attacks can be alleviated through our
         network of close business partnerships with global ISP's and through
         utilization of hardware that was acquired in January, 2004 that
         specifically defuses such attacks. Using a combination of the
         aforementioned four layers of security i.e. Software, Fraud Detection,
         Hardware and Vigilance, we offer security protection that reduces the
         risks that would lead to prolonged periods of irregular game play and
         access to, and manipulation of, the game code.

         We have implemented a leading software-based Random Number Generator to
         support our game play payouts utilizing a certain Random Number
         Algorithm.

         The machines on which the game server processes run are only accessible
         from our private network. The database systems are completely shut off
         from the Internet and can only be accessed by a limited number of
         applications on a closed network, such as the game servers and report
         generators.

         Any information provided to us is held as strictly confidential, and is
         used only to support the player's relationship with us and the
         licensee.

PRODUCTS AND SERVICES

         Our current software product areas include casino gaming, sportsbook
wagering, pari-mutuel wagering, virtual games, multi-player poker and a horse
racing product. Virtual games and multi-player poker are provided by third
parties. During the last fiscal year, casino gaming contributed approximately 46
percent of royalty revenue, sports book wagering accounted for 52 percent, and
horse-racing accounted for the remaining 2 percent.

         CASINO

         Our casino games can be categorized into two types of platforms: Java
and Windows Download software.

         Our Java games utilize the Java language to provide quick access online
games to the licensees' web sites. The cross-platform nature of Java makes it
possible to play these games on all major operating systems, online, with
virtually no downloading required. The Java games are optimized for quick
browser loading times.

         We currently have 16 Java casino games (Blackjack, Blackjack Super 7s,
Baccarat, Bermuda Poker, Free Ride, Pai Gow Poker, Roulette, Craps, Sic Bo, Red
Dog, Battle Royale, two slot machines, and three video poker machines) for
players to wager on.

         More than 17 different casino games are available in the Windows
Download version of the casino gaming product line. These games are provided for
players who are willing to take the time required to download and install the
games. However, once downloaded, they are easy and convenient to play and offer
a more heightened visual and audio experience. The Windows Download games are
also offered by most software licensees via compact disc, which is mailed to
players who request this version.

                                       19
<PAGE>

         THE SPORTSBOOK

         Our Sportsbook product generates revenues based on booking bets that
have fixed payouts. These payouts have a commission that provides revenue for
the Sportsbook. There are varying commissions that are dependent on a variety of
bet offerings. These include: pointspreads, totals, moneylines, prices, straight
wagers, parlays, teasers, futures, propositions, buy points, if bets and others.
During 2004, a new version of the Sportsbook software was released focusing on
enhanced parlay and teaser bet types as well as upgrading functionality for
licensees' operations.

         VIRTUAL GAMES

         Virtual Games was integrated into our platform and launched in December
2003 on World Gaming's system featuring two games: Virtual Derby and Super Hi Lo
supplied by a third-party provider. Virtual Derby is an interactive fantasy
horse racing game that allows bettors to place wagers on a six-horse field.
Bettors can research the standings of jockeys, trainers, horses and track
conditions before placing a win and/or exacta wagers. Super Hi Lo is card game
that allows bettors to wager on various card combinations. Bettors have the
opportunity to win big by attempting to place a number of cumulative wagers as
part of the same game.

         PARI-MUTUEL GAMING

         We fully launched our pari-mutuel horse betting software on July 31,
2001, and upgraded the product in December 2002. The product has been delivered
to over thirty gaming sites.

         In developing the proprietary, interactive pari-mutuel software, we
employed the cross-platform nature of Java, making it possible to play this game
on all major operating systems, online, with virtually no downloading required.
This interface is simplified to optimize loading times.

         After signing a simulcast distribution agreement with the host raceway,
this system links directly to the host track's pool, enabling instant access to
real-time betting lines and the live host pool.

         POKER

         We completed development for integration of a third-party supplied
multiplayer poker product in 2004. With the online poker market growing
exponentially each year, licensees will have the opportunity to earn significant
revenues and complement current products. We expect that the addition of Poker
will increase the attractiveness of our product offerings in the marketplace.
Our then major licensee launched the poker product in 2004 with other licensees
expected to launch in the second quarter of 2005.

         HORSE RACING

         During 2004, we completed development of a new Racing product that
offers payout at track odds and enhanced horse betting propositions. This
product features major tracks and offers an increase to the current offerings by
our licensees through the direct pari-mutuel product described above. In
addition, development is underway on the horsebook product and will be
integrated with the Racing product. The horsebook product will offer dynamic
wagering content that fits our licensees' competitive needs and earn solid
revenues in this growing product area.

         PARTNERS PROGRAM

         Our affiliate program provides a powerful marketing tool for our
licensees by creating an advertising vehicle with no up-front costs. The
affiliate program transforms webmasters into a sales force for our licensees, as
webmasters earn a commission on the "sales" they make. Webmasters will earn
their commission based on the players that they send through their sites. The
licensee pays webmaster only after the casino has generated revenues from
webmaster's players.

                                       20
<PAGE>

         WORLD GAMING MANAGEMENT CONSOLE

         World Gaming Management Console (WGMC) is an integrated application
that supports operations management for World Gaming and its licensees, with an
initial focus on customer service support. WGMC was launched in March 2003.
Licensee's customer service agents use WGMC to support customers' inquiries
under a single application model using one technology and security model. WGMC's
expandable framework allows for future releases that can complement other
operational areas.

GAMING PRODUCTS UNDER DEVELOPMENT

         Through the joint venture arrangements (See Item 4: Sportingbet
Transaction and Item 10: Material Contracts) we are currently developing and
integrating a major system upgrade for the unification of all administration and
reporting within our software platform. The outcome of this upgrade will
modularize our existing products onto a single unified platform while
maintaining a single user account across all products. This re-architecture will
allow greater flexibility in product offerings to new licensees and greater ease
for `plug-in' of new products. In addition, modularity across the Company's
product suite will mean more flexible and efficient development efforts. The
upgrade is scheduled for release in the third quarter of 2005. Further
development is expected on our product suite described below.

         SPORTSBOOK

         The Sportsbook product will continue to receive upgrades based on the
feedback from our licensees throughout the year.

         VIRTUAL GAMES

         With the early success of the Virtual Games, further assessment is
underway to add new Virtual Games such as dice, wheel type and sport themed
games to the current line up. In addition, feedback is being acquired from our
licensees for new features and upgrades for our existing games.

         WGMC

         WGMC will continually be upgraded throughout the year to incorporate
customer support functionality for new products such as poker. In addition,
regular software upgrades focused on customer service functions are planned
based on the feedback from our licensees.

         CASINO

         The Casino product has received ongoing upgrades and we will continue
to enhance the product with added features and enhancements based upon the
feedback from our licensees. Licensees have expressed interest in increasing the
number of machine games - slots and video poker for the casino product. Further
assessment will be required to determine the types of games that will meet our
licensees' needs in the marketplace.

         PARTNERS PROGRAM

         Licensees have indicated the need to further their online marketing
efforts with affiliate marketing programs to generate incremental revenues. The
Partners Program has been evaluated in this respect, and it was determined to
enhance the product to include greater functionality to meet the licensees'
marketing expansion efforts.

                                       21
<PAGE>

OUR LICENSEES

         We have historically focused our growth strategy on licensing our
software and services in order to become a leading technology provider to the
online gaming industry. Our Antigua-based licensing subsidiary, Interactive
Systems Inc., licenses the Gaming Software as a fully-integrated system to
prospective licensees. A one-time license fee provides an installed, fully
operational system. The licensee's interactive casino is generally operational
within 90-120 days of signing a license agreement. We receive monthly fees and a
royalty based on the licensee's revenues, in exchange for continuing to host and
maintain the site. The licensee is to obtain a gaming license from the
jurisdiction where the gaming servers are located, which currently is Antigua.
We modify the new licensee's interactive casino to reflect its intended market
segment. We never modify the random number generator or the game rules and
cannot, therefore, affect the odds on games other than the Sportsbook. We also
provide continuous support for both software and hardware, 24 hours a day and 7
days a week. We seek a licensee with knowledge of the target market in order to
maximize sales potential. Licensees generally establish their marketing efforts
from within their target market and are generally expected to be capable of
sufficient investment to purchase the software license, apply for the gaming
license and invest in marketing.

         Should any licensee become delinquent in payments due to us, we have
the technological ability to "shut down" the licensee's interactive casino(s)
remotely. In 2004, the Company set up third-party processing routes for those
licensees that choose not to process their own customer deposits and
withdrawals. Monthly settlement for these licensees is first paid to ourselves,
after which we then deduct our royalty and settle the balance to licensees.

         Sportingbet, previously our largest licensee accounted for 58% of our
consolidated revenues in 2004 and 67% in 2003. As a result of the joint venture
arrangements, effective October 1, 2004 this licensee no longer pays the Company
royalties in return for certain consideration, funding of development, payment
of hosting fees and a termination payment (See Item 4: Sportingbet Transaction
and Item 10: Material Contracts). Revenues from the Company's continuing
licensees, excluding Sportingbet grew 41% during the year thus reducing reliance
on the Sportingbet revenue stream. With respect to continuing licensees, 2
licensees represented in total 33% of our consolidated revenues in 2004. Revenue
for these 2 continuing licensees is expected to grow to 65% of total revenues in
2005 (split equally) and therefore the loss of either of these licensees would
currently have a material impact on the Company's revenues (See Item 10.
Material Contracts - Software License Agreements between the Company and Real
Entertainment and the Company and Internet Empire Entertainment dated May 10,
1999 and May 23, 2000 respectively). One of these licensees signed a five year
extension to their license agreement in November 2004 (See Item 10. Material
Contracts - Internet Empire Entertainment Amendment to Software License
Agreement dated November 22, 2004) and the other is on a rolling annual contract
that renews in May of each year.

         It is anticipated that the majority of our future revenue and earnings
growth will continue to come from our ongoing participation in the licensees'
revenue stream. We receive a sliding scale from 25 percent to 10 percent of a
licensee's net revenue (wagers less payouts, less chargebacks (credit card
reversals), house bonuses and other compensation). Our primary cost with regard
to continuing license income is the cost of upkeep of hosting facilities and
direct site operating costs.

         Management emphasizes that the licensees are structured operationally
so that a licensee's prime responsibility, aside from the ownership of the
customer data base and the casino web pages, is to market its gaming site to its
respective market.

                                       22
<PAGE>

         ORGANIZATIONAL STRUCTURE

         We are a holding company and conduct our operations worldwide through
our operating subsidiaries, which are located in various jurisdictions as
described below in this annual report.

                                       23
<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>
                                            ----------------
                                            World Gaming Plc
                                            (the "Company")
                                            ----------------
                                                    |
                                                    |
                                        ------------------------
                                        WG International Limited
                                        ------------------------
                                                    |
                                                    |
           ------------------------------------------------------------------------------------------------------
           |                           |                             |                        |                 |
           |                           |                             |                        |                 |
 --------------------       ---------------------       -------------------------      ---------------      --------
 WG Interactive, Inc.         LVA Holdings, Inc.        Interactive Systems, Inc.       World Gaming        TIC Inc. +
 ("WG Interactive)          ("Delaware Holdings")       ("Interactive Systems")        Europe Limited.
 --------------------       ---------------------       -------------------------      ---------------      --------
                                       |
                                       |
         ----------------------------------------------------------------------
         |             |               |                    |                 |
         |             |               |                    |                 |
 ----------------      |      -------------------       ---------       -------------
   Inphinity           |      ESCE Holdings Inc.           EFS          World Gaming
 Interactive Inc.      |      ("Canada Holdings") +     Caribbean       Services Inc. +
  ("Inphinity")        |                                   Inc. +
 ----------------      |      -------------------       ---------       -------------
                       |
                       |
              ------------------             ---------------------------------
                                                   Internet Opportunity
              SSII Ltd ("SSII")*                   Entertainment Limited
                                             (an affiliate of Sportingbet plc)
              ------------------             ---------------------------------
                        \                           /
                         \                         /
                 50%      \                       /     50%
                           \                     /
                        -----------------------------
                              Bullen Road LP*
                              ("Bullen Road")
                        -----------------------------
</TABLE>

_ Other than where indicated, ownership interest(s) are 100%.

+ Indicates non-trading, dormant entities.

* Bullen Road LP is an exempt limited partnership formed in the Cayman Islands.
As well as the two partners shown above, Gwladys Street Limited, a company
incorporated in the Cayman Islands, acts as a general partner and is itself
owned in equal shares by SSII and Internet Opportunity Entertainment Limited.
SSII's interest in the Bullen Road LP was transferred to ISI effective January
1, 2005.

                                       24
<PAGE>

Further information on the background and purpose of each member of the WG Group
is provided below.

         WORLD GAMING PLC (THE "COMPANY")

         The Company is incorporated within England and Wales and is the
ultimate parent company within the Group. The Company acts as a holding company
and does not carry on any trading activity. Its operations are carried out world
wide through its operating subsidiaries.

         The Company's share capital comprises ordinary shares. These ordinary
shares are represented by American Depositary Shares quoted on the National
Association of Securities Dealers' Over -The-Counter Bulletin Board and ordinary
shares traded on the Alternative Investment Market of the London Stock Exchange.

         WG INTERNATIONAL LIMITED

         WG International Limited is incorporated in England and Wales and also
does not carry out any trading activity. The company acts as an intermediate
holding company.

         WORLD GAMING EUROPE LIMITED

         World Gaming Europe Limited is incorporated in England and Wales. It
was formed to provide the WG Group with a European-based company to market the
services of its various subsidiaries. We are informed that the entity was never
actually used for this or any other purpose. Accordingly, World Gaming Europe
Limited does not currently carry out any trading activity.

         LVA HOLDINGS INC. ("LVA")

         LVA is a company incorporated in the state of Nevada and subsequently
re-domiciled in the state of Delaware. In April 2004, LVA changed its name from
Starnet Communications International, Inc. to LVA Holdings Inc.

         LVA became a subsidiary of the Company through a reorganization
completed in May 2001. The reorganization was structured as a merger of LVA with
WG Reorganization Sub, Inc. (a wholly owned subsidiary of the Company formed for
the purposes of the reorganization). The merger was carried out in accordance
with the laws of Delaware and following the merger, LVA was the surviving entity
and became part of the Group. The reorganization was approved by the
shareholders of Delaware Holdings who exchanged their Delaware Holdings common
stock for ADRs in the Company on a one for one basis. Subsequently, all of
Delaware Holding's stock was exchanged for shares of WG International Limited,
effected by way of a share for share exchange.

         LVA is involved in the current reorganization of the Group. This
reorganization involves a direct or indirect transfer of various assets and
liabilities of LVA to other Group subsidiaries.

         WG INTERACTIVE INC. ("WG INTERACTIVE")

         WG Interactive is a company incorporated in British Columbia, Canada on
14 September 2004.

         WG Interactive provides a small administration and support function to
the Group from premises in Vancouver that are sublet from Alea.

                                       25
<PAGE>

         INTERACTIVE SYSTEMS, INC. ("ISI")

         ISI is a company incorporated in Antigua. It was formed in September
2004.

         ISI licenses customized, fully-integrated Internet gaming systems to
independent parties wishing to enter the online gaming industry. It provides a
complete range of services that the operator needs in order to launch an online
gaming website. ISI also carries out hosting activities on behalf of some of its
licensees. It owns equipment and maintains systems in Antigua that host all data
that is processed on the software in accordance with its licensees gaming
licenses.

         ISI is part of the Group reorganization of the Group.

         ESCE HOLDINGS INC. ("ESCE")

         ESCE was incorporated in British Columbia, Canada on 19 May 1995. ESCE
was acquired by Delaware Holdings on 25 March 1997 pursuant to a share purchase
from Murray Partners (BVI) Inc. In 2004, ESCE changed its name from Starnet
Communications Canada, Inc. to ESCE Holdings Inc.

         On 1 January 2000, ESCE transferred its software development business
to Inphinity. On 17 March 2000, ESCE sold substantially all of its assets and
undertakings comprising the adult entertainment division of ESCE to Chisel Media
Inc.

         ESCE is currently inactive and is not used for any trading activity.
The company is involved in certain litigation matters (See Item 8, Legal
proceedings).

         INPHINITY INTERACTIVE INC. ("INPHINITY")

         Inphinity Interactive Inc. was incorporated in British Columbia, Canada
on 19 August 1999.

         Up until the Sportingbet Transaction (See Item 4: Sportingbet
Transaction and Item 10: Material Contracts), Inphinity provided certain
services to SSII. Its primary focus was to maintain, design, create and develop
software products for the interactive gaming industry.

         As part of the Sportingbet Transaction, Inphinity transferred its
development business to Alea Software Limited (an affiliate of Sportingbet).
Alea now provides development services to ISI through contractual arrangements.

         Inphinity also transferred its remaining assets (consisting of
administration staff and assets) to WG Interactive.

         Inphinity is currently inactive and is not used for any trading
activity.

         SSII LTD. ("SSII")

         SSII is incorporated in St. John's, Antigua and until October 1, 2004
was the group's main operating entity. SSII changed its name from Starnet
Systems International, Inc. to SSII Ltd in June, 2004.

         In 2004, the Company migrated licensing activities from SSII to ISI and
SSII is now dormant.

                                       26
<PAGE>

         BULLEN ROAD LP ("BULLEN ROAD") AND GWLADYS STREET LIMITED (THE "GENERAL
PARTNER")

         Bullen Road LP is an exempt limited partnership formed in the Cayman
Islands. It is a joint venture between the Company and Sportingbet. Its members
are ISI (on behalf of the Company, until execution of an assignment effective
January 1, 2005 this interest was held by SSII), Internet Opportunity
Entertainment Limited (a company incorporated in Antigua and an affiliate of
Sportingbet) ("IOEL") and the General Partner (a company incorporated in the
Cayman Islands).

         As required pursuant to Cayman Islands partnership law, the General
Partner acts as the general partner of Bullen Road. The General Partner is
itself now owned in equal shares by ISI and IOEL.

         Bullen Road was formed as part of the Sportingbet Transaction (See Item
4: Sportingbet Transaction and Item 10: Material Contracts) and is the vehicle
through which the Company and Sportingbet jointly own the proprietary interest
in the Gaming Software. The terms and conditions on which the Company and
Sportingbet are to control and run Bullen Road and the General Partner are set
out in a Partnership Agreement. On January 1, 2005, SSII Ltd transferred its
interest in the Bullen Road LP to Interactive Systems Inc., a wholly-owned
subsidiary of WG International. Agreements in respect of this transaction have
been included as exhibits to a Report of Foreign Private Issuer on Form 6-K
filed with the SEC on April 4, 2005.

         TIC, INC.

         TIC is a company incorporated in Antigua. It was formed in January
2005.

         TIC is part of the Company's plan of reorganization of certain entities
within the Group, which reorganization was approved in 2004 and with an expected
completion of June 2005. As part of this reorganization, ISI will acquire the
trade or business of the remaining subsidiaries currently held by LVA. LVA will
be wound up and to the extent there may be any remaining liabilities or
obligations of LVA, such liabilities or obligations will be transferred to TIC
until these are resolved.

         EFS CARIBBEAN INC.

         EFS Caribbean Inc. (incorporated in Antigua) ("EFS") was dedicated to
the electronic transfer of funds and was established in order to facilitate
local banking relationships for transaction processing.

         In February 2004, the service offerings of EFS were terminated by the
Company as part of certain cost saving measures. The Company has agreed
contractual arrangements with Sportingbet and Fincorp, a subsidiary of
Sportingbet, through which the Company now provides transaction processing
services to its licensees.

         EFS is currently inactive and is not used for any trading activity. The
Company believes that EFS does not have any actual or contingent liabilities or
obligations and the Company is in the process of liquidating this entity.

         WORLD GAMING SERVICES, INC.

         World Gaming Services, Inc. is a Company incorporated in Antigua.

                                       27
<PAGE>

         World Gaming Services, Inc. ran a full service online gaming operation
(www.worldgaming.com) and for this purpose, holds a gaming license from the
Antiguan authorities. World Gaming Services, Inc. ceased its online gaming
operations in June 2003 after six months of operating due to a decision by the
Company to focus on its core activities of developing Internet gaming software
and working closely with its licensees.

         World Gaming Services, Inc. is currently inactive and is not used for
any trading activity. The Company is not aware of any actual or contingent
liabilities or obligations and the Company is in the process of liquidating this
entity.

GOVERNMENT LICENSING AND REGULATION AND RELATED RISKS

         Our subsidiaries have various connections with the online gaming
industry. Until October 2004, Inphinity developed interactive gaming software
under contract with SSII. Subsequent to this date, such development is carried
out through the joint venture arrangements (See Item 4: Sportingbet Transaction
and Item 10: Material Contracts) and ISI licenses online gaming systems to
various licensees and provides hosting services. These licensees are licensed to
operate interactive casinos in the country where their gaming equipment is
physically located. Until February 2004, EFS International (Antigua) Inc. and
EFS Caribbean Inc. from its offices in Antigua performed various services for
our licensees, including financial transaction processing. ISI, from its offices
in Antigua, now performs various services for the licensees, including, but not
limited to, providing licensee support and technical support. The Joint Venture
Arrangements provide development support to ISI, which benefits our licensees,
by maintaining our software systems.

         The licensees operate their interactive casinos from servers maintained
by ISI and located in Antigua.

         A significant debate exists whether the laws of any country other than
the country where the computer gaming servers are physically located have
jurisdiction over the operations of the licensees of ISI. In addition, a
significant debate exists whether the laws of any country other than the country
where the computer gaming servers are physically located has jurisdiction over
the operations of our affiliates, which perform services for the licensees.

         ISI or a Group Company holds a gaming license in the nation of Antigua
and Barbuda. It is a condition of our contracts with our licensees that they too
must hold a gaming license. Our licensees each have the responsibility to
determine from which countries they will accept gaming transactions and ensure
that their own gaming license is maintained. All of our licensees gaming
transactions are accepted on servers located in Antigua and are governed by the
conditions of those licensees gaming licenses. No gaming transactions are
accepted or recorded by any subsidiary of the Company other than those processed
on our servers located in Antigua and licensed by the government of Antigua and
Barbuda under our subsidiary, ISI.

         Historically, gaming activities have been subject to extensive
statutory and regulatory control by government authorities, and have been very
dependant and likely significantly affected by any changes in the political
climate and economic and regulatory policies of the countries where gaming
facilities are located. These changes may impact our operations in a materially
adverse way. Various laws and regulations could have a direct and material
effect on the business, and indirectly could have a material effect on the
public demand for our gaming software. Most countries and jurisdictions within
countries have laws or regulations restricting gaming activities. For example,
in the United States, the Wire Act contains provisions which make it a crime for
anyone in the business of gaming to use an interstate or international wire
communication line to make wagers or to transmit information assisting in the
placing of wagers. Other United States laws impacting gaming activities include

                                       28
<PAGE>

the Interstate Horse Racing Act, the Interstate Wagering Paraphernalia Act, the
Travel Act, the Organized Crime Control Act and the Patriot Act.

         While we believe that the activities of our subsidiaries do not violate
or are not subject to such laws and regulations, because there is very little
clear statutory and case law authority, this conclusion is not free from doubt.
We face the risk of either civil or criminal proceedings brought by governmental
or private litigants who disagree with our interpretation of laws and
regulations. Because there is little guiding authority, there is a risk that we
could lose such lawsuits or actions and be subject to significant damages or
civil or criminal penalties and fines. Such proceedings could also involve
substantial litigation expense, diversion of the attention of key executives,
injunctions or other prohibitions being invoked against our licensees or us and
our subsidiaries. The uncertainty surrounding regulation of the Internet gaming
could have a material adverse effect on our business, revenues, operating
results and financial condition.

         Several countries and governmental authorities, most notably law
enforcement agencies in the United States, believe that the laws of their
country restrict, and in some instances prohibit, interactive gaming operators
from doing business with residents of their countries and, in some instances,
prohibit or restrict residents of their respective countries from doing business
with interactive gaming operators located in a foreign country. Specifically the
United States federal law (18 U.S.C. ss. 1084), commonly referred to as the Wire
Act, is a federal statute that purports to make it illegal for a betting or
wagering business to use a wire communication facility to transmit bets or
wagers in interstate or foreign commerce.

         In response to the events of September 11, 2001 the United States
enacted the Patriot Act, which is intended to address worldwide terrorism.
However, the Patriot Act also contains provisions which could be used against
the Internet gaming industry. The jurisdiction of the United States now extends
to all non-U.S. banks that have correspondent accounts in the United States.
This means that any such non-U.S. bank processing U.S. gaming transactions will
be violating U.S. law, regardless of the fact that they are in full compliance
with the laws of their own country. Pursuant to the Patriot Act, the United
States can now obtain a pretrial restraining order freezing assets, including
bank accounts, of defendants in U.S. civil actions, once process has been served
on the non-U.S. party. This means that the U.S. merely has to serve papers on a
non-U.S. bank, and it can freeze the non-U.S. bank's U.S. correspondent account,
if that bank is processing U.S. gaming transactions or holding operating funds
or the profits of an operator accepting U.S. wagers. Thus, if allegedly tainted
funds are deposited in a non-U.S. bank account of a non-U.S. bank, the United
States can seize and forfeit an equal amount of funds on deposit in the non-U.S.
bank's correspondent account.

         The U.S. Justice Department has taken the view that all offshore gaming
funds are tainted, because all offshore gaming is illegal. This creates a
serious disincentive for non-U.S. banks to provide banking services to Internet
gaming operators, and thus negatively impacts our licensees as well as inhibits
potential licensees. MBNA, Bank of America and Chase Manhattan Bank and Citibank
have announced that they will decline authorization to Americans who try to use
their credit cards for online gaming.

         We believe that if current laws or any future laws become applicable to
activities of our licensees or our affiliates that perform services for the
licensees, such laws would have a material adverse effect on our business,
revenues, operating results and financial condition. If it was determined that
such law was applicable to the activities of our licensees and affiliates, the
licensees would have to change the types of wagering provided to residents of
the United States. This would impact their current operations and there may be a
delay in offering acceptable wagering products to such customers. There would be
no assurance that the wagering products offered to such customers would be as
profitable to our licensees or to our affiliates as the wagering products
currently offered to such customers by the licensees.

                                       29
<PAGE>

         The Company and the industry as a whole are under threat from certain
factions within the U.S. Congress that seek to ban certain Internet gambling.
Whilst legislation has been introduced in both houses of Congress in recent
years, no Internet gambling bills have been introduced in the current session of
Congress as of April 30, 2005, and thus there are no bills pending. There is no
way of knowing if and when such a bill might be introduced, and the Company
continues to monitor this situation since the passage of this legislation could
have a substantial impact on the business of the Company's licensees and
ultimately the Company. IF INTERNET GAMBLING PROHIBITION LEGISLATION IS
INTRODUCED AND BECOMES LAW, IT WOULD HAVE AN IMMEDIATE DETRIMENTAL EFFECT ON THE
INDUSTRY AND WOULD POSE A SERIOUS THREAT TO THE COMPANY'S CONTINUED OPERATIONS.

         In March 2004, the World Trade Organization held in favor of Antigua
and Barbuda and against the United States with regard to unlawful trade
restrictions relating to Internet gaming. In April 2005, the US appeal to this
ruling was delivered in favor of Antigua, but it is too early to determine what,
if any, influence this may have on United States led legislation.

PROPERTY, PLANTS AND EQUIPMENT

         UNITED KINGDOM

         Our registered office now operates from Minerva House, 5 Montague
Close, London. The Company has no physical assets at this location. Corporate
activities are managed from our office in Antigua.

         ANTIGUA

         The operations of ISI, SSII (now dormant) and EFS International
(Antigua) (now dormant) are located in 2,500 square feet of commercial space at
Jasmine Court located at Friar's Hill Road, St. Johns, Antigua, at an annual
cost of approximately $49,000 plus utilities. The lease expires on May 1, 2009.

         CANADA

         WG Interactive sub-leases approximately 2,500 square feet for its
administrative activities at 1401 West 8th Avenue, Vancouver, Canada. The
sub-lease is from Alea Software (See Item 4: Sportingbet Transaction and Item
10: Material Contracts). The sub-lease expires May 31, 2007 and is terminable on
3 months written notice to the other party. The annual cost is approximately
$50,000.

         In 2004, we successfully terminated the lease over office space in
Toronto. The lease, signed in 2001, was for a term of five years expiring
September 30, 2006 and a base rent of approximately $90,000 in the first year,
increasing to approximately $110,000 per year by the end of the lease. The
Company had vacated the office in 2002.

         EQUIPMENT

         During the years ended December 31, 2004, 2003 and 2002 we made capital
expenditures of approximately $1.1 million, $0.4 million and $2.0 million,
respectively. The expenditures were primarily for computer equipment and related
items in order to increase our capacity to process transactions and improve
overall system reliability.

                                       30
<PAGE>

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

         YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION
WITH "ITEM 3. SELECTED FINANCIAL DATA" AND OUR CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES THERETO SET FORTH ELSEWHERE IN THIS ANNUAL REPORT. IN ADDITION TO
HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" APPEARING ON
PAGE 1 OF THIS ANNUAL REPORT. CURRENCY AMOUNTS IN THOUSANDS OF U.S. DOLLARS,
UNLESS OTHERWISE SPECIFIED.

CHANGE IN FISCAL YEAR

         On May 17, 2001, we changed our fiscal year end from April 30 to
December 31.

RESULTS OF OPERATIONS

         On May 25, 2001, pursuant to an Agreement and Plan of Reorganization
executed on May 17, 2001, LVA Holdings Inc. (formerly Starnet Communications
International Inc.) became a wholly-owned subsidiary of World Gaming Plc, a
Company organized in England and Wales for the purpose of facilitating a new
holding company structure.

         World Gaming Plc ("World Gaming" or the "Company") is a holding company
incorporated under the laws of England and Wales that, through its subsidiaries
and joint venture arrangements, is a developer, licensor and supplier of online
gaming products, including casino, sportsbook, poker and pari-mutuel betting.

         Interactive Systems Inc., a wholly-owned subsidiary of the Company
incorporated and operating out of Antigua, licenses gaming software to third
parties for an initial licensing fee and monthly royalties. In addition,
Interactive Systems Inc. provides hosting and other systems administrative
services to its licensees. WG Interactive Inc., a wholly-owned subsidiary of the
Company, incorporated and operating out of British Columbia, Canada, provides
further administrative services on behalf of ISI Limited such as development
support.

         The following tables set out selected consolidated information from the
statements of operations for the years ended December 31, 2004, 2003 and 2002;
and, the balance sheets as at December 31, 2004, 2003 and 2002:

         SELECTED STATEMENT OF OPERATIONS INFORMATION
<TABLE>
<CAPTION>
                                  FOR THE YEARS ENDED DECEMBER 31,
                                -----------------------------------
                                  2004         2003          2002
                                --------     --------      --------
<S>                             <C>          <C>           <C>
Net sales                       $ 16,288     $ 17,698      $ 16,777
Gross margins                     14,417       15,548        15,073
Operating expenses                 9,234       13,421        20,483
Profit/(loss) from operations      5,183        2,127        (5,410)
Net profit/(loss)                 17,370        2,958        (5,318)
</TABLE>

                                       31
<PAGE>

         SELECTED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
                                  FOR THE YEARS ENDED DECEMBER 31,
                                -----------------------------------
                                  2004         2003          2002
                                --------     --------      --------
<S>                             <C>          <C>           <C>
Working capital                 $ 14,866     $   (126)     $ (5,581)
Total assets                      23,379       12,591         8,377
Long term debt                         -        2,944         3,804
Accumulated deficit               (6,353)     (23,723)      (26,681)
Total shareholders' equity        16,028          828        (3,545)
</TABLE>

OPERATING RESULTS FOR FISCAL 2004

         Total revenues for the year ended December 31, 2004 decreased by 8.0%
or $1,410 to $16,288 compared to $17,698 for the same period last year. Net
income from operations for the year ended December 31, 2004 was $5,183 or $0.16
per participating ordinary share compared to net income of $2,127 or $0.05 per
participating ordinary share last year. Participating ordinary shares include
those shares that have voting and economic rights and exclude those shares held
by Sportingbet in accordance with the transaction effective October 1, 2004 (See
Item 4: Sportingbet Transaction and Item 10: Material Contracts).

         Revenue consists of the following elements: 1.) Royalty income from our
licensees for utilization of our proprietary software and hosting facilities,
charged as a percentage of those licensees' net win; 2.) Fee income,
representing amounts charged to certain licensees for management of transaction
processing activity; 3.) Development and Web Page design fees, representing
certain amounts charged to licensees for unique development projects and 4.)
License fee revenue, representing upfront costs of purchasing a license to
utilize our proprietary software.

         Net income for the year ended December 31, 2004 increased by 487.2% or
$14,412 to $17,370 compared to $2,958 for the same period last year. The
significant increase in net income from the prior year relates to an
extraordinary gain on disposal of assets attributable to the Sportingbet
transaction of $12,187 (2003: $Nil) described below.

         Royalty revenue from software licensing decreased 4.0% or $629 to
$15,227 for the year ended December 31, 2004 compared to $15,856 for the same
period last year. The decrease is as a result of the transaction with
Sportingbet where, effective October 1, 2004, the Company no longer receives
royalty revenues from this customer. For comparative purposes, revenue from
continuing licensees excluding Sportingbet grew 41% to $5,574 for the year ended
December 31, 2004 when compared to the prior year. The growth in revenue from
these licensees has continued through the first quarter of 2005.

         In February 2004, the Company closed its transaction processing and
customer service divisions migrating licensees that utilized these services to a
third party supplier. For comparative purposes, $1,765 of transaction processing
fee revenue was included in total revenues for the year ended December 31, 2003
compared to $423 in the year ended December 31, 2004. Direct costs associated
with this division exceeded fee revenue in every quarter up to the date of its
closure.

         Despite the exclusion of transaction processing fee income since
February 2004, revenues have continued to grow due to increases in total
wagering volume experienced by licensees. For the twelve months ended December
31, 2004, gross wagering volumes increased 63% to $6.2 billion when compared to
$3.8 billion in the prior year. Growth in wagering volume from continuing
licensees, excluding Sportingbet, was 73%. Management believes that the growth
in wagering volume is attributable to both a continued expansion of the market
for internet gaming. In addition, this growth is partially attributable to
increased reliability of the Company's product suite as a result of
infrastructure and support services

                                       32
<PAGE>

upgrades. Overall net win experienced by licensees exceeded last year. (Net win
for the Company's licensees is the difference between the amount wagered (bet
placed) by a customer and the amount paid back to (won by) that customer).
Consequently, continuing licensees' revenues representing a total of 10
licensees at December 31, 2004 increased 58% over the prior year.

         The gross margin for the year ended December 31, 2004 was 88.5%
compared to 87.9% for the same period last year. The increase resulted from a
more profitable revenue mix due to the closure of the transaction processing
division in February 2004 and the recovery of hosting fees attributable to
Sportingbet for continuing to host their data on the Company's servers in
Antigua. Effective October 1, 2004 Sportingbet now pays the Company for its
usage of the Company's hosting facility. The payment is on a cost plus 10% basis
and amounted to revenue of $621 in the year ended December 31, 2004 compared to
$nil for the year ended December 31, 2003.

         Operating expenses including interest and depreciation decreased 31.2%
to $9,234 during the year ended December 31, 2004 compared to $13,421 for the
same period last year.

The decrease occurred primarily due to the following:

      o  The removal of development costs effective October 1, 2004 as a result
         of the transaction with Sportingbet. These costs were approximately
         $1,100 per quarter.

      o  Depreciation charges declined $513 or 26.5% when compared to the same
         period last year;

      o  An 18.8% reduction in other corporate overhead or a reduction of
         $1,914, when compared to the same period last year.

         The Company believes it has stabilized its cost base through 2004 while
maintaining its commitment to continue investing in enhanced infrastructure and
product offerings for its existing licensees.

OPERATING RESULTS FOR FISCAL 2003

         Revenues from all components of the gaming business, which include
licensing and financial transaction processing, increased 5 percent or $921 to
$17,698 for the year ended December 31, 2003 when compared to $16,777 for the
prior year.

         Net win for our licensees is calculated as the difference between the
amount wagered (bet placed) by a customer and the amount paid back to (won by)
that customer. Subject to the volume of total amounts wagered net win on live
sports events are higher than those on interactive casino gaming.

         Contributing to the increase in total revenue was a 7 percent or $1,056
increase in royalty revenue to $15,856 when compared to $14,800 for the year
ended December 31, 2002. For the year ended December 31, 2003 the continued
growth in royalty revenue was driven primarily by the following:

      o  An increase of 9 percent in licensee's wagering activity utilizing our
         gaming infrastructure. The value of wagers placed for the year ended
         December 31, 2003 was $3.8 billion when compared to $3.4 billion for
         2002.

      o  The 9 percent increase in overall licensee wagering activity was
         represented equally in increases in both the sportsbook and casino and
         other gaming wagers.

                                       33
<PAGE>

      o  The increase in sportsbook wagers yielded an 11 percent increase in
         licensee net win as licensees managed to retain greater net win on
         sporting events due to a combination of effective risk management,
         greater offerings of higher net-win bet types and results of chance.

      o  The increase in total casino wagers yielded a 2 percent increase in
         total licensee net win. Percentage net win on casino gaming fell
         primarily as a result of increased player win on blackjack and the
         introduction of progressive jackpots on some games. The increase in
         total wagering activity is primarily as a result of the casino product
         upgrade that took place in July 2003. This upgrade increased the number
         of games offered and the types of bets that could be placed. In
         addition, the increase in wagering activity and volumes were made
         possible by the upgrade in Gaming Software to the 3.3.1 Release which
         provided a stable platform and increased the system capacity to handle
         higher volumes without significant system failures or significant
         breakdowns.

      o  A 4 percent increase in deposits across all licensees thus increasing
         the amount of funds available to wager. This increase was primarily as
         a result of more stable transaction processing routes, particularly
         towards the latter part of 2003.

      o  These increases occurred despite the impact of losing a licensee in
         May, who at that time contributed 6 percent of total revenues.

         It should be noted that royalty revenue from one of our operating
licensees represented approximately 67 percent of our total sales for the year
ended December 31, 2003, compared to the same 67 percent for the year ended
December 31, 2002. While there was a 7 percent growth in gaming revenue
generated by this licensee, there was a 50 percent growth in gaming revenues
generated by our other continuing licensees. Effective October 1, 2004, the
Company entered into a Joint Venture arrangement with this licensee (See Item 4:
Sportingbet Transaction and Item 10: Material Contracts).

         During the year ended December 31, 2003, we lost one licensee resulting
in a total of 9 active licensees as of December 31, 2003.

         Revenue from fees charged in respect of transaction processing on
behalf of certain licensees increased 56 percent or $634 to $1,765 during 2003
when compared to the year ended December 31, 2002. This increase is the result
of a revision of fees charged to our licensees in June 2003 to a level that
covered the charges we were incurring from the transaction processing gateways
we utilized. In addition, the increase in deposit volume also contributed to the
overall increase in revenues. Transaction processing fees increased considerably
during the year as processors willing to accept gaming transactions became more
scarce. In February 2004, we closed the transaction processing and customer
service divisions of our business. This was in recognition that licensees
utilizing these divisions were better serviced outside our core software
development business. The transaction volume that we processed at the time of
closure represented 6% of system-wide transaction volume.

         Our margin increased 3 percent or $475 during the year ended December
31, 2003 when compared to $15,073 for 2002. Gross margin represents our total
revenues less charges primarily for transaction processing, described above and
Internet bandwidth. Gross margin percentage declined to 88 percent for the year
ended December 31, 2003 from 90 percent when compared to 2002. The decline in
gross margin percentage reflected a less profitable revenue mix as transaction
processing revenue increased as a percentage of total revenue. Such revenues
have close to 100% direct costs. Therefore any increase in these revenues as a
percentage of overall revenues has the effect of reducing our gross margin
percentage.

                                       34
<PAGE>

         As a result of our continuing effort to reduce operating costs,
expenses including interest and depreciation decreased by 34 percent to $13,421
during the year ended December 31, 2003 compared to $20,483 for the year ended
December 31, 2002. The decrease was primarily due to the following:

      o  Bad debts for the year ended December 31, 2003 decreased 90 percent or
         $3,056 compared to the same period last year. Last year the Company
         experienced significant write-offs in failed transaction processing
         routes. The failure of these routes typically occurred due to
         implementation of transaction processes that lacked transparency.
         Improved due diligence procedures and reinforcement of risk sharing
         policies with licensees has resulted in a significant reduction in this
         cost in the year ended December 31, 2003.

      o  Depreciation expense decreased 39% or $1,235 during 2003 when compared
         to 2002. This reduction was the result of a number of significant
         assets becoming fully depreciated in the third quarter of 2003.

      o  Communication costs decreased 46% or $397 during 2003 when compared to
         2002 as contracts with certain suppliers were cancelled or renegotiated
         and the use of voice-over IP telecommunication was utilized.

      o  Salaries and wages decreased 10% or $670 during 2003 despite severance
         costs incurred on a number of senior employees in 2003.

      o  Professional fees declined 22% or $390 during the year ended December
         31, 2003 when compared to 2002 as litigious matters requiring third
         party advice declined and other advisors were not utilized or changed.

      o  Other corporate overhead including occupancy costs, board expenses and
         travel declined 30% or $1,314 during 2003 when compared to 2002 through
         initiatives such as relocation or closure of offices and renegotiation
         or changes in certain supplier accounts.

         Other income increased by $889 to $981 from $92 for the same period
last year. The increase in other revenue is primarily due to significant lease
liability settlements agreed during the year.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2004, the Company had $7,944 in cash and cash
equivalents up from $2,657 at December 31, 2003. The increase over the year was
primarily due to profits and the receipt of $3,000 from Sportingbet. Profits
earned in the period were as a result of increased royalty revenues from
licensees and maintaining a stabilized cost base with greater scalability. In
addition, on October 1, 2004 the Company received $3,000 from Sportingbet
representing the first installment of consideration payable under the terms of
the transaction.

         Working capital at December 31, 2004 improved to $14,866 from $(126) at
December 31, 2003. The primary reason for the increase in working capital
relates to consideration received ($3,000) or receivable ($7,000) from
Sportingbet as a result of the transaction effective October 1, 2004. In
addition the improvement in working capital is due to the decline in current
liabilities through the execution and completion by current management of
payment plans on significant lease and other obligations and payment of
remaining loan balances.

         Reserves and deposits held by credit card processors on behalf of our
licensees were $2,234 at December 31, 2004, down from $5,948 at December 31,
2003. The decrease in funds held relates to residual funds receivable from
processors after the closure of the transaction processing division in

                                       35
<PAGE>

February 2004. These reserves are expected to continue to decline until all
amounts have either been received or written off. As these funds are held on
behalf of licensees, the Company does not release such funds to the licensee
until they are collected from the respective processor. It is expected that as
funds receivable are deemed uncollectible, such funds will be written-off and
offset against corresponding amounts owing to licensees.

         Accounts receivable increased by $2,900 from $1,538 at December 31,
2003 to $4,438 at December 31, 2004. The accounts receivable balance primarily
consists of amounts due to the Company in respect of deposits processed on
behalf of licensees during December 2004. The Company collects all funds
processed by our licensees in the previous month within 30 days of month-end of
the preceding month. The Company then collects its royalty from these funds
before distributing to respective licensees. December represents a busy month on
the US winter sports season calendar and, therefore deposit volumes increase,
reflecting a higher balance receivable at December 30, 2004. Royalties due from
operating licensees who do not utilize the Company's outsourced processing
function are usually collected towards the end of the following month. Prior to
closure of the transaction processing division in February 2004, such amounts
would have been disclosed as amounts due from processors.

         Prepaid expenses and deposits decreased by $250 to $344 at December 31,
2004 compared to $594 at December 31, 2003. The decrease is due to lower prepaid
software licensing costs at year end due to change in the payment scheduling
with Oracle during the year.

         Consideration receivable of $7,000 represents cash payments due from
Sportingbet in respect of the transaction which took effect October 1, 2004. A
further staged payment of $3,000 was received on March 1, 2005 and the balance
of $4,000 is receivable no later than November 1, 2005.

         Accounts payable and accrued liabilities balances increased by $636 to
$7,080 in the year ended December 31, 2004 compared to $6,444 at December 31,
2003. The balance comprises reserves and deposits described above of $2,234 due
to our licensees together with amounts receivable in respect of December 2004
processing net of the Company's royalties. These amounts will subsequently be
paid to our licensees if and when received. In addition, amounts managed for
jackpot balances of $594 at December 31, 2004 are included in the balance
together with general accounts payable. Jackpot balances are amounts held on
behalf of our licensees for gaming products utilized on their websites.

         Net cash used in investing activities for the year ended December 31,
2004 was $1,867 compared to $219 for the same period last year. This amount
primarily represents payments under the current Oracle license contract, and
those under the upgrade described below, investment in new hardware
infrastructure and Denial of Service (DoS) defense equipment. Towards the end of
the second quarter of 2004 the Company began investing in a major upgrade to its
hosting facilities in Antigua to increase stability of the Company's computer
operating systems, as well as scalability. The upgrade involved moving to an
Oracle 10g database platform in addition to replacement and expansion of disk
storage sub-systems.

         Net cash used for financing activities for the year ended December 31,
2004 was $3,081 compared to $747 for the same period last year. Cash was
primarily used for payments on lease settlements negotiated during the second
half of 2003, and repayments of amounts due to Sportingbet. In addition, under
the terms of the transaction with Sportingbet, $7,000 of cash remained
receivable in respect of the transaction at December 31, 2004.

CONTRACTUAL OBLIGATIONS

         At December 31, 2004, the Company had the following contractual
obligations:

                                       36
<PAGE>
                                               Payments due by period
                                     -----------------------------------------
Contractual obligations              Total  less than  1 - 3  3 - 5  more than
                                              1 year   years  years   5 years

Long-term debt obligations              -        -        -      -        -
Capital (Finance) Lease Obligations     -        -        -      -        -

Operating Lease Obligations           319      101      106    112        -
                                      ---      ---      ---    ---      ---
Total                                 319      101      106    112        -

TREND INFORMATION

         We have not identified any changes in trends in our operations since
the end of the financial period ended December 31, 2004.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

         The names, positions and ages of our directors and senior management as
of April 30, 2005 are as follows:

       NAME         AGE                 POSITION               DATE(S) APPOINTED

James H. Grossman   65    Chairman of the Board and Director   April 11, 2003

A. Daniel Moran     37    Director and Chief Executive         April 11, 2003
                          Officer

David Naismith      31    Director and Chief Financial         August 1, 2003
                          Officer

Jonathan Moss       51    Sales and Marketing Director         January 1, 2005,
                                                               appointed to the
                                                               Board of
                                                               Directors
                                                               March 1, 2005.

Clare Roberts       56    Non-executive Director               October 18, 2000

Michael Cumming     64    Non-executive Director               March 1, 2005

         See Item 10 - Additional Information - Board Action and Powers for a
discussion on the terms and conditions underlying the appointment to the Board
of Directors.

         David Fleming resigned from the position of Chief Technology Officer in
January 2004.

BACKGROUND INFORMATION CONCERNING DIRECTORS

         JAMES H. GROSSMAN, CHAIRMAN OF THE BOARD AND DIRECTOR

         James H. Grossman, who became Chairman on April 11, 2003, is an
attorney with experience in the international business, corporate, and venture
capital areas and has an active international commercial arbitration practice.
Mr. Grossman was of counsel to Reed Smith Crosby Heafey in San Francisco,
California and predecessor entities from January 2000 until August 2003. From
1995 to 1999, he practiced law as a sole practitioner and also acted as a
business consultant.

                                       37
<PAGE>

         In 1992, Mr. Grossman was appointed by then President George H.G. Bush
to serve as Chairman of the U.S. Foreign Claims Settlement Commission, where he
actively participated in quasi-judicial international arbitration relating to
expropriation of property by foreign governments. Mr. Grossman has served as a
Special Representative for the United Nations Development Program, focusing on
the implications upon certain Balkan nations of sanctions imposed on the then
former Yugoslavia.

         Mr. Grossman also was the Chief Negotiator for the U.S. in the tariff
reduction acceleration round of the US-Canada Free Trade Agreement, which was a
precursor to the creation of NAFTA. He obtained his undergraduate degree in
International Relations/Political Science/History in 1960 from the University of
California at Berkeley and a J.D. from Harvard Law School in 1963. Mr. Grossman
has also served as a director of Champion Communication Services, Inc., a
company based in Houston, Texas, publicly traded on the OTC Bulletin Board and
the Canadian Venture Exchange. Information regarding retirement of directors is
disclosed in Item 10: Additional Information.

         A. DANIEL MORAN, DIRECTOR AND CHIEF EXECUTIVE OFFICER

         Daniel Moran, who became Chief Executive Officer of the Company on
April 11, 2003, has over 15 years of international business experience,
primarily in the technology and Internet sectors seven of which have been in the
e-gaming sector. Most recently, he was the Managing Director for Sportingbet
Australia, where his duties included strategic planning and automation of the
business process, overseeing operations, regulatory compliance, government
relations and the management of a 50-person staff.

         Prior to joining Sportingbet in March 2000, Mr. Moran was a consultant
in Australia, providing advice to companies seeking to organize and become
licensed to conduct Internet gaming operations in a regulated market. Mr. Moran
received a BSc in (Computing Science) from Macquarie University, Australia and a
Post Graduate Diploma in Management from the Macquarie Graduate School of
Management, Australia. Information regarding retirement of directors is
disclosed in Item 10: Additional Information.

         DAVID NAISMITH, DIRECTOR AND CHIEF FINANCIAL OFFICER

         David Naismith was elected to the Board as Chief Financial Officer of
the Company effective August 1, 2003. Mr. Naismith is a qualified chartered
accountant with several years experience in Internet gaming, most recently
holding a senior finance role with Sportingbet. Prior to this, Mr. Naismith held
regional finance directorships at Sportingbet before assuming responsibility for
these finance divisions globally based in London. Having qualified as a
chartered accountant in audit with BDO, Mr. Naismith progressed to transaction
support predominately for international media groups, many of whom have U.S.
based parents, working in both Australia, London and within Europe.

         Together with a financial control and reporting background, Mr.
Naismith's experience in the on-line gaming industry includes capital raising,
acquisitions and global merchant processing in several locations including Costa
Rica, United Kingdom, Austria and Australia. Mr. Naismith holds a Bachelor of
Commerce in finance from Bond University in Australia and is a member of the
Institute of Chartered Accountants, where he was ranked in the top 5 per cent of
candidates. Information regarding retirement of directors is disclosed in Item
10: Additional Information.

         JONATHAN MOSS, SALES AND MARKETING DIRECTOR

         Jonathan Moss has eight years senior management experience in the
e-gaming sector. Immediately prior to his appointment at World Gaming, Jon held
the position of Business Development Director at WagerLogic Limited, the
licensing and services subsidiary of CryptoLogic Inc., one of the industry's
leading e-gaming software providers. Mr. Moss dealt with brand-name clients to
CryptoLogic's casino and poker solutions including Betfair, Littlewoods Gaming,
The Ritz Club of London and ukbetting PLC.

         Mr. Moss has also played a key role in industry lobbying efforts
related to the forthcoming UK Gambling Bill and is an experienced speaker at
international e-gaming conferences. Prior to joining

                                       38
<PAGE>

WagerLogic, Mr. Moss was the principal of a leading industry consulting group
and a director at Access Systems, who brought the world's first regulated
internet casino, Lasseters.com, to market in 1999.

         Mr. Moss's previous international business experience includes
international careers with Unisys and Motorola, heading computer and
telecommunications business units in Australia and the United States. Mr. Moss
holds a BSc Honors Degree in Economics and Psychology and a Postgraduate Degree
in Education. Information regarding retirement of directors is disclosed in Item
10: Additional Information.

         CLARE KAMAU ROBERTS, NON-EXECUTIVE DIRECTOR

         Clare Roberts has served as a director of the Company since October 18,
2000 and was Chairman of the Board from November 20, 2002 to April 11, 2003. He
is a former Attorney General and Minister of Justice and Legal Affairs of
Antigua and Barbuda from 1994 to 1997.

         Mr. Roberts has been founder and principal at Roberts & Company,
Attorneys at Law, since 1986. He served as a consultant to the government of
Antigua from 1986 to 1990 and preceding that, served as Solicitor General for
Antigua and Barbuda as well as Parliamentary Counsel. He is a founding member
and director of the National Development Foundation of Antigua and Barbuda and
Vice President of the Antigua Offshore Association. He is presently a director
and chairman of ACB Mortgage and Trust Company Limited, a wholly owned
subsidiary of Antigua Commercial Bank, the leading bank in Antigua.

         Mr. Roberts is president of the Inter American Commission on Human
Rights, to which he was elected in May 2001. He has served as a consultant to
various government agencies throughout the Caribbean region.

         Mr. Roberts received a BA and L.L.B. from the University of West
Indies, a Legal Education Certificate from the Caribbean Council of Legal
Education, a Diploma in Legislative Drafting from the University of Ottawa in
Canada and attended Harvard University for a program of instruction for lawyers
in 1995 and 1996. Information regarding retirement of directors is disclosed in
Item 10: Additional Information.

         MICHAEL CUMMING, NON-EXECUTIVE DIRECTOR

         Michael Cumming has over 35 years of experience in the field of Private
Equity. Prior to his retirement in 1996 he was for 14 years the Managing
Director of Barclays Private Equity which he expanded from a London base into a
company with nine offices worldwide.

         He is currently Chairman of Mercia Fund Management, Matrix Venture Fund
VCT PLC, Private & Commercial Finance Group PLC and UK Smaller Companies Tracker
Trust PLC. He is also a non-executive Director of Graphite Enterprise Trust PLC
and Forelle Estates Holdings Limited. He has degrees from Royal School of Mines,
Imperial College, London and the Stanford Graduate School of Business
Administration, Palo Alto, California. Information regarding retirement of
directors is disclosed in Item 10: Additional Information.

BACKGROUND INFORMATION CONCERNING SENIOR MANAGEMENT AND CERTAIN KEY EMPLOYEES

         PAUL BOTELHO, DIRECTOR OF PRODUCT DEVELOPMENT

         Paul Botelho joined World Gaming in 1999 and is responsible for
overseeing product development for the company in respect of the Company's
software.

         Mr. Botelho has over 12 years of marketing and product development
experience in the gaming and packaged goods industries. Mr. Botelho began his
career with the British Columbia Lottery Corporation (BCLC) where he was
responsible for mass marketing, brand management and the development of the
BCLC's first Internet presence.

                                       39
<PAGE>

         Mr. Botelho holds a Bachelor of Applied Science from Simon Fraser
University and is a member of the American Marketing Association and the
Canadian Marketing Association.

         ANDREW COCHRAN, DIRECTOR OF INFORMATION TECHNOLOGY

         Andrew Cochran joined the Company in September, 2001 and has been in
the IT field since 1993. Mr. Cochran has expertise in designing and managing
large scale enterprise networks and systems. As Director of IT, he architects
and manages all the gaming systems and networks for World Gaming.

         Prior to Joining World Gaming Mr. Cochran held many lead roles in the
telecommunications industry. At Bell Canada he was responsible for the design
and operation of Bell's Sympatico and Advanced Business Internet infrastructure.
In Bermuda he helped Logic Communications establish an island wide DSL service.
Prior to these positions he was an independent consultant offering engineer
services to a variety of organizations.

COMPENSATION

         COMPENSATION OF NON-EMPLOYEE BOARD MEMBERS

         We have entered into agreements with our three independent directors as
follows: Mr. Grossman receives a fee of (pound)66,000 per year and Messrs.
Roberts and Cumming a fee of (pound)21,600 per year. Mr. Grossman's fees include
compensation for up to five hours a month of legal services to be provided by
Mr. Grossman to the Company and Mr. Grossman may additionally provide up to five
hours per month of legal services, the fees for which shall not exceed a total
of US$2,000.00 per month. In addition, Mr. Grossman has been granted share
options to purchase ordinary shares as follows: The Company on June 4, 2003
authorized the issuance of options to purchase 150,000 ordinary shares all of
which vested only on April 11, 2004 and options to purchase 300,000 ordinary
shares all of which vested only on April 11, 2005. The Company on July 1, 2004
authorized the issuance of options to purchase 500,000 ordinary shares all of
which were to vest on April 11, 2006; however such options vested as a result of
a deemed change of control in accordance with the option terms and conditions
which took place on October 1, 2004. The Company on January 3, 2005 authorized
the issuance of options to purchase 500,000 ordinary shares all of which vest
only on January 3, 2007.

         Mr. Roberts has been granted options, of which 100,000 are exercisable
and fully vested at an exercise price of $2.13; 50,000 are exercisable and fully
vested at an exercise price of $1.44. In August 2003, Mr. Roberts relinquished
options to purchase 200,000 shares at an exercise price of $0.31 granted in July
2001. These options were granted at below market value and therefore in breach
of the current Option Committee policy. As consideration for this
relinquishment, he was granted options at the then market price of $0.15 to
purchase 200,000 shares of which 100,000 were fully vested at the time of the
grant and the remaining 100,000 will vest in August 2005. The Company on July 1,
2004 authorized the issuance of options to purchase 100,000 ordinary shares all
of which vest only on October 18, 2006. The Company on January 3, 2005
authorized the issuance of options to purchase 25,000 ordinary shares all of
which vest only on January 3, 2007.

         On March 1, 2005 Mr. Cumming was granted options to purchase 100,000
ordinary shares at an exercise price of $0.69 all of which vest only on March 1,
2007.

         Any directors who are employees receive no cash compensation for
serving on our Board of Directors. Directors who resigned during the year were
paid pro rata up to when they ceased performing duties for us. All directors are
reimbursed for their reasonable expenses incurred to attend meetings of the
Board of Directors. We anticipate that our Board of Directors will hold
regularly scheduled meetings at least quarterly in person and monthly by
telephonic conference.

                                       40
<PAGE>

         COMPENSATION OF OUR SENIOR MANAGEMENT

         The following table sets forth all compensation, in U.S. dollars, we
paid to our senior management and directors including stock options grants
during the year ended December 31, 2004 and stock options granted as of April
30, 2005. All of the options listed in the table below represent options to
purchase our ordinary shares or ADR's. Options issued and vesting schedules for
existing Directors are set forth in the chart below. All new options granted to
our employees and officers will normally vest over a two-year period from the
date of the grant. Please see "Item 10. Material Contracts" for a description of
employment agreements with our senior management.
<TABLE>
<CAPTION>
                   NAME AND PRINCIPAL POSITION                         COMPENSATION       OPTIONS VESTED/ OPTIONS
                                                                                          GRANTED AS OF APRIL 30,
                                                                            ($)                     2005
_________________________________________________________________________________________________________________
<S>                                                                      <C>                <C>
James H. Grossman, Chairman of the Board and Director (1)                 267,796             950,000/ 1,450,000

A. Daniel Moran, Chief Executive Officer and Director (2)                 468,910           2,000,000/ 2,500,000

David Naismith, Chief Financial Officer and Director (3)                  386,640           1,150,000/ 1,650,000

Jonathan Moss, Sales and Marketing Director (4)                                 -                      -/650,000

Clare Roberts, Director (5)                                                32,990               250,000/ 475,000

Michael Cumming, Director (6)                                                   -                      -/100,000

David Fleming, former Chief Technology Officer and Director
and Managing Director Inphinity (7)                                        89,279                 66,666/ 66,666

Mark Thompson, Operations Director and Managing Director SSII (8)         160,200               310,000/ 310,000
</TABLE>
______________________________

(1) James H. Grossman has served as a Director and Chairman of the Board since
April 11, 2003. Effective January 1, 2005 his annual compensation for such
service and up to five hours a month of legal services is (pound)66,000 plus
US$2,000 per month for such legal services. The Company on June 4, 2003
authorized the issuance of options to purchase 150,000 ordinary shares all of
which vested only on April 11, 2004 and options to purchase 300,000 ordinary
shares all of which vested only on April 11, 2005. The Company on July 1, 2004
authorized the issuance of options to purchase 500,000 ordinary shares all of
which vest only on April 11, 2006; however such options vested as a result of a
deemed change of control in accordance with the option terms and conditions
which took place on October 1, 2004. The Company on January 3, 2005 authorized
the issuance of options to purchase 500,000 ordinary shares all of which vest
only on January 3, 2007. All option grants are at the then market value on the
date of grant. During 2004, Mr. Grossman received compensation for additional
legal services at a rate of $400 per hour in an amount of $21,000. Unvested
options will terminate if Mr. Grossman's directorship is terminated for cause.
If Mr. Grossman is terminated for another reason not contemplated by an option
agreement then options shall be exercisable for a period of 12 months after the
termination period but only to the extent that it is vested and exercisable on
the date of the end of such termination period, except as permitted in the sole
discretion of the Board. All options granted to Mr. Grossman otherwise have an
exercise period of the greater of 10 years from the date of grant or at the
expiration of the Option Plan in 2011. Mr. Grossman is entitled under the terms
of his service agreement to a deferred bonus of 75% of the total bonuses
receivable by him over three years of service with the Company payable on his
third anniversary. Mr. Grossman will only receive his entitlement to this
deferred bonus if he is still employed by the Company on such third year
anniversary. (See Item 10. Material Contracts).

(2) A. Daniel Moran's employment as Chief Executive Officer and Director with
World Gaming plc commenced on April 11, 2003. Effective January 1, 2005 his
annual base compensation is (pound)158,500 with an annual housing allowance of
$72,000 and certain other additional benefits. The Company on June 4, 2003

                                       41
<PAGE>

authorized the issuance of options to purchase 1,000,000 ordinary shares all of
which vested on April 11, 2004 and options to purchase 500,000 ordinary shares
all of which vest only on April 11, 2005. The Company on July 1, 2004 authorized
the issuance of options to purchase 500,000 ordinary shares all of which vest
only on April 11, 2006. In accordance with Mr. Moran's contract a deemed change
of control took place on completion of the transaction with Sportingbet Plc. In
accordance with the change of control provisions, all option grants prior to
October 1, 2004 vested immediately. The Company on January 3, 2005 authorized
the issuance of options to purchase 500,000 ordinary shares all of which vest
only on January 3, 2007. All option grants are at the then market value on the
date of grant. Unvested options will terminate if Mr. Moran's employment is
terminated for cause. If Mr. Moran is terminated for another reason not
contemplated by an option agreement then options shall be exercisable for a
period of 12 months after the termination period but only to the extent that it
is vested and exercisable on the date of the end of such termination period,
except as permitted in the sole discretion of the Board. All options granted to
Mr. Moran otherwise have an exercise period of the greater of 10 years from the
date of grant or at the expiration of the Option Plan in 2011. Mr. Moran is
entitled under the terms of his service agreement to a deferred bonus of 75% of
the total bonuses receivable by him over three years of service with the Company
payable on their third anniversary. Mr. Moran will only receive his entitlement
to this deferred bonus if he is still employed by the Company on such third year
anniversary. (See Item 10. Material Contracts).

(3) David Naismith's employment as Chief Financial Officer and a Director with
World Gaming plc commenced on August 1, 2003. Effective January 1, 2005 his
annual base compensation is (pound)129,200, with an annual housing allowance of
$48,000 and certain other additional benefits. In addition, the Company on June
4, 2003 authorized the issuance of options to purchase 150,000 ordinary shares
all of which vested on June 4, 2004 and options to purchase 500,000 ordinary
shares all of which vest only on August 1, 2005. The Company on July 1, 2004
authorized the issuance of options to purchase 500,000 ordinary shares all of
which vest only on August 1, 2006. In accordance with Mr. Naismith's contract a
deemed change of control took place on completion of the transaction with
Sportingbet Plc. In accordance with the change of control provisions, all option
grants prior to October 1, 2004 vested immediately. The Company on January 3,
2005 authorized the issuance of options to purchase 500,000 ordinary shares all
of which vest only on January 3, 2007. All option grants are at the then market
value on the date of grant. Unvested options will terminate if Mr. Naismith's
employment is terminated for cause. If Mr. Naismith is terminated for another
reason not contemplated by an option agreement then options shall be exercisable
for a period of 12 months after the termination period but only to the extent
that it is vested and exercisable on the date of the end of such termination
period, except as permitted in the sole discretion of the Board. All options
granted to Mr. Naismith otherwise have an exercise period of the greater of 10
years from the date of grant or at the expiration of the Option Plan in 2011.
Mr. Naismith is entitled under the terms of his service agreement to a deferred
bonus of 75% of the total bonuses receivable by him over three years of service
with the Company payable on their third anniversary. Mr. Naismith will only
receive his entitlement to this deferred bonus if he is still employed by the
Company on such third year anniversary. (See Item 10. Material Contracts).

(4) Jonathan Moss' employment as Director of Sales and Marketing with World
Gaming commenced on January 1, 2005. His annual base compensation is
(pound)100,000 with certain other additional benefits. On March 1, 2005, Mr.
Moss was appointed to the Board of Directors of World Gaming plc. No changes
were made to Mr. Moss' compensation as a result of this appointment. The Company
on January 1, 2005 authorized the issuance of options to purchase 650,000
ordinary shares, 500,000 of which vest on 1 January, 2007 and 150,000 which vest
on 1 January 2007 subject to certain performance related criteria. Mr. Moss is
entitled under the terms of his service agreement to a deferred bonus of 75% of
the total bonuses receivable by him over three years of service with the Company
payable on his third anniversary. Mr. Moss will only receive his entitlement to
this deferred bonus if he is still employed by the Company on such third year
anniversary.

                                       42
<PAGE>

(5) Clare Roberts has served as a Director from October 18, 2000. Effective
January 1, 2005 his annual compensation for such service is (pound)21,600. Mr.
Roberts has been granted options, of which 100,000 are exercisable and fully
vested at an exercise price of $2.13; 50,000 are exercisable and fully vested at
an exercise price of $1.44. In August 2003, Mr. Roberts relinquished vested
options to purchase 200,000 shares at an exercise price of $0.31 granted in July
2001as these options were granted at below market value and therefore in breach
of the current Option Committee policy. As consideration for this
relinquishment, he was granted options at the then market price of $0.15 to
purchase 200,000 shares of which 100,000 were fully vested at the time of the
grant and the remaining 100,000 will vest in August 2005. The Company on July 1,
2004 authorized the issuance of options to purchase 100,000 ordinary shares all
of which vest only on October 18, 2006. The Company on January 3, 2005
authorized the issuance of options to purchase 25,000 ordinary shares all of
which vest only on January 3, 2007. All option grants are at the then market
value on the date of grant. In addition from time to time, Mr. Roberts acts as
Counsel to the Company in specific matters where his expertise is considered
valuable by the Board. During 2004, Mr. Roberts did not receive compensation for
such legal services. Options will terminate if Mr. Robert's directorship is
terminated for cause, or if Mr. Roberts voluntarily resigns without appropriate
or agreed notice and termination terms, unless otherwise agreed by the Board. If
Mr. Roberts is terminated for another reason not contemplated by an option
agreement then the option shall be exercisable for a period of 12 months after
termination but only to the extent that they are vested and exercisable on the
date of the end of the termination period, except as permitted in the sole
discretion of the Board. All options granted to Mr. Roberts otherwise have an
exercise period of 10 years from the date of grant or at the expiration of the
option plan in 2011.

(6) Michael Cumming was appointed to the Board of Directors as a non-executive
director effective March 1, 2005. His annual compensation is (pound)21,600. On
March 1, 2005 Mr. Cumming was granted options to purchase 100,000 ordinary
shares all of which vest only on March 1, 2007.

(7) David Fleming's employment ceased with effect from January 16, 2004. Under
the terms of a settlement agreement, Mr. Fleming continued to be paid his
monthly salary until May 16, 2004. Mr. Fleming has retained the options granted
on September 10, 2001 for 100,000 ordinary shares at an exercise price of $0.88
which were to vest annually on the anniversary dates over a three year period of
which 66,666 had vested at the date of his resignation. The vested options are
exercisable for a twelve month period post-termination. On June 4, 2003 the
Company authorized the issuance of options to David Fleming to purchase 500,000
ordinary shares which would have vested on April 11, 2005. These options to
purchase ordinary shares were forfeited as a result of Mr. Fleming's
resignation. (See Item 10. Material Contracts).

(8) Mark Thompson was appointed to the position of Operations Director and
Managing Director of SSII on December 1, 2002 on a salary of $130,000 with an
annual housing allowance of $30,000 and certain other additional benefits. Mark
Thompson's employment with the Company was terminated by resignation effective
March 31, 2005. Mr. Thompson had been granted options to purchase an aggregate
of 310,000 ordinary shares of which 30,000 were granted on August 7, 2001 with
an exercise price of $1.47 and vesting period of one year; and 80,000 were
granted on November 1, 2001 with an exercise price of $0.47 to vest over a one
year period. Such options are fully vested. In addition, effective July 1, 2003
Mr. Thompson was granted a further 200,000 options to purchase shares with an
exercise price at the then market value of $0.14 to vest at the conclusion of a
two year period. All options vested upon termination and remain exercisable for
a period of twelve months from the date of termination.

         WORLD GAMING PLC 2001 SHARE OPTION PLAN

         The World Gaming plc 2001 Share Option Plan (the "2001 Plan") provides
that eligible persons may acquire options to purchase ordinary shares or ADRs as
determined by Board or the Share Option

                                       43
<PAGE>

Committee. The Board serves as the Share Option Committee. The 2001 Plan was
adopted by the Board on May 17, 2001 and approved by ordinary resolution of our
shareholders on May 17, 2001 in substitution of the LVA Stock Option Plans
(1997, 1999 and 1999 (No. 2)), which were terminated in the course of the
reorganization and options thereunder were exchanged for new options pursuant to
the 2001 Plan.

         NUMBER OF ORDINARY SHARES

         The maximum number of the ordinary shares (or ADRs) with respect to
which options may be granted under the 2001 Plan is 15,000,000. If any option
shall lapse or shall be cancelled, then the shares represented by such option
shall become available for new options. An option may be exercised for an
ordinary share or an ADR.

         ELIGIBILITY

         All employees, officers, directors and all other persons who provide
services to us or any of our subsidiaries, as determined by the Board, are
eligible to participate in the 2001 Plan.

         GRANT OF OPTIONS

         The Board administers the 2001 Plan and has discretion in awarding
share options to the eligible participants. (See Item 6. Committees of the Board
below).

         OPTION PRICE

         Options will be granted at exercise prices to be determined by the
Board, which the Board has determined must be the fair market value of the
ordinary shares (or ADSs) on the date of grant. Fair market value for these
purposes means the closing price of our American Depositary Shares, as traded on
the OTC Bulletin Board or the other principal U.S. market for our securities, on
the business day immediately preceding the date of grant.

         EXERCISE OF OPTIONS

         Prior to April 2003, the options granted to directors under the 2001
share option agreement generally vested and became exercisable as to 25% of the
original number of option shares on the date of grant and a further 25% upon the
expiration of each of the following three periods of three months. Options
granted subsequent to April 2003 require a more onerous vesting schedule as
determined by the Board. Options granted to our employees and officers and
directors normally vest over a two-year period from the date of the grant. The
Board during 2003 affirmed the requirement that the grant price in respect of
all options granted must represent the closing market price prevailing on the
date of such grant. The exercise of the options for other categories of
optionholders may be tied to certain performance conditions.

         Options will terminate to the extent that they have not vested if an
optionholder's employment or service agreement is terminated for cause, or if an
option holder voluntarily resigns without appropriate or agreed notice and
termination terms, unless otherwise agreed by the Board. If the employee or
officer or director is terminated for another reason not contemplated by an
option agreement then the option shall be exercisable for a period of 12 months
after termination but only to the extent that it is vested and exercisable on
the date of the end of termination or notice period, except as permitted in the
sole discretion of the Board. If an optionholder's employment or office or
directorship is terminated due to his or her death or disability, the options
will remain exercisable for a period of 12 months after termination but only to
the extent that such options have vested and are exercisable on the date of the
end of any

                                       44
<PAGE>

termination or notice period. Notwithstanding the foregoing, all options lapse
at the end of the option period applicable to them. Options are not transferable
and may only be exercised by the persons to whom they are granted, except in the
case of the death or disability of the optionholder in which case they would be
exercisable by the guardian or personal representative of the optionholder (as
the case may be).

         ISSUES OF ORDINARY SHARES OR ADRS

         Ordinary shares or ADRs issued upon the exercise of options will rank
equally with ordinary shares or ADRs, as applicable, of the same class, but
shall not be entitled to any dividends or other distributions declared prior to
the date of the exercise.

         VARIATION IN SHARE CAPITAL

         Options may be adjusted following certain variations in our share
capital, including a capitalization or rights issue.

         TERMINATION OF THE 2001 PLAN

         No options may be granted under the 2001 Plan after the tenth
anniversary of its adoption.

         AMENDMENTS

         The Board of Directors may amend the 2001 Plan with respect to minor
amendments relating to administrative matters. Material modifications will
require shareholder approval if such approval is required by law or exchange
rules. Additionally, no amendments which would adversely affect the rights of
the existing optionholders may be made without their consent.

         On March 18, 2005 a former Director of the company relinquished all
rights to purchase 2,200,000 ordinary shares in the company that had fully
vested.

BOARD PRACTICES

         In English companies, when a director ceases to be a director, whether
voluntarily or otherwise, we say that the director has "retired." Our directors
are subject to retirement by rotation. At every one of our annual general
meetings, one-third of our directors who are subject to retirement by rotation
or, if their number is not three or a multiple of three, the number nearest to
one-third of our directors, shall retire from office. If there is only one
director who is subject to retirement by rotation, that director shall retire.
Subject to the provisions of the U.K. Companies Act 1985, the directors to
retire by rotation shall be those who have been longest in office since their
last appointment or retirement. As between persons who became or were last
reappointed directors on the same day, those to retire shall be determined by
lot unless they otherwise agree among themselves. If a director retires by
rotation and he is not reappointed, the retiring director may retain its office
until the meeting appoints someone in his place or until the end of the meeting.
However, the director in that situation shall not be deemed to be reappointed,
if the shareholders determine not to fill the vacancy or a resolution to
reappoint the director is voted upon and defeated. Shareholders holding a
majority of the Company's ordinary shares may remove any director from office at
any time, with or without cause, subject to the requirements of the U.K.
Companies Act of 1985 and our Articles of Association.

COMMITTEES OF THE BOARD OF DIRECTORS

         Our Board of Directors has appointed an Audit Committee and a
Compensation Committee.

         The Audit Committee of the Board of Directors makes recommendations
concerning the engagement of independent public accountants. The Audit Committee
charter mandates that the Audit Committee approve all audit, audit-related, tax
and other services conducted by our independent

                                       45
<PAGE>

accountants. In addition, the Committee reviews the plans, results and fees of
the audit engagement with our independent public accountants, and any
independence issues with our independent public accountants. The Audit Committee
also reviews the adequacy of our internal accounting controls. The current
members of the audit committee are James H. Grossman, Clare Roberts and Michael
Cumming.

         The Company does not yet have an "audit committee financial expert"
serving on its Audit Committee. The Board believes that the appointment of Mr.
Cumming to the Board, while not meeting specific financial or accounting officer
requirements as defined, brings a significant amount of experience and relevant
financial education to the Board. Mr. Cumming has over 35 years experience in
private equity, most recently as Managing Director of Barclays Private Equity, a
major UK banking group. In addition, Mr. Cumming has an MBA from Stanford
Graduate School of Business Administration, Palo Alto, California.

         The Compensation Committee of the Board of Directors determines
compensation for our executive officers and key employees and administers our
equity plan. The Compensation Committee currently consists of Messrs. Grossman,
Roberts and Cumming.

EMPLOYEES

         The number of employees by location as of the dates set forth below is
as follows:

                          DECEMBER 31,    DECEMBER 31,   DECEMBER 31,
                              2004            2003           2002

         Antigua               16              51             53
         Canada                17              41             32
         London                 -               -              5
                              ---             ---            ---
         Total                 33              92             90
                              ===             ===            ===

         Licensing operations take place in our office in Antigua, while limited
administrative functions are in Vancouver, Canada. Effective February 11, 2004,
our EFS transaction processing and customer services departments were closed
resulting in the termination of twenty-three employees. Effective October 1,
2004, 44 employees representing the development function of the Group were
transferred to Alea Software, a wholly owned subsidiary of Sportingbet Plc (See
Item 4: Sportingbet Transaction and Item 10: Material Contracts). The total
number of our employees as of April 30, 2005 is 34.

         Our employees are not represented by a union or other collective
bargaining organization and we have never experienced a work stoppage. We
believe that our employee relations are good.

SHARE OWNERSHIP OF SENIOR MANAGEMENT AND DIRECTORS

         The table below sets forth certain information concerning the share
ownership of our directors and senior management as of April 30, 2005.

                                       46
<PAGE>
<TABLE>
<CAPTION>
                                      NUMBER OF
                                   ORDINARY SHARES                                             PERCENTAGE OF
                      NUMBER OF     OR ADSS WHICH         RANGE                               ORDINARY SHARES
                      ORDINARY     MAY BE ACQUIRED     OF EXERCISE                               OR ADSS
                      SHARES OR      UNDER SHARE        PRICES OF      RANGE OF EXPIRATION     BENEFICIALLY
      NAME           ADSS OWNED      OPTION PLAN        OPTIONS($)      DATES OF OPTIONS          OWNED(1)
<S>                    <C>            <C>             <C>                <C>                      <C>
James H. Grossman      20,002         1,450,000       $0.14 - $0.69      4/2011 - 5/2011          0.04%(2)

A. Daniel Moran             -         2,500,000       $0.14 - $0.69      4/2011 - 5/2011          0%

David Naismith              -         1,650,000       $0.14 - $0.69               5/2011          0%

Jonathan Moss               -           650,000               $0.39               5/2011          0%

Clare Roberts               -           475,000       $0.14 - $2.13      1/2004 - 5/2011          0%

Michael Cumming             -           100,000               $0.69               5/2011          0%

Mark Thompson               -           310,000       $0.14 - $1.47      8/2006 - 5/2011          0%
</TABLE>
_____________________

(1) The information in this table is based on our records, information provided
to us by our Directors and Executive Officers and a review of any Schedules 13D
and 13G filed by our shareholders with the Securities and Exchange Commission.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power. This information is
based on 46,331,407 ordinary shares issued and outstanding as of April 30, 2005.
Including shares underlying options which are exercisable within 60 days of
April 30, 2005, none of the identified persons beneficially owned greater than
1% of the Company's American Depository Shares or ordinary shares.

(2) Mr. Grossman purchased 10,000 ADR's on the open market in November 2003 and
a further 10,000 ADR's on the open market in February 2005. Continental Stock
and Transfer Company transferred its 2 ordinary shares held in the Company for
legal purposes to Mr. Grossman in January 2005.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

         The following table contains information regarding the beneficial
ownership of our ordinary shares, including our American Depositary Shares, as
of April 30, 2005, for all shareholders known by us to beneficially own 5% or
more of our ordinary shares.
<TABLE>
<CAPTION>
                                                NUMBER OF ORDINARY     PERCENTAGE OF OUTSTANDING
                                                   SHARES OR ADRS        ORDINARY SHARES OR ADRS
   NAME OF BENEFICIAL OWNER                    BENEFICIALLY OWNED(1)       BENEFICIALLY OWNED
<S>                                                 <C>                           <C>
Cribbage Limited (a wholly-owned
subsidiary of Sportingbet, PLC)                     8,506,204(2)                  18.6%
Goodison Park Limited (a wholly-owned
subsidiary of Sportingbet, PLC)                     5,000,000(2)                  10.9%
</TABLE>
_____________________

(1) The information in this table is based on our records, information provided
to us by our Directors and Executive Officers and a review of any Schedules 13D
and 13G filed by our shareholders with the Securities and Exchange Commission.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power. This information is
based on 46,331,407 ordinary shares issued and outstanding as of April 30, 2005.
(See Item 7. Related Party Transactions).

                                       47
<PAGE>

(2) Under the terms of the Sportingbet agreement (See Item 4: Sportingbet
Transaction and Item 10: Material Contracts), Sportingbet has irrevocably agreed
to the waiving of all voting, dividend, rights to transfer, rights to
participate (other than the right to attend meetings) and other similar rights
attaching to such shares in respect of the 13,506,204 issued ordinary shares of
the Company for a total consideration of $1 when requested to do so by the
Company. These shares will be purchased by the Company when there are available
distributable profits. At an Extraordinary Meeting of Shareholders, these
13,506,204 shares held by members of the Sportingbet Plc group of companies were
transferred to a separate class of shares with further restrictions such that
they are unable to be admitted to trading on AIM (see Item 10: Private Placement
on the Alternative Investment Market ("AIM") of the London Stock Exchange).
Documentation in respect of this Extraordinary Meeting of Shareholders was
included as exhibits to a Report of Foreign Private Issuer on Form 6-K filed
with the SEC on March 24, 2005.

         SIGNIFICANT CHANGES IN OWNERSHIP OF ORDINARY SHARES

         Prior to the holding company reorganization in 2001, LVA issued
2,000,000 shares of its common stock to AIM Investments Ltd. pursuant to LVA's
agreement with AIM Investments Ltd's parent Simpson Bay Ltd. described elsewhere
in this report. In 2002, as a result of the issuance of the class action shares,
Cribbage Limited, a wholly-owned subsidiary of Sportingbet, acquired 6,506,204
American Depositary Shares. By way of agreement dated July 11, 2003, AIM
Investments Ltd. transferred its entire holding of 2,000,000 shares to Cribbage
Ltd.

         With the completion of the financing on April 7, 2003, Goodison Park
Limited, another wholly-owned subsidiary of Sportingbet PLC, acquired 5,000,000
ordinary shares of the Company and the right to acquire up to 7,500,000
additional ordinary shares upon the conversion of a certain convertible loan
issued by us to Goodison Park Limited. (See Item 7. Related Party Transactions).
Effective October 1, 2004 the convertible loan note was cancelled together with
the underlying right to acquire 7,500,00 shares in the Company. In addition all
holdings by the Sportingbet group companies will be transferred to the Company
for a total consideration of $1 when requested to do so by the Company. These
shares will be purchased by the Company when there are available distributable
profits for $1 in aggregate.

         SECURITIES AND RECORD HOLDERS IN THE UNITED STATES

         As of April 30, 2005, 32,485,231 American Depositary Shares were held
in the name of CEDE & Co., which is not obligated to disclose publicly the
residence of the beneficial owners of those shares. We know that, excluding the
CEDE & Co. held shares, approximately 11% of our ordinary shares were held by
168 U.S. record holders, and 4% of our ordinary shares were held by 7 record
holders in the United Kingdom and Europe.

         CHANGE OF CONTROL

         We are not aware of any arrangements the operation of which may at any
subsequent date result in a change in control of our Company.

RELATED PARTY TRANSACTIONS

         SPORTINGBET PLC AND ITS AFFILIATES, GOODISON PARK LIMITED AND CRIBBAGE
         LIMITED

         Goodison Park Limited, a wholly-owned subsidiary of Sportingbet,
acquired an interest in World Gaming Plc by way of share acquisition and a
convertible loan. Goodison Park purchased 5,000,000 ordinary shares of World
Gaming at $0.12 per share or a total of $600,000; and made a convertible loan to
the Company (the "Convertible Loan") in the principal amount of $900,000.

         Cribbage Limited, a wholly-owned subsidiary of Sportingbet, acquired an
interest in World Gaming Plc in 2002 by way of acquiring 6,506,204 ADRs issued

                                       48
<PAGE>

as a result of the Class Action shares from a third party. Additionally, on July
3, 2003, AIM Investments Ltd., transferred its holding of 2,000,000 ADRs to
Cribbage Ltd.

         As a result of the Transaction with Sportingbet, effective October 1,
2004, the Convertible Loan was forgiven in full and the Company may repurchase
shares held by Goodison Park Limited and Cribbage Limited or its affiliates of
13,506,204 for an aggregate payment of $1.00 as soon as it has the retained
earnings to do so. All other loan balances were repaid in full during the year.
(See Item 4: Sportingbet Transaction and Item 10: Material Contracts)

         Pursuant to an Ancillary Services Agreement, some of the Company's
licensees receive certain transaction processing and related services from
Sportingbet or its affiliates. The Company therefore receives balances from
Sportingbet or its affiliates and pays these onto affected licensees after
deducting the royalty due to the Company.

         SETTLEMENT OF DISPUTE WITH CHISEL INC.

         From June 19, 2002 until July 17, 2002, James MacKay, the shareholder
of Chisel Media Inc., served interim CEO and a Director of the Company. Any
settlement will be scrutinized by the Board as a related party transaction, and
will be subject to the Board's approval as such.

ITEM 8.  FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

         Our consolidated financial statements for the years ended December 31,
2004, 2003 and 2002, set forth in this Report following Part III, are included
herein at Item 17 of the Annual Report.

LEGAL PROCEEDINGS

         The following are material existing and pending or recently concluded
legal or arbitration proceedings against us and our subsidiaries:

         (i)      On 6 August 1998 Mitchell White commenced an action against
ESCE and SSII Limited for breach of his employment agreement and wrongful
termination of him as a director. Action was commenced in October 1998.

         Mr. White alleges that as a result of his wrongful termination as an
employee and director, he was not provided with a severance package in lieu of
reasonable notice and he did not receive stock options that he would have
otherwise received. Mr. White claims that his losses are in excess of $1.5
million. The Company's defense is based, among other things, on the Claimant's
resignation due to then recurring drug related problems and is in the process of
vigorously defending this action. The trial of this action was to commence in
April 2005, but has been adjourned. No new date for trial has yet been set.

         In February 2004, SSII Limited commenced a third party claim against a
former director, Mr. Jack Carley. It is alleged that Mr. Carley was responsible
for the termination of Mr. White's employment in 1998. Mr. Carley is also Mr.
White's father-in-law.

         (ii)     In March 2000 ESCE sold substantially all of the assets and
undertakings comprising its adult entertainment division to Chisel Media. The
sale price for the assets was $2.3 million, of which $460,000 was paid to ESCE.
The balance was to be paid in monthly installments by 1 July 2003. The deferred
portion of the purchase price is secured by a general security agreement in
favor of ESCE, and a

                                       49
<PAGE>

pledge of the shares of Chisel Media. The monthly installments referred to above
which were to begin 1 July 2000 have not been paid by Chisel Media.

         ESCE has attempted to put Chisel Media into bankruptcy in its efforts
to recover the outstanding consideration. Chisel Media has filed counterclaims
against ESCE alleging that ESCE is in breach of the Purchase and Sale Agreement
because of certain alleged misrepresentations of the nature of assets sold and
is claiming a set off. The bankruptcy action has been stayed until it is
determined whether a debt is due from Chisel Media. This debt issue will be
resolved by arbitration within the next 6 months. Settlement negotiations are
also pending.

         (iii)    On 25 November 2001, a claimant identified only as J. Doe
commenced action in the British Columbia Supreme Court against ESCE and others
(who are not part of the Company's Group) for unpaid royalties. ESCE had used
images of the claimant on its websites pursuant to a one off lump sum payment
and the claimant is claiming that she is entitled to on-going royalties for the
use of her image. The value of the claim is $250,000 CDN. ESCE believes that the
claimants claim is wholly without merit and intends to vigorously defend the
action. ESCE has filed an appropriate defense to the action. The matter has
remained dormant for several months.

         (iv)     On 10 March 2004, Robert Hiscox commenced action against the
Company in the United States District Court, Southern District of New York.
Hiscox alleges that the Company breached two consultancy agreements (for 2001
and 2002) by failing to make certain payments due under the agreement. The
amount of the claim is $521,103 and 25,002 shares in the Company (plus interest
and costs).

         The Company has filed a statement of defense alleging, inter alia, that
Hiscox did not provide the services he agreed to provide to the Company. The
matter is still in the discovery stage.

         (v)      On 31 March 2004 the Company received a Claim Form filed in
the Supreme Court of England & Wales against the Company by Jim Mackay. Mr.
Mackay is claiming $200,004 in respect of a termination payment pursuant to an
independent contractor agreement dated 1 May 2002. However, Mackay did not file
and has still not filed any Particulars to his claim, and accordingly as it
stands the claim form is defective. The Company has been advised that it has a
good chance to apply for the claim to be struck out, but the claim is currently
in abeyance.

         Jim Mackay is also involved in the Chisel Media litigation (he controls
Chisel Media) and any settlement agreed in those proceedings will include a
release by Mackay of all his claims against the Company.

         (vi)     In March 2002, Casino on Air World Entertainment Ltd., a
former licensee of the Company, filed a lawsuit against the Company alleging
breach of contract in Antigua. The amount of the claim is U.S. $1.84 million.
The Company successfully obtained a stay of this action in the Antiguan courts.
The court ordered that the dispute be dealt with by way of arbitration. Since
that decision in 2002, Casino on Air has to date failed to file a Notice to
Arbitrate.

DIVIDEND POLICY

         Our Articles of Association provide that dividends are declared by the
shareholders upon the recommendation of the Board of Directors which has the
discretion to make any such recommendation. We have never paid cash dividends on
our ordinary shares. We review our dividend policy on a regular basis.
Currently, we do not anticipate that any cash dividend on our ordinary shares
will be paid within twelve months of filing this 20-F Annual Return.

                                       50
<PAGE>

SIGNIFICANT CHANGES

         We have experienced no significant changes since the date of the annual
financial statements other than those disclosed in those financial statements.

ITEM 9.  THE OFFER AND LISTING

NATURE OF TRADING MARKET

         Our ordinary shares are not directly publicly traded in the United
States or any foreign market. Our American Depositary Shares are traded on the
OTC Bulletin Board. Each American Depositary Share represents one ordinary
share. Price quotations for our American Depositary Shares were reported on the
OTC Bulletin Board under the symbol "WGMGY" beginning on May 29, 2001. As of
April 30, 2005, we had 46,331,407 ordinary shares issued and outstanding,
41,331,407 of which are represented by American Depositary Shares evidenced by
American Depositary Receipts issued by Continental Stock Transfer and Trust
Company, as depositary. As of April 30, 2005, two of our ordinary shares were
held of record by James H. Grossman, two ordinary shares were held by
Continental Stock Transfer and Trust Company and 5,000,000 ordinary shares
carrying no voting or economic rights were held by Goodison Park Limited subject
to arrangements described at Item 4: Sportingbet Transaction and Item 10:
Material Contracts. This represents 100% of our issued and outstanding ordinary
shares.

         Item 10: Private Placement on the Alternative Investment Market ("AIM")
of the London Stock Exchange describes the further placement of 4,760,000 of the
Company's ordinary shares on the Alternative Investment Market ("AIM") operated
by the London Stock Exchange effective May 17, 2005.

         The following table sets forth the high and low closing sale prices for
our American Depositary Shares on the OTC Bulletin Board, from the beginning of
trading on May 29, 2001 to April 30, 2005 and for LVA, as our predecessor, for
periods prior thereto. Such prices do not reflect retail markup, markdown or
commissions and may not necessarily represent actual transactions.

                                                            HIGH         LOW
FIVE MOST RECENT FINANCIAL YEARS
   Year ended April 30, 2000............................   29.000       1.750
   Year ended April 30, 2001............................    4.187       0.312
   Eight months ended December 31, 2001 ................    2.100       0.410
   Year ended December 31, 2002.........................    0.975       0.140
   Year ended December 31, 2003.........................    0.460       0.110
   Year ended December 31, 2004.........................    0.890       0.280

YEAR ENDED DECEMBER 31, 2003
   First Quarter........................................    0.250       0.120
   Second Quarter.......................................    0.180       0.120
   Third Quarter........................................    0.450       0.110
   Fourth Quarter.......................................    0.460       0.300

YEAR ENDED DECEMBER 31, 2004
   First Quarter........................................    0.890       0.400
   Second Quarter.......................................    0.860       0.280
   Third Quarter........................................    0.620       0.300
   Fourth Quarter.......................................    0.720       0.350

                                       51
<PAGE>

                                                            HIGH         LOW
QUARTER ENDED
   March 31, 2005.......................................    1.760       0.650

MOST RECENT SIX MONTHS
   November 2004........................................    0.520       0.360
   December 2004........................................    0.720       0.580
   January 2005.........................................    0.890       0.650
   February 2005........................................    1.730       0.850
   March 2005...........................................    1.760       1.320
   April 2005...........................................    1.820       1.040

REGISTRAR, TRANSFER AGENT AND DEPOSITARY

         From June 25, 2001, Continental Stock Transfer and Trust Company has
acted as our registrar, transfer agent and depositary with respect to our
American Depositary Receipts. Prior to that, our registrar, transfer agent and
depositary was Pacific Stock Transfer. For the purposes of the Company's
ordinary shares traded on AIM, the registrar in the United Kingdom is Capita
IRG.

ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

         Set forth below is information concerning our equity capital structure
and related summary information concerning provisions of our Memorandum of
Association and Articles of Association and applicable English law. Since it is
a summary, it does not contain all of the information that may be important to
you, and the summary is qualified in its entirety by reference to the U.K.
Companies Act of 1985, our Memorandum of Association and our Articles of
Association. Our Memorandum of Association was filed as Exhibit 3.1 to
Registration Statement on Form F-4 (SEC File No. 333-48280) on October 19, 2000.
Our former Articles of Association, adopted by special resolution on May 17,
2001, were filed as Exhibit 4.2 to Registration Statement on Form S-8 (SEC File
No. 333-70056) on September 24, 2001. A copy of our present Articles of
Association, adopted by special resolution on September 19, 2003 was filed as an
exhibit to our Form 20-F for the year ended December 31, 2003. On October 12,
2004 the Company adopted certain changes to its Articles of Association by
Special Resolution at an Extraordinary Meeting of Shareholders. These changes
related to matters requiring amendment for the Company's admission to the
Alternative Investment Market of the London Stock Exchange and relevant
shareholder material including notices and voting material were sent to
shareholders and were included as exhibits to a Report on Foreign Private Issuer
on Form 6-K filed with the SEC on March 24, 2005.

         We are incorporated under the name World Gaming plc and our Company is
incorporated in England and Wales with the registered number 4094204. Our
Memorandum of Association does not include a stated purpose.

BOARD ACTION AND POWERS

         The Articles of Association provide that unless otherwise determined by
ordinary resolution, the Board of Directors shall consist of not less than two
nor more than 10 members. Currently, the number of directors is set at 6.

         Except as noted below, the Board of Directors may at any time appoint
any person to be a director either to fill a vacancy or as an additional
director, provided that the number of directors does not exceed 10. Any person
so appointed by the Board of Directors shall hold office only until the next
annual general

                                       52
<PAGE>

meeting of shareholders and shall then be eligible for election by the
shareholders, but shall not be taken into account in determining the number of
directors who are to retire by rotation at such meeting as set out below.

         At each annual general meeting of shareholders, one-third of our
directors (or, if their number is not a multiple of three, the number nearest to
but not greater than one-third) must retire from office by rotation. If the
number of directors subject to retirement by rotation is fewer than three, one
of such directors shall retire. The directors to retire by rotation shall be in
addition to any director who wishes to retire and not to offer himself for
re-election. The directors to retire by rotation shall include those members who
have served the longest on the Board of Directors. A retiring director is
eligible for immediate re-election.

         Any provisions of the U.K. Companies Acts of 1985 and 1989 or other
United Kingdom statutes applicable to us which would have the effect of
rendering any person ineligible for appointment as a director or liable to
vacate office as a director by virtue of his having reached any specified age or
of requiring special notice or any other special formality in connection with
the appointment or election of any director over a specified age, do not apply
to us.

         Directors are not required to hold any of our ordinary shares by way of
qualification. A director who is not a shareholder shall nevertheless be
entitled to attend and speak at shareholders' meetings.

         BORROWING POWERS

         Subject to the limitations noted below, the directors may exercise all
our powers to borrow money and to mortgage or charge our undertaking, property
and uncalled capital or any part or parts thereof, and to issue debentures and
other securities, whether outright or as collateral security for any debt,
liability or obligation of us or of any third party.

         COMPENSATION AND EXPENSES

         The compensation of the directors is determined by the Board of
Directors but may not in the aggregate exceed (pound)180,000 per year
(disregarding any compensation payable to directors in their capacity as
executives) or such higher amount as may from time to time be determined by an
ordinary resolution of our Board. Such compensation shall (unless such
resolution otherwise provides) be divisible among the directors as the Board of
Directors may decide, or, failing agreement, equally, except that any director
who holds office for only part of the period with respect to which such
compensation is payable is entitled only to rank in such division for a
proportion of compensation related to the period during which he has held
office. Any director who is employed, or holds executive office may be paid such
extra compensation by way of a fixed sum of money, or in whole or in part by
participating in profits or otherwise, as the Board of Directors may determine,
and such compensation may be in addition to or instead of a fee payable to him
for his services as director. The directors may repay to any director all
reasonable expenses as he may incur in attending and returning from meetings of
the directors or of any committee of the directors or shareholders' meetings or
otherwise in connection with our business.

         PENSIONS AND OTHER BENEFITS

         The directors shall have the power to pay and agree to pay gratuities,
pensions or other retirement benefits, death or disability benefits to (or to
any person in respect of) any director or ex-director and, for the purpose of
providing any such gratuities, pensions, or other benefits, to contribute to
such scheme or to pay premiums.

                                       53

<PAGE>

         INTERESTED DIRECTOR TRANSACTIONS

         Subject to certain provisions of the U.K. Companies Act of 1985
designed to enforce fair dealing by directors and prevent their taking financial
advantage, and provided that a director has disclosed to the directors the
nature and extent of any interest, a director:

         o        may be party to or otherwise interested in any contract,
transaction, or arrangement with us or in which we are otherwise interested;

         o        may be a director or other officer of or employed by a party
to any contract, transaction or arrangement with or otherwise interested in any
corporate body promoted by us or in which we are in any way interested (or any
firm of which he is a partner, employee or member) ; and

         o        may act in a professional capacity for us (other than as
auditor) and be compensated therefor and shall not (unless otherwise agreed by
him) be accountable to us for any benefit which he derives from any such
contract, transaction or arrangement or from any such office or employment or
from any interest in any such corporate body or for such compensation.

         No such contract, transaction or arrangement shall be liable to be
avoided on the grounds of any such interest or benefit.

         Except as otherwise provided below, a director shall not vote in
respect of any contract or arrangement or any other proposal whatsoever in which
he has any material interest otherwise than by virtue of interests in shares or
debentures or other securities of, or otherwise in or through, us. A director
shall not be counted in the quorum of a meeting in relation to any resolution on
which he is not entitled to vote. Provided that a director has disclosed the
nature and extent of his interests, a director shall (in the absence of some
other material interest than is indicated below) be entitled to vote (and be
counted in the quorum) in respect of any resolution concerning any of the
following matters:

         o        the giving of any security, guarantee or indemnity with
respect to (a) money lent or obligations incurred by him or by any other person
at the request of or for our benefit of our Company or the benefit of any of our
subsidiaries, or (b) a debt or other obligation of our Company or any of our
subsidiaries for which he himself has assumed responsibility in whole or in part
under a guarantee or indemnity or by the giving of security;

         o        any proposal concerning an offer of shares or debentures or
other securities of or by us or any of our subsidiaries in which offer he is or
may be entitled to participate as a holder of securities or in the underwriting
or sub-underwriting of which he is to participate;

         o        any proposal concerning any other corporate body in which he
is interested, directly or indirectly, and whether as an officer or shareholder
or otherwise, provided that he (together with persons connected with him (within
the meaning of Section 346 of the U.K. Companies Act 1985)) does not have any
interest (as that term is used in Sections 198 to 211 of the U.K. Companies Act
1985) in 1% or more of the issued equity share capital of any class of such body
corporate (or of any third company through which his interest is derived) or of
the voting rights available to members of the relevant corporate body;

         o        any proposal relating to an arrangement for the benefit of our
employees or those of any of our subsidiaries which does not award him any
privilege or benefit not generally awarded to the employees to whom such
arrangement relates; and

         o        any proposal concerning insurance which we propose to maintain
or purchase for the benefit of directors or for the benefit of persons who
include directors.

                                       54
<PAGE>

         INDEMNIFICATION OF DIRECTORS

         Our Articles of Association entitles (subject to the provisions of the
U.K. Companies Act of 1985 and the U.K. Uncertificated Securities Regulations
1995) every director, secretary or manager of our Company, to be indemnified by
the Company against liabilities incurred during the discharge of his or her
duties including where judgment is given in his or her favor or if the claim is
disposed of where he or she has not been found to have been in material breach
of his or her duty.

DESCRIPTION OF SHARE CAPITAL

         GENERAL

         Our authorized share capital is (pound)1,000,000 divided into
500,000,000 ordinary shares of (pound)0.002 nominal value per share.

         ORDINARY SHARES

         As of April 30, 2005, 46,331,417 of our ordinary shares were issued and
outstanding and are fully paid or credited as fully paid, each of which is in
registered form. Subject to the Sportingbet Transaction described at Item 4,
13,506,204 ordinary shares have no dividend or voting rights and may be
re-purchased by the Company for an aggregate price of $1 when it has retained
earnings to do so. No holder of ordinary shares will be required to make
additional contributions of capital in respect of those shares in the future.
There are no rights of pre-emption attaching to the ordinary shares, save as set
out below under "Issuance of Shares". All rights of Sportingbet and its
subsidiaries in respect of its ordinary shares, particularly those rights
attached to the Unsecured Convertible Loan Note with Goodison Park Limited and -
Stock Acquisition Agreement with Goodison Park Limited were cancelled effective
October 1, 2004. Furthermore, they are not issued as redeemable shares. However,
it should be noted that we may choose to utilize the power conferred upon us by
Part V Chapter VII of the Companies Act 1985 to issue redeemable shares subject
to obtaining an appropriate authority from the shareholders. Neither the
Memorandum of Association, Articles of Association, nor any statutory provision
in England and Wales restrict in any way the ownership of, nor voting rights
attaching to, the ordinary shares held by persons resident outside the United
Kingdom. Under the terms of our Articles of Association, we are obliged to give
notice of shareholder meetings to all ordinary shareholders, including those
with an address for service outside the United Kingdom.

         PRIVATE PLACEMENT ON THE ALTERNATIVE INVESTMENT MARKET ("AIM") OF THE
         LONDON STOCK EXCHANGE

         Under a placing agreement, made between (1) the Company, (2) the
Directors and (3) Daniel Stewart and dated April 28, 2005 Daniel Stewart agreed
to use reasonable endeavors to procure subscribers for the 4,760,000 Placing
Shares. Effective May 17, 2005, the Placing Shares represent new ordinary shares
issued by the Company upon admission of the Company's ordinary shares to AIM
("Admission")

         The obligation of the parties are defined under a placing agreement and
were conditional, inter alia, upon Admission occurring not later than 8.30 a.m.
on May 17, 2005, or such later time and date (not being later than 8.30 a.m. on
May 31, 2005 as may be agreed by Daniel Stewart and the Company. The placing
agreement contains certain warranties by the Company and the Directors as to the
accuracy of the information contained in the prospectus document and other
matters relating to the Group and its businesses as well as an indemnity in
favor of Daniel Stewart from the Company against all losses, costs, charges and
expenses which Daniel Stewart may suffer or incur as a result of the carrying
out of its duties under the placing agreement. Under the placing agreement, the
Company is to indemnify Daniel Stewart

                                       55
<PAGE>

against all costs and expenses in connection with the application for Admission.
In addition, subject to the placing agreement becoming unconditional, the
Company is to pay to Daniel Stewart a fee of (pound)120,000 and a commission of
4 per cent of the amount equal to the placing price multiplied by the number of
new ordinary shares placed ("the Placing"). The Company has agreed to issue
options to Daniel Stewart equal to 2 per cent of the Existing ordinary shares
and 4 per cent of the Placing Shares exercisable at the Issue Price.

         In addition to the placing agreement the Company has entered into an
agreement with Daniel Stewart pursuant to which Daniel Stewart agreed to act as
nominated adviser and broker to the Company for a fee of (pound)40,000 per
annum. Under this agreement the Company provides Daniel Stewart with an
indemnity customary in agreements of this kind.

         The net proceeds of the Placing are estimated to be approximately
(pound)2,029,000.

         ADRs representing ordinary shares are currently quoted and traded on
the US OTC Bulletin Board, but the ordinary shares themselves are not currently
admitted to trading on a recognized investment exchange and, other than the
Company's application for the ordinary shares, both issued and to be issued
under the Placing, and admitted to trading on AIM, no applications for such
admission have been made.

         The ordinary shares to be issued or sold in the Placing have not been
and will not be registered under the Securities Act or under the relevant
securities laws of any state of the United States or any other jurisdiction.
Subject to certain exceptions, such ordinary shares may not be directly or
indirectly offered, sold, resold or otherwise transferred within the United
States or to, or for the account or benefit of, U.S. persons (as defined in
Regulation S), or in any country where to do so may contravene local securities
laws or regulations. Such ordinary shares have not been approved or disapproved
by the United States Securities and Exchange Commission, any state securities
commission in the United States or any other U.S. regulatory authority, nor have
any of the foregoing authorities passed upon or endorsed the merits of the
Placing of the ordinary shares or the accuracy or adequacy of the Prospectus
document under which the shares were offered. Any representation to the contrary
is a criminal offence in the United States.

         Each purchaser of the Placing Shares has agreed that in accordance with
Regulation S of the Securities Act of 1933, as amended ("Securities Act"), it
will not offer or sell the ordinary shares until 40 days after the later of the
closing of the Placing (the "distribution compliance period"), within the United
States or to, or for the account or benefit of, U.S. persons, and in relation to
a sale to any other person, it will have sent to each such purchaser to which it
sells ordinary shares during the distribution compliance period a confirmation
or other notice setting forth the restrictions on offers and sales of the
ordinary shares within the United States or to, or for the account or benefit
of, U.S. persons. Each initial purchaser of the Placing Shares will be required
to certify that the purchaser and any person for whose account or benefit the
purchaser is acting is located outside the United States and is not a U.S.
person (as defined in Regulation S) and that upon acquiring the ordinary shares
it and any such persons will be outside the United States or is otherwise
acquiring the ordinary shares in an "offshore" transaction in compliance with
Rule 903 of Regulation S.

         As a condition to a purchase of any ordinary shares in the Placing,
each purchaser is deemed to have made, or, in some cases, be required to make,
certain representations and warranties, which will be relied upon by the
Company, Daniel Stewart & Co. plc and others. The Company reserves the right, in
its sole and absolute discretion, to reject any purchase of ordinary shares that
the Company or its agents (including Daniel Stewart & Co. plc) believe may give
rise to a breach or violation of any law, rule or regulation, including, without
limitation, the Securities Act.

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<PAGE>

         No actions have been taken to register or qualify the ordinary shares
offered hereby or otherwise permit a public offering of the ordinary shares
offered hereby in any jurisdiction other than the United Kingdom. The ordinary
shares are being offered outside of the United States pursuant to Regulation S
under the Securities Act. The ordinary shares offered hereby have not been, and
will not be, registered under the Securities Act and may not be offered, sold or
resold or otherwise transferred within, or to persons in, the United States
except in accordance with an applicable exemption from registration under the
Securities Act.

         The Company has included as Exhibit 1 to a Report on Foreign Private
Issuer on Form 6-K filed with the SEC on May 17, 2005, its Prospectus/AIM
Admission document as filed with the Alternative Investment Market, or AIM,
operated by the London Stock Exchange and distributed to investors in respect of
the Registrant's application to have its ordinary shares be admitted to trading
on AIM.

         ISSUANCE OF SHARES

         Subject to any special rights previously conferred on the holders of
any issued shares or class of shares, any share of the Company may be issued
with any preferred, deferred, or other special rights. They may also be issued
subject to restrictions, including, without limitation, restrictions on
dividends, return of capital, voting or otherwise, as an ordinary resolution of
a general meeting of our shareholders may from time to time direct, and failing
such direction, as our Board of Directors may determine.

         Pursuant to a resolution passed on October 12, 2004, our directors are
authorized under Section 80 of the U.K. Companies Act 1985 (the "Act"), to allot
shares (or grant any right to subscribe for or convert other securities into
shares) up to a nominal value of (pound)1,000,000, and such authorization will
expire five years from the date of the resolution.

         If ordinary shares are to be issued for cash, Section 89 of the U.K.
Companies Act 1985 requires, subject to limited exceptions in respect of
employee share schemes, that those shares first be offered to existing holders
of shares in proportion to their holdings. However, Section 95 of the U.K.
Companies Act 1985 provides that in certain circumstances the directors of a
company may by special resolution be given power to issue shares as if Section
89 did not apply.

         Pursuant to a special resolution of the Company passed on October 12,
2004, the Directors are authorized, pursuant to Section 95 of the Act, to allot
equity securities pursuant to the exercise of share options up to an aggregate
nominal amount of (pound)30,000 as if Section 89(1) of the Act did not apply to
such allotment.

         Further, pursuant to a special resolution of the Company passed on
April 7, 2005, the Directors are empowered, pursuant to Section 95 of the Act,
to allot equity securities (as defined in Section 94 of the Act) for cash
pursuant to the section 80 authority (the "Authority") above as if Section 89(1)
of the Act did not apply to such allotment, such power to expire (unless
previously revoked, varied or renewed) at the conclusion of the annual general
meeting of the Company to be held in 2006 or, if earlier, the date fifteen
months from the passing of that resolution (save that the Company may before
such expiry make an offer or agreements which would or might require equity
securities to be allotted after such expiry) provided that this power shall be
limited to:

         o  the allotment of up to 10,000,000 ordinary shares of (pound)0.002
            pursuant to a Placing of 4,760,000 ordinary shares to trading on the
            Alternative Investment Market(which occurred on 17 May 2005);

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<PAGE>

         o  the allotment of up to 1,051,504 ordinary shares pursuant to options
            or warrants to be granted to Daniel Stewart in respect of its
            services in connection with the Placing;

         o  the issue of such shares as may be offered by way of a rights issue
            or open offer to existing shareholders; and

         o  the issue of ordinary shares otherwise than as referred to in (i),
            (ii) and (iii) above up to an amount equal to 10 per cent of the
            issued share capital of the Company after the issues of shares
            contemplated by (i) and (ii) above.

         No allotment of new shares of an amount exceeding 35 per cent of the
issued ordinary share capital of the Company immediately before such allotment
(to be paid in cash or otherwise) shall be made by the Company without the
consent of the holders of over 50 per cent of the Company's ordinary shares.

         Shareholder notices and voting material in respect of April 7, 2005
resolutions was included as exhibits to a Report on Foreign Private Issuer on
Form 6-K filed with the SEC on March 24, 2005.

         ALTERATION OF SHARE CAPITAL

The Company may from time to time by ordinary resolution approved by our
shareholders at a general meeting:

         o  increase our share capital by the sum, to be divided into shares of
            those amounts, as the resolution shall prescribe;

         o  consolidate and divide all or any of our share capital into shares
            of larger amount than our existing shares;

         o  cancel any shares which, at the date of the passing of the
            resolution, have not been taken, or agreed to be taken, by any
            person and diminish the amount of our capital by the amount of the
            shares so cancelled; and

         o  subdivide our shares, or any of them, into shares of smaller amount,
            and so that the resolution whereby any share is subdivided may
            determine that the shares resulting from that subdivision may, as
            compared with the others, have any preferred, or other special
            rights or be subject to any restrictions.

         The Company may purchase or enter into a contract under which we will
or may purchase any of our own shares of any class (including any redeemable
shares, if any then exist) on such terms and in such manner as permitted by the
law.

         The Company may, by special resolution approved by our shareholders at
a general meeting, reduce our share capital or any capital redemption reserve,
share premium account, or other undistributable reserve in any manner.

         DIVIDEND RIGHTS

         Holders of ordinary shares are entitled to receive those dividends as
may be recommended in the discretion of the Board of Directors and declared by
the shareholders in a general meeting, but no larger

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<PAGE>

dividend may be declared than is recommended by our Board of Directors. No
unpaid dividend bears interest as against the Company unless otherwise provided
by the rights attached to the shares.

         RIGHTS IN LIQUIDATION

         In the event of the Company's liquidation, after satisfaction of
liabilities to creditors, holders of ordinary shares are entitled to share pro
rata in the net assets of our Company.

         NOTIFICATION OF INTEREST IN ORDINARY SHARES

         Section 198 of the U.K. Companies Act 1985 obliges any person (subject
to exception) who acquires an interest of 3% or more of our ordinary shares to
notify the Company of his interest within two business days following the day on
which the obligation to notify arises. After the 3% level is exceeded, similar
notification must be made if the whole percentage figure increases or decreases,
rounded down to the next whole number. For the purposes of the notification
obligation, the interest of a person in the shares means any kind of interest in
shares (subject to certain exceptions) including any shares (1) in which his
spouse or his child or stepchild, is interested, (2) in which a corporate body
is interested where either (a) that corporate body or its directors are
accustomed to act in accordance with that person's directions or instructions,
or (b) that person controls one third or more of the voting power of that
corporate body, or (3) in which another party is interested where the person and
that other party are parties to a "concert party" agreement under Section 204 of
the U.K. Companies Act 1985 and any interest in shares is in fact acquired by
any one of the parties pursuant to the agreement. A "concert party" agreement is
an agreement which provides for one or more parties to it to acquire interests
in shares of a particular company and imposes obligations or restrictions on any
one or more of the parties as to the use, retention or disposal of the
interests.

         In addition, Section 212 of the U.K. Companies Act 1985 enables us, by
notice in writing, to require a person whom we know or have reasonable cause to
believe to be, or to have been at any time during the three years immediately
preceding the date on which the notice is issued, interested in shares to
confirm that fact or (as the case may be) to indicate whether or not that is the
case, and where he holds or has during this relevant time held an interest in
the shares, to give further information as may be required relating to his
interest and any other interest in the shares of which he is aware.

         In addition to the restrictions on the rights attaching to shares
imposed by the U.K. Companies Act 1985 for noncompliance with Section 212 of
that Act, the Articles of Association apply additional restrictions. The
restrictions imposed or applied can potentially include disenfranchisement, loss
of entitlement to dividends and other payments and restrictions on alienability.

         VOTING RIGHTS OF ORDINARY SHARES AND SHAREHOLDER MEETINGS

         Under English law, there are two types of general meeting of
shareholders: annual general meetings and extraordinary general meetings. An
annual general meeting must be held at least once in each calendar year and not
later than 15 months from the previous annual general meeting. At the annual
general meeting matters such as the election of directors, appointment of
auditors and the fixing of their remuneration, approval of the annual accounts
and the directors' report and declaration of dividends are considered. Any other
general meeting is known as an extraordinary general meeting.

         The directors may convene an extraordinary general meeting and must
convene one if demanded by holders of not less than 10% of the paid-up shares.
An annual general meeting and an extraordinary general meeting called to pass a
special resolution must be called by at least 21 days' notice specifying the
place, day and time of the meeting and the general nature of the business to be
transacted. No business

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<PAGE>

may be transacted at any general meeting unless a quorum of two persons entitled
to vote on the business to be transacted is present in person or by proxy.

         At a general meeting, a simple majority of the votes cast is sufficient
to pass an ordinary resolution. A special or extraordinary resolution is decided
on a poll. A special or extraordinary resolution can only be considered if our
shareholders receive at least 21 days' prior notice of the meeting at which such
resolution will be considered.

         Subject to the restrictions referred to in the following paragraph, at
a meeting of shareholders every holder of shares who (being an individual) is
present in person or (being a corporation) is present by a representative or
proxy not being himself a member shall have one vote on a show of hands, and on
a poll, every holder of shares present in person or by proxy shall have one vote
for every share held. A special or extraordinary resolution (such as, for
example, a resolution amending our Memorandum of Association or Articles of
Association or approving a winding-up of the Company) requires approval of the
holders of 75% of our issued ordinary shares represented at a shareholders
meeting, in person or by proxy, and voting thereon. Shareholders are not
entitled to cumulative voting rights. A poll can be demanded by:

         o        the chairman of the meeting;

         o        not less than five shareholders present in person or by proxy
         having the right to vote at the meeting;

         o        a holder or holders of shares or his or their proxy
representing not less than 10% of the total voting rights of all shareholders
having the right to attend and vote at the meeting; or

         o        by a holder or holders of shares or his or their proxy
conferring a right to attend and vote at the meeting on which an aggregate sum
has been paid up equal to not less than one tenth of the total sum paid up on
all shares conferring that right.

         A holder of shares shall not be entitled (except as a proxy for another
shareholder) to be present or vote at any general meeting:

         o        in respect of any shares held by him in relation to which he
or any other person appearing to be interested in those shares has been served
with a notice under Section 212 of the U.K. Companies Act 1985, requiring him to
provide information in accordance with that section and containing a statement
that upon failure to supply such information before the expiration period
specified in the notice (which may not be less than 28 days) the registered
holder of the share is not entitled to vote in respect of those shares, and the
person on whom such notice was served fails to supply the information within the
specified period; or

         o        unless all amounts presently payable by him in respect of such
         shares have been paid.

         TRANSFER OF SHARES

         Fully paid ordinary shares are issued in registered form and may be
freely transferred pursuant to the Articles of Association. The instrument of
transfer of a share may be in any usual form or in any other form of which the
directors approve and shall be executed by or on behalf of the transferor and,
unless the share is fully paid, by or on behalf of the transferee. The directors
may restrict the transfer of a share which is not fully paid provided that any
such restriction will not prevent dealings in the shares from taking place on an
open and proper basis. Subject to the provisions of English law, the Company's

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<PAGE>

Articles of Association provide that we may issue shares which may be held,
evidenced and transferred through a relevant system in an uncertificated form.

         The ordinary shares to be issued or sold in the Placing on AIM (see
Item 10: Private Placement on the Alternative Investment Market ("AIM") of the
London Stock Exchange) have not been and will not be registered under the
Securities Act or under the relevant securities laws of any state of the United
States or any other jurisdiction. Subject to certain exceptions, such ordinary
shares may not be directly or indirectly offered, sold, resold or otherwise
transferred within the United States or to, or for the account or benefit of,
U.S. persons (as defined in Regulation S), or in any country where to do so may
contravene local securities laws or regulations. Such ordinary shares have not
been approved or disapproved by the United States Securities and Exchange
Commission, any state securities commission in the United States or any other
U.S. regulatory authority, nor have any of the foregoing authorities passed upon
or endorsed the merits of the Placing of the ordinary shares or the accuracy or
adequacy of the Prospectus document under which the shares were offered. Any
representation to the contrary is a criminal offence in the United States.

         Each purchaser of the Placing Shares has agreed that in accordance with
Regulation S of the Securities Act of 1933, as amended ("Securities Act"), it
will not offer or sell the ordinary shares until 40 days after the later of the
closing of the Placing (the "distribution compliance period"), within the United
States or to, or for the account or benefit of, U.S. persons, and in relation to
a sale to any other person, it will have sent to each such purchaser to which it
sells ordinary shares during the distribution compliance period a confirmation
or other notice setting forth the restrictions on offers and sales of the
ordinary shares within the United States or to, or for the account or benefit
of, U.S. persons. Each initial purchaser of the Placing Shares will be required
to certify that the purchaser and any person for whose account or benefit the
purchaser is acting is located outside the United States and is not a U.S.
person (as defined in Regulation S) and that upon acquiring the ordinary shares
it and any such persons will be outside the United States or is otherwise
acquiring the ordinary shares in an "offshore" transaction in compliance with
Rule 903 of Regulation S.

         As a condition to a purchase of any ordinary shares in the Placing,
each purchaser is deemed to have made, or, in some cases, be required to make,
certain representations and warranties, which will be relied upon by the
Company, Daniel Stewart & Co. plc and others. The Company reserves the right, in
its sole and absolute discretion, to reject any purchase of ordinary shares that
the Company or its agents (including Daniel Stewart & Co. plc) believe may give
rise to a breach or violation of any law, rule or regulation, including, without
limitation, the Securities Act.

         No actions have been taken to register or qualify the ordinary shares
offered hereby or otherwise permit a public offering of the ordinary shares
offered hereby in any jurisdiction other than the United Kingdom. The ordinary
shares are being offered outside of the United States pursuant to Regulation S
under the Securities Act. The ordinary shares offered hereby have not been, and
will not be, registered under the Securities Act and may not be offered, sold or
resold or otherwise transferred within, or to persons in, the United States
except in accordance with an applicable exemption from registration under the
Securities Act.

         ISSUANCE OF AMERICAN DEPOSITARY SHARES

         The terms of our Deposit Agreement with Continental Stock Transfer &
Trust Company, as depositary ("ADS Depositary"), permits issuance of American
Depositary Receipts, or ADRs, evidencing American Depositary Shares, or ADSs,
for ordinary shares accepted for deposit by the depositary. Our ADS Depositary
also serves as an initial custodian.

                                       61
<PAGE>

         The Deposit Agreement provides that every person depositing ordinary
shares is deemed to represent to the depositary that

         o  such shares are validly issued and outstanding;

         o  were not acquired in violation of any pre-emptive rights;

         o  such person is duly authorized to make such deposit; and

         o  such shares are not restricted securities as defined in Rule 144
            under the Securities Act unless at the time of deposit they may be
            freely transferred under that rule, or have been registered under
            the Securities Act.

         The ADS Depositary may require a written delivery order listing the
persons in whose name an ADR or ADRs evidencing the ADSs representing such
deposited ordinary shares are to be issued. ADRs are issued only in
denominations of any whole number of ADSs. We are obligated to transmit to the
depositary a copy of all communications it makes generally available to holders
of ordinary shares or to any securities regulatory authority or stock exchange
as public information. The depositary will make such publication obligations
available to the holders. Our depositary keeps a register for the registration,
registration of transfer, combination or split-up of ADSs at its offices in New
York at 2 Broadway, New York, New York 10004, and such register is open for
inspection by registered holders of ADSs. In the registration statement that we
filed with the SEC on Form F-6 (SEC File No. 333-13286) on May 24, 2001,
50,000,000 ADSs, where each ADS represented one ordinary share, were registered.
The Deposit Agreement and a form of ADR have been filed as Exhibit (a) to a
registration statement on Form-6 (SEC File No. 333-13286) effective as of May
24, 2001.

         VOTING OF ADSS BY PROXY

         The ADS Depositary can appoint more than one person to be its proxy.
The appointment shall set out the number of ordinary shares in relation to which
such proxy has been appointed, and such number shall not exceed the number of
the ordinary shares registered in the name of the ADS Depositary. The appointed
proxy may attend general meetings so long as it provides us with written
evidence of its appointment. At a general meeting, the appointed proxy is
entitled to the same rights and has the same obligations with respect to the
appointed number of the ordinary shares as if it were a registered owner of such
shares, or as if it were a duly appointed proxy in relation to those ordinary
shares.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

         There are currently no United Kingdom foreign exchange control
restrictions on the payment of dividends or other payments to holders of
ordinary shares or on the conduct of our operations.

         There are currently no restrictions under our Articles of Association
or under English law which limit the rights of non-resident or foreign owners to
freely hold, vote and transfer ordinary shares in the same manner as United
Kingdom residents or nationals.

CHANGE OF CONTROL

         We have a "classified" Board of Directors because our directors must
retire by rotation. This means that (if the retiring directors are willing to
continue to act and are approved by the Board and offer themselves for
re-election) only approximately one-third of our directors are eligible for
election each year (in addition to any directors appointed by the Board since
the last annual general meeting).

                                       62
<PAGE>

         In addition to the shareholders right not to re-appoint retiring
directors who are willing to continue to act and are approved by the Board and
to re-appoint directors appointed by the Board since the last annual general
meeting, shareholders can remove directors by ordinary resolution of the holders
of 50% of our issued ordinary shares represented at a shareholders meeting.

MATERIAL CONTRACTS

         The following is a summary of our material contracts. We have included
the contracts entered into by our operating subsidiaries that we consider
material to our operations.

         SPORTINGBET PLC AND ITS SUBSIDIARIES

         The Company entered into various agreements with Sportingbet on 6
August 2004 (the "Transaction"). The Company's shareholders approved the
Transaction at the Company's AGM on 12 October 2004 and the Transaction closed
on the same day taking effect from 1 October 2004. In summary, the Transaction
consisted of: (i) the Company transferring its proprietary gaming software
("Gaming Software") to Bullen Road LP, an entity jointly owned by Sportingbet
and the Company so that Sportingbet and the Company own the Gaming Software in
equal shares through Bullen Road LP; and (ii) the Company selling to Sportingbet
the business and assets (the "Development Business") relating to development,
maintenance and second level support of the Gaming Software which was carried
out by Inphinity Interactive Inc. Contractual arrangements were agreed whereby
Sportingbet agreed to continue to provide development and maintenance services
to the Company in relation to the Gaming Software at the cost of Sportingbet;
and (iii) the parties entering into a deed formally terminating the Previous
Gaming Software license between the parties; and (iv) Sportingbet committing to
use the Company to provide hosting services for at least a 3 year period; and
(v) Sportingbet relinquished its rights in the 13,506,205 American Depository
Receipts Shares in the Company held by Sportingbet or its affiliates
("Sportingbet Shares"). As a result of these transactions, the Company is no
longer receiving royalty fees from Sportingbet but no longer has the cost base
of its Development Business. The Transaction was structured as follows.

         Internet Opportunity Entertainment Limited (an affiliate of
Sportingbet) purchased a 50 per cent interest in the Gaming Software from SSII
Limited. Alea Software Limited (an affiliate of Sportingbet) purchased the
Development Business from Inphinity Interactive, Inc. The consideration payable
by Sportingbet for the 50 per cent interest in the Gaming Software and the
acquisition of Development Business was as follows:


         (i)      $10 million cash, to be paid in installments as specified.
                  Full amount to be paid before 1 November 2005.

         (ii)     Additional consideration valued at $3.3 million payable in
                  kind through the (i) cancellation of all rights in the
                  Sportingbet Shares and an agreement to transfer those shares
                  upon the Company's request and direction for a nominal
                  consideration of $1; and

         (iii)    the waiver of the $900,000 Convertible Loan Note.

         The full payment of the $10 million is secured by a pledge over
Sportingbet's partnership interest in Bullen Road LP and share interest in the
Gwladys Street Limited (being the general partner of Bullen Road LP).

         Both SSII Limited and Internet Opportunity Entertainment Limited
contributed their respective 50 per cent interest in the Gaming Software to
Bullen Road LP (a newly incorporated exempt liability

                                       63
<PAGE>

partnership in the Cayman Islands). Bullen Road LP is a 50:50 joint venture
between SSII Limited and Internet Opportunity Entertainment Limited.

         Bullen Road LP has granted Internet Opportunity Entertainment Limited
and SSII Limited a perpetual, royalty free license to use the Gaming Software.
The Company may continue to license the Gaming Software to any third party as it
did before the transaction. Sportingbet may use the Gaming Software royalty free
for its existing licensees and for the benefit of members of its group.
Sportingbet cannot sublicense the Gaming Software to the Company's licensees.
Both parties will make royalty type payments to each other in the following
situations:

         (i)      Sportingbet will pay 5 per cent of a licensee's net win to the
                  Company for any new white-label marketing partner taken on
                  after closing of the transaction;

         (ii)     the Company will pay 5 per cent of licensee's net win to
                  Sportingbet if it acquires a controlling interest in a
                  competitor of Sportingbet or enters into a transaction with a
                  competitor which requires the Company or the competitor to
                  consolidate any or all of each other's revenues;

         (iii)    the Company will pay 5 per cent of the relevant websites' net
                  win if it owns and operates its own gaming website which
                  competes with Sportingbet.

         Where such payments are due, these will continue for the duration of
the joint partnership in Bullen Road LP and for a period of three years from the
date of its termination.

         Inphinity Interactive, Inc. sold its Development Business to Alea
Software Limited and Alea Software Limited took on the employees of the
Development Business.

         Alea Software Limited has entered into a development services contract
with Bullen Road LP, the Company and Sportingbet, pursuant to which Alea
Software Limited agrees to continue to provide second level support to the
Company and also to continue developing and maintaining the Gaming Software in
accordance with a plan agreed between the Company and Sportingbet (the
"Development Plan"). Sportingbet and the Company shall directly share in the
objectives of the Development Plan on a 70/30 basis, respectively. The cost of
implementing this Development Plan will be fully funded by Sportingbet. The
Company may purchase additional development time should the need arise at a
price of cost 10 plus per cent. Other than the Company's input in agreeing the
Development Plan, Sportingbet will otherwise have full control over Alea
Software Limited, including implementation of the Development Plan.

         Sportingbet has agreed to fully fund the operating costs of Alea
Software Limited and has committed to spend at least $4.5 million per year on
the operational costs of Alea Software Limited in the first 3 years and a
minimum of $2.5 million in the fourth year. The developments to the Gaming
Software will be owned by Bullen Road LP and will be licensed back to each of
Internet Opportunity Entertainment Limited and SSII Limited.

         Sportingbet may not terminate the joint partnership in Bullen Road LP
and the services to be provided by Alea Software Limited for the first 3 years'
from completion of the transaction. Thereafter, Sportingbet may terminate upon
12 months notice to the Company. However, Sportingbet may terminate at any time
if certain events of default occur, such as material breach by the Company or a
material change in control of the Company. The Company may terminate the
partnership in Bullen Road LP at any time on 3 months' notice to Sportingbet.

         Upon termination: (a) Sportingbet is required to make a further payment
to the Company of $3 million (if the Company then sells the Gaming Software
within 2 years, this additional payment is to be reduced by the consideration
received by the Company, up to a maximum of $3 million); (b) The Gaming

                                       64
<PAGE>

Software (as updated and improved) will be jointly owned by Sportingbet and the
Company (or their respective affiliates), and both parties will have an
unrestricted right to use, sub-license and assign their interest in the
software. Neither party will have the rights to any further improvements or
developments made by the other party subsequent to the termination.

         The parties have entered into the following ancillary arrangements:

         (i)      Information Technology Services - The Company will provide
                  certain U.S. facing hosting services to Sportingbet on an
                  exclusive basis for the life of the transaction. Such services
                  will be charged on the basis of actual cost plus a 10 per cent
                  margin.

         (ii)     Sportingbet Ancillary Services - Sportingbet or its affiliates
                  will continue to provide certain customer and transaction
                  processing services to the Company's existing and future
                  licensees.

         (iii)    European Agency Agreement - Sportingbet will provide the
                  Company through a joint marketing arrangement, with access to
                  Sportingbet's technology to allow the Company to market a
                  European gaming solution for the benefit of existing and
                  future licensees. Under the Framework Agreement, this
                  agreement was supposed to have been completed as at the
                  closing of the Transaction. The agreement has not yet been
                  completed due to some delay in working out the detailed terms.
                  The Directors consider that the agreement is now close to
                  being completed.

         Agreements in respect of this transaction have been included as
exhibits to a Report on Foreign Private Issuer on Form 6-K filed with the SEC on
April 4, 2005.

         SOFTWARE LICENSE AGREEMENT BETWEEN REAL ENTERTAINMENT LTD. AND SOFTEC
         SYSTEMS CARIBBEAN INC. DATED MAY 10, 1999

         A Software License Agreement between Real Entertainment Ltd. and ISI's
predecessor, Softec Systems Caribbean Inc. was entered into on May 10, 1999. ISI
licensed its Internet casino software in order to allow Real Entertainment to
operate an Internet gaming site. The non-exclusive license permits no more than
two casinos including such games as blackjack, roulette, pai gow poker, video
poker and slot machine, a sportsbook web site, an HTML version of the
sportsbook, and a lottery ticket distribution web site. ISI is to provide all
necessary computer hardware to run Real Entertainment's site. The term of the
license is for one year, and it will renew indefinitely for additional one year
terms. Real Entertainment may cancel the license upon at least 45 days notice
prior to the end of such annual term, and ISI may cancel upon at least six
months notice. In the event of breach by either party, the other party may
terminate this agreement. ISI can also terminate this agreement if it becomes
the subject of a serious third party civil or criminal litigation as a result of
Real Entertainment's actions. The agreement can also be terminated by either
party if the other party becomes insolvent. Certain terms of this agreement are
subject to a request for confidential treatment with the Securities and Exchange
Commission.

         SOFTWARE LICENSE AGREEMENT BETWEEN INTERNET EMPIRE ENTERTAINMENT LTD.
         AND SOFTEC SYSTEMS CARIBBEAN INC. DATED MAY 23, 2000

         A Software License Agreement between Internet Empire Entertainment and
ISI's predecessor, Softec Systems Caribbean Inc. was entered into on May 23,
2000. ISI licensed its Internet casino software in order to allow Internet
Empire Entertainment to operate an Internet gaming site. The non-exclusive
license permits no more than two casinos including such games as blackjack,
roulette, pai gow poker, video poker and slot machine, a sportsbook web site, an
HTML version of the sportsbook, and a lottery ticket distribution web site. ISI
is to provide all necessary computer hardware to run Real

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Entertainment's site. The term of the license was for one year, and it will
renew indefinitely for additional one year terms subject to the Amendment to
License agreement date November 22, 2004 described below. During such renewal
terms Internet Empire Limited may have cancelled the license upon at least 45
days notice prior to the end of such term, and ISI may have cancelled upon at
least six months notice. In the event of breach by either party, the other party
may terminate this agreement. ISI can also terminate this agreement if it
becomes the subject of a serious third party civil or criminal litigation as a
result of Internet Empire Entertainment's actions. The agreement can also be
terminated by either party if the other party becomes insolvent. Certain terms
of this agreement are subject to a request for confidential treatment with the
Securities and Exchange Commission.

         INTERNET EMPIRE ENTERTAINMENT AMENDMENT TO SOFTWARE LICENSE AGREEMENT
         DATED NOVEMBER 22, 2004

         An amendment to the Software License agreement between Internet Empire
Entertainment and ISI's predecessor SSII, was entered into on November 22, 2004
with effect November 1, 2004. The agreement amends the original agreement dated
May 23, 2000 to provide for the following key terms: (i) an initial license term
of 5 years; (ii) 90 days written notice of termination required prior to the end
of the 5 year term to terminate before the license automatically renews for a
further 1 year term (the Renewal term); (iii) 90 days notice of termination
prior to the yearly anniversary under the Renewal term; and (iv) exclusivity of
the Company's software on 6 specific sites of the licensee. Certain terms of
this agreement are subject to a request for confidential treatment with the
Securities and Exchange Commission.

         INTERNET SERVICE AGREEMENT BETWEEN EFS CARIBBEAN INC. AND CABLE AND
         WIRELESS (WEST INDIES) LTD.

         The Company hosts its casino, sportsbook and pari-mutuel offerings on
servers in Antigua with access to this software provided to our licensees and
their clientele. As such, Internet access to these servers is critical to the
provision of our services. To facilitate these services, EFS Caribbean Ltd.
entered in an agreement with Cable and Wireless (West Indies) Ltd., on April 21,
1999 for the provision of Internet Services. The initial terms of agreement was
for three months but the agreement will continue until either party provides 30
days advance written notice of termination. Cable and Wireless may revise the
charges payable under the agreement upon thirty (30) days advance notice.

         SETTLEMENT AGREEMENT BETWEEN EMC CORPORATION AND EMC CORPORATION OF
         CANADA AND STARNET COMMUNICATION CANADA INC., WORLD GAMING PLC., AND
         INPHINITY INTERACTIVE

         Pursuant to a master lease agreement of June 27, 2000 entered into by
the Company, EMC claimed unpaid lease payments including interest of $1,522 as
at November 13, 2003. On December 30, 2003, the Company entered into a
settlement agreement with EMC Corporation which provided for full and final
settlement of all claims by EMC Corporation for consideration of $300,000
payable as $100,000 upon signing the agreement with the balance payable in 12
equal installments payable until November 15, 2004. All payments were made under
the agreement through 2004 and the Company has been released from all
obligations under the agreement.

         SETTLEMENT AGREEMENT BETWEEN SUNRISE INTERNATIONAL LEASING CORPORATION
         OF CANADA AND WORLD GAMING PLC

         In August 2003, the Company reached a settlement with Sunrise
Corporation in consideration of a full and final release of any claims that
Sunrise Corporation may have against the Company. The settlement was in respect
of equipment provided to the Company under lease arrangements for which the
Company was in default due to non-payment. The settlement was payment of
$230,000 payable as

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$25,000 upon signing the settlement with the balance payable in equal
installments of $17,083.33 beginning September 1, 2003 and ending August 1,
2004. All payments were made under the agreement through 2004 and the Company
has been released from all obligations under the agreement.

         LICENSE AND SERVICES AGREEMENT BETWEEN ORACLE CORPORATION CANADA INC.
         AND WORLD GAMING PLC

         On May 30, 2003 the Company entered into a License and Services
Agreement with Oracle Corporation Canada Inc for the provision of limited rights
to use certain Oracle software products together with product support and
software updates. The total commitment in respect of this agreement was CDN
$1.36 million dollars payable in accordance with a payment schedule over twenty
months ending December 2004. Certain terms of this agreement are subject to a
request for confidential treatment with the Securities and Exchange Commission.

         AMENDMENT AGREEMENT BETWEEN ORACLE CORPORATION CANADA INC. AND WORLD
         GAMING PLC IN RESPECT OF THE LICENSE AND SERVICES AGREEMENT

         On February 24, 2004 the Company entered into an Amendment Agreement to
the License and Services Agreement with Oracle Corporation Canada Inc for the
provision of limited rights to use certain Oracle software products together
with product support and software updates. The amended agreement provides for an
acceleration to the original payment schedule in consideration of a discount of
CDN $100,000 dollars to the Company. The revised payments schedule provides for
completion of the outstanding payments by May 25, 2004 with a final payment of
$93,636.96 Canadian dollars. All other payments under this schedule have been
met at March 31, 2004. Certain terms of this agreement are subject to a request
for confidential treatment with the Securities and Exchange Commission.

         LICENSE AND SERVICES AGREEMENT BETWEEN ORACLE CORPORATION CANADA INC.
         AND WORLD GAMING PLC DATED MAY 20, 2004

         On May 20, 2004 the Company entered into a License and Services
Agreement with Oracle Corporation Canada Inc for the provision of limited rights
to use certain Oracle software products together with product support and
software updates.

EMPLOYMENT AND CONSULTING AGREEMENTS

         JAMES H. GROSSMAN, CHAIRMAN

         James H. Grossman holds the office of non-executive chairman of the
Board and Director under an agreement effective from April 11, 2003 which can be
terminated at will by the Company although the Company would be required to pay
severance in lieu of notice equal to 12 months' fees and all benefits. Mr.
Grossman is required to give 12 months' notice to terminate the agreement.

         Mr. Grossman receives an annual fee of (pound)66,000, and a further
US$2,000 per month for acting as counsel to the Company for up to 5 hours per
month. Any additional legal services are provided at agreed hourly rates of
US$400 per month. Mr. Grossman also receives US$2,400 per month for his business
expenses. Mr. Grossman may achieve a performance related bonus of 50 per cent of
his annual salary and he is entitled to a deferred bonus of 75 per cent of the
aggregate of all bonuses paid to him over the previous 3 years. Mr. Grossman is
also entitled to reasonable healthcare benefits including long-term care
insurance not to exceed US$550 per month. The remaining balance (500,000) of Mr.
Grossman's share options will vest on January 3, 2007.

         The service contract contains post-termination restrictions attempting
to stop Mr. Grossman from competing with the Company and soliciting the
Company's business and employees. Such restrictions are

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<PAGE>

seen by the English courts as restraints of trade and will only be enforceable
if they only go as far as is reasonably necessary to protect the legitimate
business interests of the Company.

         A. DANIEL MORAN, CHIEF EXECUTIVE OFFICER

         Daniel Moran holds the office of Chief Executive Officer and Director
under an agreement effective from April 11, 2003 which can be terminated at will
by the Company although the Company would be required to pay severance in lieu
of notice equal to 12 months' salary and all benefits Mr. Moran is required to
give 12 months' notice to terminate the agreement.

         He is required to devote the whole of his time, attention and skill to
the business and affairs of the Company during the Company's normal business
hours and is also required to work such additional hours as are necessary to
fulfill his duties under the contract.

         Mr. Moran receives an annual salary of (pound)158,500. He is paid an
annual housing allowance of $72,000 and certain other additional benefits, and
an allowance of $1,000 per month for school fees. Mr. Moran is also eligible for
a performance bonus of up to 50 per cent of salary and a deferred bonus of 75
per cent of the aggregate of all bonuses paid to him over the previous 3 years.
He is entitled to pension benefits of 6 per cent of basic salary. The Company is
required to provide reasonable healthcare benefits for him and his family
including life insurance and disability insurance for him only. The Company is
also to provide a fully maintained company car. The balance of Mr. Moran's share
options (500,000 ordinary shares) will vest on January 3, 2007.

         The service contract contains post-termination restrictions attempting
to stop Mr. Moran from competing with the Company and soliciting the Company's
business and employees. Such restrictions are seen by the English courts as
restraints of trade and will only be enforceable if they only go as far as is
reasonably necessary to protect the legitimate business interests of the
Company.

         DAVID NAISMITH, CHIEF FINANCIAL OFFICER

         David Naismith holds the office of Chief Financial Officer and Director
under an agreement effective from August 1, 2003 which can be terminated at will
by the Company although the Company would be required to pay severance in lieu
of notice equal to 12 months' salary and all benefits. Mr. Naismith is required
to give 12 months' notice to terminate the agreement.

         He is required to devote the whole of his time, attention and skill to
the business and affairs of the Company during the Company's normal business
hours and is also required to work such additional hours as are necessary to
fulfill his duties under the contract.

         Mr. Naismith receives an annual salary of (pound)129,200, an annual
housing allowance of $48,000 and certain other additional benefits. Mr. Naismith
is also eligible for a performance bonus of up to 50 per cent of salary and a
deferred bonus of 75 per cent of the aggregate of all bonuses paid to him over
the previous 3 years. He is entitled to pension benefits of 6 per cent of basic
salary. The Company is required to provide him with reasonable healthcare
benefits for him and his family including life insurance and disability
insurance for him only. The Company is also to provide a fully maintained
company car. The balance of Mr. Naismith's share options (500,000 ordinary
shares) will vest on January 3, 2007.

         The service contract contains post-termination restrictions attempting
to stop Mr. Naismith from competing with the Company and soliciting the
Company's business employees. Such restrictions are seen by the English courts
as restraints of trade and will only be enforceable if they only go so far as is
reasonably necessary to protect the legitimate business interests of the
Company.

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<PAGE>

         JONATHAN MOSS, SALES AND MARKETING DIRECTOR

         Jonathan Moss holds the office of Director of Sales and Marketing under
an agreement effective from January 1, 2005 which can be terminated by either
Mr. Moss or the Company giving the other party 6 months' notice of termination.

         Mr. Moss receives an annual salary of (pound)100,000. He is required to
devote the whole of his time, attention and skill to the business and affairs of
the Company during the Company's normal business hours and is also required to
work such additional hours as are necessary to fulfill his duties under the
contract. The Company is required to provide reasonable healthcare benefits for
him and his family, including life assurance and disability insurance for him
only.

         Mr. Moss is eligible for a performance bonus of up to 50 per cent of
salary and a deferred bonus of 75 per cent of the aggregate of all bonuses paid
to him over the previous 3 years. 500,000 of Mr. Moss's share options will vest
on November 16, 2006 and the remaining balance of 150,000 ordinary shares will
vest progressively at the discretion of the Board (based on profit thresholds
and sales targets).

         The service contract contains post-termination restrictions attempting
to stop Mr. Moss from competing with the Company and soliciting the Company's
business and employees. Such restrictions are seen by the English courts as
restraints of trade and will only be enforceable if they only go as far as is
reasonably necessary to protect the legitimate business interests of the
Company.

         CLARE ROBERTS, NON-EXECUTIVE DIRECTOR

         Clare Roberts holds the office of non-executive director under an
agreement effective from October 18, 2000 which can be terminated at will by the
Company although the Company would be required to pay severance in lieu of
notice equal to 3 months' fees and all benefits. Clare Roberts is required to
give 3 months' notice to terminate the agreement.

         Mr. Roberts receives a fee of (pound)1,800 per month and has received
stock options in the past. However, in August 2003 Mr. Roberts relinquished
options to purchase 200,000 shares granted in July 2001, all of which were
vested. As consideration therefore options were granted at the then market price
to purchase 200,000 shares of which 100,000 were fully vested at the time of
grant and 100,000 will vest in August 2005. The remaining balance of Mr.
Robert's share options will vest as to 100,000 on October 18, 2006 and 25,000 on
January 3, 2007.

         MICHAEL CUMMING, NON-EXECUTIVE DIRECTOR

         Michael Cumming holds the office of Director under an agreement
effective from March 1, 2005 which can be terminated at will by the Company
although the Company would be required to pay severance in lieu of notice equal
to 3 months' fee and all benefits. Mr. Cumming is required to give 3 months'
notice to the Company to terminate the agreement. Mr. Cumming receives a monthly
fee of (pound)1,800.

         MARK THOMPSON, FORMER OPERATIONS DIRECTOR

         By letter dated January 5, 2005 Mr. Thompson's employment contract and
services there-under were terminated effective March 31, 2005. The amicable
settlement in respect of Mr. Thompson's resignation entitled him to payment of
four month's salary totaling $43,333.33 and certain other benefits. In addition,
Mr. Thompson will retain his options grants all of which vested on termination.

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<PAGE>

         DAVID FLEMING, FORMER CHIEF TECHNOLOGY OFFICER AND MANAGING DIRECTOR OF
         INPHINITY INTERACTIVE

         By letter dated January 6, 2004, Mr. Fleming's employment contract and
services thereunder were terminated effective January 16, 2004. The amicable
settlement in respect of Mr. Fleming's resignation entitled him to a payment of
CDN $33,333.33 in respect of accrued bonuses, four months salary including
benefits payable until May 16, 2004 and other costs of CDN $8,700. In addition
Mr. Fleming will retain his options granted on September 10, 2001 at an exercise
price of $0.88 which were to vest annually on the anniversary dates over a three
year period of which 66,666 had vested at the date of his resignation. Under the
settlement agreement, Mr. Fleming waived any rights that he had under his
employment agreement and the agreement had certain restrictions with respect to
Mr. Fleming's soliciting or competing with the Company.

         MARK HETHERINGTON, FORMER ACTING CHIEF TECHNOLOGY OFFICER

         Inphinity Interactive Inc. entered into an independent contractor
agreement with Mark Hetherington as Acting Chief Technology Officer on January
15, 2004. Mr. Hetherington had been consulting to the Group since November 2003.
Under his contract, Mr. Hetherington was entitled to a monthly fee of $16,666
plus expenses of $5,416.66. In addition Mr. Hetherington is entitled to up to
100,000 options that are granted in four installments of 25,000, each contingent
upon meeting certain objectives. All such options, if granted shall have an
exercise price per share equal to the closing price of the Company's ADR's on
January 15, 2004, the date of his independent contractor agreement, and shall
vest on January 15, 2006.

         The contract was terminated with effect November 30, 2004. All amounts
due to Mr. Hetherington post October 1, 2004 were paid by Alea software as part
of the joint venture arrangements (See Item 4: Sportingbet Transaction and Item
10: Material Contracts).

         Effective December 1, 2004 the Company entered into a further
independent contractor agreement with Mr. Hetherington for consulting services
as part of the joint venture board of directors with Sportingbet. The agreement
provides for fees of $1,000 per day for six days of service per quarter in
respect of joint venture matters. In addition, Mr. Hetherington has the
opportunity to continue to earn the aforementioned options subject to certain
performance and time related criteria.

         SIMON COULTHARD, FORMER CHIEF FINANCIAL OFFICER

         Effective May 8, 2003, Mr. Coulthard's employment was terminated. Mr.
Coulthard received (pound)18,750 or three months gardening leave as part of his
agreed upon severance.

         NICHOLAS JACKSON, FORMER CHIEF EXECUTIVE OFFICER

         On June 4, 2003, the Company entered into a settlement agreement
regarding Nicholas Jackson's employment relationship with the Company. Under the
settlement agreement, Mr. Jackson waived any rights that he had under his
employment agreement. Mr. Jackson is entitled to exercise options at various
exercise prices for 352,459 shares of the Company all of which must be exercised
no later than September, 2005 or they will otherwise be cancelled. Mr. Jackson
was paid a severance payment of (pound)125,000. The Company gave up any claims
that it had against Mr. Jackson for his performance as a director or employee.
The agreement had certain restrictions with respect to Mr. Jackson's soliciting
or competing with the Company. In connection with the severance agreement,
Goodison Park released Mr. Jackson from his personal guarantee.

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<PAGE>

         DAVID CRAVEN, FORMER CHIEF EXECUTIVE OFFICER

         On June 28, 2003, the Company entered into a settlement agreement
regarding Mr. Craven's employment agreement with the Company after an unfair
dismissal claim was raised with the UK Employment Tribunal. In exchange for a
full release of the Company by Mr. Craven, Mr. Craven is to receive
(pound)25,000 and, in accordance with his employment contract, options to
purchase 400,000 shares at prices ranging from $0.27 to $0.40. As at April 30,
2005 Mr. Craven has exercised all options of these options.

TAXATION

         The following discussion sets forth the material U.S. federal income
tax consequences and the material U.K. tax consequences of the ownership and
disposition of our American Depositary Shares or ordinary shares by a U.S.
Holder. This summary is for general information purposes only. A U.S. Holder is
a beneficial owner of our American Depositary Shares or ordinary shares that is:

         o        a citizen or individual resident of the United States;

         o        a corporation or other entity taxable as a corporation for
         U.S. federal income tax purposes that is created or organized in the
         United States or under the law of the United States or of any state or
         the District of Columbia;

         o        an estate whose income is includible in gross income for U.S.
         federal income tax purposes regardless of its source; or

         o        a trust if (1) a court within the United States is able to
         exercise primary supervision over the administration of the trust, and
         one or more United States persons have the authority to control all
         substantial decisions of the trust, or (2) the trust was in existence
         on August 20, 1996 and properly elected to continue to be treated as a
         United States person.

         The following discussion addresses only the tax consequences to a U.S.
Holder that is a portfolio investor, that is, a U.S. Holder that does not own at
any time, directly or indirectly, American Depositary Shares or ordinary shares
representing ten percent or more of the voting power of our stock.

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISERS REGARDING YOUR PARTICULAR TAX
CONSEQUENCES.

UNITED KINGDOM TAX CONSEQUENCES

         The following discussion sets forth the material U.K. tax consequences
of the ownership and disposition of our ordinary shares or American Depositary
Shares by Qualifying U.S. Holders. A "Qualifying U.S. Holder" is a U.S. Holder
who is a resident of the United States for purposes of the recently revised
U.S.-U.K. income tax treaty, who owns or controls less than ten percent of the
Company's outstanding voting power and who has acquired his American Depositary
Shares or ordinary shares for bona fide commercial reasons as an investment and
not in connection with any business carried on through a permanent establishment
situated in the United Kingdom or for the purposes of securing the benefit of
Article 10, relating to dividends, of the U.S.-U.K. income tax treaty. This
summary is for general information purposes only. It does not purport to be a
comprehensive description of all of the tax considerations that may be relevant
to each U.S. Holder. This discussion is based on the current provisions of
United Kingdom domestic tax law, current regulations promulgated thereunder,
judicial decisions and published positions of the Inland Revenue and/or Customs
and Excise and other applicable

                                       71
<PAGE>

authorities, all as in effect as of the date hereof, and each of which is
subject to change or to differing interpretations, possibly with retroactive
effect. This discussion does not address all aspects of U.K. taxation that may
be relevant to any particular shareholder based on the shareholder's individual
circumstances.

         For the purposes of U.K. tax on distributions on ordinary shares, the
holders of American Depository Shares are treated as the beneficial owners of
our ordinary shares underlying their American Depository Shares. For the
purposes of this summary it is assumed, and we are of the opinion, that our
business is managed and controlled in the United Kingdom.

         On March 31, 2003, the U.S. and the U.K. exchanged instruments of
ratification on a new income tax treaty. This New Tax Treaty has a complex set
of effective dates. The New Tax Treaty will generally be effective for tax years
commencing after March 31, 2003. For many companies resident in the U.K.,
including our Company, this means that the New Tax Treaty became effective for
the tax year commencing on April 1, 2003. For most U.K. individuals, the New Tax
Treaty became effective for the tax year commencing April 6, 2003. And for U.S.
taxpayers who file their taxes based on the calendar year, the New Tax Treaty
became effective commencing January 1, 2004. The summary set out addresses the
provisions of the New Tax Treaty. Investors are urged to consult their own tax
advisors concerning transactions that occurred prior to the effective dates of
the New Tax Treaty.

         DISTRIBUTIONS ON AMERICAN DEPOSITARY SHARES OR ORDINARY SHARES

         An individual shareholder resident in the United Kingdom generally is
entitled to a tax credit, referred to as the "U.K. tax credit", in respect of
any cash dividend received equal to one-ninth of the dividend. Under the prior
law, the payment from the U.K. Inland Revenue to a Qualifying U.S. Holder was
reduced by a U.K. withholding tax equal to the lesser of (1) 15 percent of the
sum of the dividend and the amount of the U.K. tax credit and (2) the amount of
the U.K. tax credit. Currently, the U.K. does not, in general, impose a dividend
withholding tax.

         A Qualifying U.S. Holder would not be entitled to receive any cash
payment in respect of the U.K. tax credit for dividends paid by us, and U.S.
Holders that are not Qualifying U.S. Holders, depending on their personal
circumstances, may be liable to U.K. tax in respect of dividends at a rate of up
to 32.5 percent.

         TAXATION OF CAPITAL GAINS OF U.S. HOLDERS

         A U.S. Holder who is neither resident nor ordinarily resident in the
United Kingdom for U.K. tax purposes generally will not be subject to U.K. tax
on capital gains realized on the disposition of our American Depositary Shares
or ordinary shares.

         A U.S. Holder who is resident or ordinarily resident in the United
Kingdom at the time of any disposal of his American Depositary Shares or
ordinary shares in our Company, or at a time when he is deemed to have made such
a disposal, or if the disposal is deemed, for the purposes of U.K. tax, to occur
at such a time, may, depending on his circumstances, be subject to U.K. capital
gains tax at a rate of up to 40 percent, in the case of disposal of ordinary
shares, on the whole or, in the case of disposal of American Depositary Shares,
almost the whole, of the chargeable gain arising on the disposal.

         A U.S. Holder who owns his American Depositary Shares or ordinary
shares in our Company in connection with any business or otherwise than as a
capital investment, depending on his circumstances, may be subject to U.K. tax
on any gain he makes on any disposal of his American Depositary Shares or
ordinary shares of our Company at a rate of up to 40 percent, whether or not he
is resident or ordinarily resident in the United Kingdom.

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<PAGE>

         INHERITANCE TAX AND GIFT TAXES ON U.S. HOLDERS

         Our ordinary shares and almost all of the American Depositary Shares
are assets situated in the United Kingdom for the purposes of U.K. inheritance
tax. An individual who is domiciled in the United States and who is not a
national of the United Kingdom for purposes of the U.S.-U.K. estate and gift tax
treaty, however, generally will not be subject to U.K. inheritance tax in
respect of our American Depositary Shares or ordinary shares on the individual's
death or to U.K. gift tax on a gift of World Gaming American Depositary Shares
or ordinary shares during the individual's lifetime, provided that any
applicable U.S. federal estate or gift tax liability is paid. In the exceptional
case where World Gaming American Depositary Shares or ordinary shares are
subject both to U.K. inheritance tax and to U.S. federal estate or gift tax, the
U.S.-U.K. estate and gift tax treaty generally provides for any tax paid to the
United Kingdom to be credited against tax payable to the United States or for
any tax paid to the United States to be credited against tax payable to the
United Kingdom based on priority rules set out in that treaty. Where, however,
the ordinary shares or American Depositary Shares are shares or American
Depositary Shares in a company which, when taken with its subsidiaries, exists
wholly or mainly for trading purposes, business property relief from U.K.
inheritance tax may be available to reduce or eliminate the tax unless, as in
the case of our American Depositary Shares or ordinary shares, they may be
deemed "quoted on a recognized stock exchange" for the purposes of U.K. domestic
inheritance tax, if the shareholding in questions does not carry control.

         STAMP DUTY AND STAMP DUTY RESERVE TAX

         A transfer for value of our ordinary shares will normally be subject to
ad valorem stamp duty or to stamp duty reserve tax. Stamp duty tax will arise on
the execution of an instrument to transfer our ordinary shares. Stamp duty
reserve tax will arise on the entry into an agreement to transfer our ordinary
shares, but the charge may be canceled if stamp duty has been paid. Stamp duty
and stamp duty reserve tax are normally a liability of the purchaser. The rate
of stamp duty payable is 0.5 percent of the consideration rounded to the nearest
(pound)5, and 0.5 percent of the consideration in the case of stamp duty reserve
tax. There is no charge to U.K. stamp or other duties on the issue by a U.K.
incorporated company of shares in itself.

         There should be no charge to U.K. stamp duty on the transfer of
American Depositary Shares of World Gaming, provided the agreement and the
conveyance of transfer, if any, are executed outside the United Kingdom.

         TAXATION OF THE COMPANY

         A company that is incorporated in the United Kingdom prima facie is
treated as being resident in the United Kingdom for tax purposes. However, this
treatment will not apply if the effective management and control of the company,
that is, broadly, the exercise by the board of directors of that company of
their function, takes place in another country with which the United Kingdom has
an appropriate double tax treaty. A company whose management and control is
exercised in the United Kingdom is also generally resident in the United Kingdom
regardless of its country of incorporation. A company that is tax resident in
the United Kingdom is liable to U.K. tax on its worldwide income and gains at a
maximum effective rate of up to 30 percent. Tax credit for foreign taxes on the
foreign income is generally given up to the amount of UK tax chargeable on the
income. If the tax residence of a U.K. company changes from the United Kingdom
to that of another jurisdiction, under U.K. tax regulations it would be deemed
to have disposed of all of its chargeable assets, i.e., its shares in its
subsidiaries and any other chargeable assets that it owns, including the
goodwill of any trade carried on by it, for each asset's market value at the
date of the change of residence. It is, therefore, crucial to ensure that the
exercise by the board of directors of their functions is conducted in the
territory of its intended tax residence and if different from

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the U.K. there is a tax treaty with that intended territory so as to ensure that
there is no change of a U.K. resident company's tax residence out of the United
Kingdom.

         TAXATION OF A U.K. COMPANY THAT CONTROLS CERTAIN CONTROLLED FOREIGN
         COMPANIES

         If any of the subsidiaries of a U.K. resident company are deemed
resident in another tax jurisdiction so that that subsidiary is liable to tax or
its profits, other than capital gains, that is less than 75 percent of the tax
it would have paid on those profits if liable to tax in the United Kingdom, then
unless 90 percent of that subsidiary's profits are paid up as a dividend to a
U.K. resident company, within 18 months of the end of the accounting period in
which they are earned or an exemption from these rules applies, those profits
will be treated as profits of the U.K. company and taxed accordingly (with
credit for foreign tax calculated in accordance with the applicable U.K. laws).
Therefore, in relevant circumstances, we would be subject to U.K. tax (currently
at the rate of 30 percent) on the profits of the overseas subsidiaries, subject
to appropriate credit for the relevant overseas tax in respect of such profits.
We have engaged advisors to prepare an application to the United Kingdom tax
authorities for a ruling that the profits that are generated by our Antiguan
resident companies fall within an exemption from these rules. This would mean
that the profits would not be treated as profits of the UK parent company until
such time as they are formally paid out as dividends.

         TAXATION OF CERTAIN DIVIDENDS RECEIVED BY A U.K. HOLDING COMPANY

         After the reorganization involving LVA and certain internal
restructuring that has occurred in 2004 and 2005, we own WG International
Limited, which in turn owns the entire issued share capital of LVA and certain
other operating subsidiaries of our corporate group. Thus, some of the dividends
or other distributions received by WG International Limited and World Gaming
will have passed through its U.S. subsidiary. And some portion of those
dividends may be subjected, in addition to any tax payable in the country of the
operating subsidiaries, to U.S. federal income tax, generally at a rate of 34
percent or 35 percent, after giving credit, subject to limitations, for foreign
income tax paid by the operating subsidiary. A dividend paid by the U.S.
subsidiary will be subject to a U.S. withholding tax unless the earnings of the
operating subsidiaries qualify the dividend for an exemption from that tax.
Pursuant to the Old Tax Treaty, the 30% withholding tax imposed by U.S. federal
income tax law would have been reduced to five percent for non-exempt dividends
from the U.S. subsidiary to WG International Limited. Under the New Tax Treaty,
it is possible that WG International Limited would not qualify for the benefits
of the treaty, in which case that rate reduction would not apply, and dividends
from LVA to WG International Limited would be subject to a U.S. withholding tax.
We believe, based on the current ownership and trading of our stock, that there
is a significant risk that WG International Limited would not qualify for the
benefits of the New Tax Treaty. Alternatively, if WG International Limited were
to qualify for the benefits of the New Tax Treaty, it is possible that U.S.
withholding tax on those dividends would be eliminated entirely. For U.K.
corporation tax purposes, the dividend from the U.S. subsidiary will be subject
to U.K. tax payable at effective rates of between 20 percent and 30 percent,
depending on the level of deemed or actual profits of the Company, but will be
reduced by means of a credit for any U.S. withholding tax and for any federal
and state income tax paid by LVA on the earnings distributed by it and, to the
extent that LVA's income is derived from dividends received from its operating
subsidiaries, the corporate income tax paid by such operating subsidiaries in
their countries of operation. However, the credit cannot exceed the effective
U.K. corporation tax payable and is further restricted by detailed and
complicated tax anti-avoidance and other provisions. Thus, the U.S. tax and the
taxes paid in the countries in which the operating subsidiaries are situated, if
relevant, could exceed the U.K. tax, and no credit will be available in respect
of the excess. Further, the credit against foreign taxes suffered on profits
from which a dividend is paid is based on an assumption that all available
relief and exemptions from the foreign tax have been claimed by the overseas
company.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

         This discussion is based on current provisions of the Internal Revenue
Code of 1986, as amended, referred to as the Code, current and proposed Treasury
regulations promulgated thereunder, judicial decisions and published positions
of the U.S. Internal Revenue Service, known as the "IRS", and other applicable
authorities, all as in effect as of the date hereof, and each of which is
subject to change or to differing interpretations, possibly with retroactive
effect. This discussion does not address all aspects of U.S. federal income
taxation that may be relevant to any particular shareholder based on the
shareholder's individual circumstances. In particular, this discussion considers
only U.S. Holders that will own American Depositary Shares or ordinary shares as
capital assets and does not address the potential application of the alternative
minimum tax or the U.S. federal income tax consequences to U.S. Holders that are
subject to special treatment, including U.S. Holders that:

         o  are broker-dealers;

         o  have elected mark-to-market accounting;

         o  are tax-exempt organizations;

         o  are financial institutions or insurance companies or other entities
            that derive financial services income;

         o  hold American Depositary Shares or ordinary shares as part of a
            straddle, "hedge", "conversion transaction" or other risk reduction
            strategy with other investments;

         o  have a functional currency that is not the U.S. dollar; or

         o  are regulated investment companies.

         In addition, this discussion does not consider the tax treatment of
persons who hold American Depositary Shares or ordinary shares through a
partnership or other pass-through entity. This discussion does not address any
aspect of state, local or non-U.S. tax laws or any U.S. federal tax laws other
than U.S. federal income tax laws.

         Subject to the limitations described in the next paragraph, the
following discussion describes the material U.S. federal income tax consequences
to a U.S. Holder. In addition, certain material aspects of U.S. federal income
tax relevant to a holder other than a U.S. Holder, referred to as a Non-U.S.
Holder, are discussed below.

TAX CONSEQUENCES FOR U.S. HOLDERS

         For U.S. Federal income tax purposes, a holder of an American
Depositary Share will be treated as the owner of the ordinary share underlying
the American Depositary Share.

         TAXATION OF DIVIDENDS PAID ON AMERICAN DEPOSITARY SHARES OR ORDINARY
         SHARES

         A U.S. Holder will be required to include in gross income as ordinary
income the amount of any distribution paid on an American Depositary Share or
ordinary share, including any U.K. tax withheld from the amount paid, on the
date the distribution is received, to the extent the distribution is paid out of
our current and/or accumulated earnings and profits as determined for U.S.
federal income tax purposes. A distribution in excess of earnings and profits
will be treated first as a nontaxable return of capital, reducing the U.S.
Holder's basis in the American Depositary Share or ordinary share and, to the
extent in

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excess of basis, will be treated as gain from the sale or exchange of the
American Depositary Share or ordinary share. The amount of any distribution paid
in any currency other than the U.S. dollar will equal the U.S. dollar value of
the other currency calculated by reference to the exchange rate in effect on the
date the distribution is received by the Depositary, in the case of American
Depositary Shares, or by the U.S. Holder, in the case of ordinary shares,
regardless, in each case, of whether the other currency is converted into U.S.
dollars. Gain or loss, if any, realized on a sale or other disposition of the
other currency will be ordinary income or loss. Our dividends will not qualify
for the dividends received deduction generally available to corporations.

         On May 28, 2003, the Jobs and Growth Reconciliation Tax Act of 2003 was
enacted. The 2003 Tax Act reduces the rate of federal income tax imposed on
certain kinds of corporate dividends received by individuals. The rate
reductions, where applicable, limit the maximum rate of federal income tax on
such dividends to 15 percent, commencing with dividends paid in tax years
beginning after 2002. The new rules are currently scheduled to expire after the
year 2008. The new rules apply only to "qualified dividend income" and, if not
paid by a U.S. corporation, only to qualified dividend income paid by a
"qualified foreign corporation." It is unclear whether dividends we pay to an
individual U.S. Holder would qualify for the rate reductions introduced by the
2003 Tax Act, primarily due to uncertainty as to whether we satisfy the
requirements to be a "qualified foreign corporation." While we appear to satisfy
certain threshold tests relating to our eligibility for the benefits of a
comprehensive U.S. tax treaty, the 2003 Tax Act specifically denies qualified
foreign corporation status to any corporation that was a passive foreign
investment company, or PFIC, in either the taxable year of the dividend
distribution or the preceding taxable year. Therefore, if we are a PFIC in the
year we make a dividend distribution, or were a PFIC in the preceding year, the
dividend would not qualify for the reduced rates introduced by the 2003 Tax Act.
See the discussion below in "Taxation - United States Federal Income Tax
Consequences - Tax Consequences for U.S. Holders - Tax Consequences if We Are a
Passive Foreign Investment Company" for a more detailed description of the PFIC
rules and their possible application to our operations.

         Under prior law and the Old Tax Treaty, a portfolio U.S. Holder, as
defined above, could elect to be treated as receiving the U.K. tax credit in
respect of certain dividends paid by us. A U.S. Holder who made that election
would be treated (1) as having received additional dividend income equal to the
gross amount of the U.K. tax credit unreduced by any U.K. withholding tax and
(2) as having paid U.K. withholding tax in the same amount. U.S. Holders that
were not portfolio U.S. Holders were subject to different rules. Those rules,
and the procedures for making the election described above, are set forth in
Revenue Procedure 2000-13.

         The New Tax Treaty and current laws modify these rules. The U.K.
generally does not impose dividend withholding tax under current law, and the
New Tax Treaty generally eliminates the requirement that the U.S. permit U.S.
Holders to claim a credit, based on "grossed-up" dividend income, for integrated
taxes paid by the U.K. company in which they own shares.

         The foreign tax credit rules in the Code are exceedingly complex, and
each U.S. Holder is urged to consult its own tax adviser regarding those rules.

         TAXATION ON DISPOSITION OF ORDINARY SHARES

         Subject to the rules applicable to passive foreign investment
companies, controlled foreign corporations and foreign investment companies,
discussed below, upon the sale, exchange or other disposition of an American
Depositary Share or ordinary share, a U.S. Holder will recognize capital gain or
loss in an amount equal to the difference, if any, between the U.S. Holder's
basis in the American Depositary Share or ordinary share, which usually is the
U.S. Holder's cost of the American Depositary Share or ordinary share, and the
amount realized on the disposition computed in U.S. dollars. Capital gain from
the sale, exchange or other disposition of an American Depositary Share or
ordinary share held

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more than one year, including any capital gain recognized on a distribution that
exceeds earnings and profits and basis in the American Depositary Share or
ordinary share on which it is paid, is long-term capital gain, and, in the case
of a U.S. Holder that is not a corporation, is generally eligible for a maximum
15 percent rate of taxation. Gain or loss recognized by a U.S. Holder on a sale,
exchange or other disposition of an American Depositary Share or ordinary share
generally will be treated as U.S. source income or loss for purposes of the U.S.
foreign tax credit limitations. Unless an exception to that general source rule
applies, or unless the U.S. Holder has other foreign source income in the same
class or "basket" that is subject to foreign tax at a rate below the U.S.
federal income tax rate on that income, the limitations on the foreign tax
credit may prevent the U.S. Holder from claiming a foreign tax credit for part
or all of any U.K. tax paid by the U.S. Holder on the disposition of an American
Depositary Share or ordinary share. The deductibility of a capital loss
recognized on the sale, exchange or other disposition of an American Depositary
Share or ordinary share is subject to limitations. An exchange, deposit or
withdrawal by a U.S. Holder of ordinary shares in exchange for American
Depositary Shares, or vice versa, will not be subject to any U.S. Federal income
tax.

         TAX CONSEQUENCES IF WE ARE A PASSIVE FOREIGN INVESTMENT COMPANY

         In general, we will be a passive foreign investment company, or PFIC,
for any taxable year if either (1) 75 percent or more of our gross income in the
taxable year is passive income, or (2) 50 percent or more of the average value,
or, if our American Depositary Shares or ordinary shares are not regularly
traded on any of certain designated stock exchanges and if we so elect, the
adjusted basis, of our assets in the taxable year produces, or is held for the
production of, passive income. The IRS takes the position that interest on
working capital or any other cash is passive income and that the corresponding
asset is an asset that produces or is held for the production of passive income.
The PFIC rules can produce unfavorable tax consequences for a U.S. Holder if we
are treated as a PFIC for any year while a U.S. Holder owns our American
Depositary Shares or ordinary shares, and if that U.S. Holder does not make, or
has not made, a timely election that remains in effect, for the first taxable
year the U.S. Holder owns our American Depositary Shares or ordinary shares, and
we are a PFIC, either to treat us as a "qualified electing fund" or, to mark the
holder's American Depositary Shares or ordinary shares to market. As described
below, a "qualified electing fund" election will not be available to a U.S.
Holder unless we provide certain information to U.S. Holders, and we provide no
assurance that we will make that information available. In addition, a
mark-to-market election will not be available to a U.S. Holder unless our
American Depositary Shares or ordinary shares held by the U.S. Holder are
"marketable stock", and at the present time we believe there is a risk that the
shares may not so qualify. If neither of those elections is available to, or, if
available, is made by, a U.S. Holder, as described more fully below, the U.S.
Holder will be subject to the adverse tax consequences described in the
following paragraph if we are a PFIC. We have not undertaken a detailed
determination of whether we are a PFIC and therefore cannot provide any
assurance that we are not. Therefore, we may be a PFIC. Moreover, in the absence
of a detailed analysis of our status as a PFIC performed by us, any assertion by
the IRS with respect to a U.S. Holder that we are a PFIC might be upheld against
that U.S. Holder, whether or not we are in fact a PFIC.

         Under the PFIC provisions, in any year in which the U.S. Holder either
disposes of an American Depositary Share or ordinary share at a gain or receives
an "excess distribution," special rules apply to the taxation of the gain and
the excess distribution. For purposes of these rules, "excess distributions" are
the portion of our distributions in any taxable year, whether or not out of our
earnings and profits, that exceed 125 percent of the average of the
distributions (whose amount is subject to adjustment to the extent there were
excess distributions) that the U.S. Holder received on the American Depositary
Share or ordinary share during the previous three years, or, if shorter, the
U.S. Holder's holding period for the American Depositary Share or ordinary share
on which the distributions are paid. A disposition of an American Depositary
Share or ordinary share, for purposes of these rules, includes many transactions
on which gain

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or loss is not realized under general U.S. federal income tax rules. The gain or
the excess distributions must be allocated ratably to each day the U.S. Holder
has held the American Depositary Share or ordinary share. Amounts allocated to
each year are taxable as ordinary income in their entirety and not as capital
gain, and amounts allocable to prior years may not be offset by any deductions
or losses. Amounts allocated to each prior year are taxable at the highest rate
in effect for that year and are subject to an interest charge at the rates
applicable to deficiencies for income tax for those periods. In addition, a U.S.
Holder's tax basis in an American Depositary Share or ordinary share that is
acquired from a decedent would not receive a step-up to fair market value as of
the date of the decedent's death but instead would be equal to the decedent's
basis, if lower.

         The special PFIC rules described in the preceding paragraph will not
apply to a U.S. Holder if the U.S. Holder makes a timely election, which remains
in effect, to treat us as a "qualified electing fund," or QEF, for the first
taxable year in which the U.S. Holder owns an American Depositary Share or
ordinary share and in which we are a PFIC. A U.S. Holder generally may make a
QEF election only if we provide to the U.S. Holder certain information regarding
our earnings and profits and net capital gain and certain other information
regarding us. As indicated above, we provide no assurance that we will make any
of that information available. A U.S. Holder that has made a valid QEF election
is required for each taxable year to include in income a pro rata share of our
ordinary earnings as ordinary income and a pro rata share of our net capital
gain as long-term capital gain, subject to a separate election to defer payment
of taxes, which deferral is subject to an interest charge. The QEF election is
made on a shareholder-by-shareholder basis and can be revoked only with the
consent of the IRS. A shareholder makes a QEF election by attaching to a timely
filed U.S. federal income tax return a properly completed IRS Form 8621 that
reflects the information provided in the PFIC Annual Information Statement
supplied by us to the shareholder and by filing a second copy of that form with
the IRS Service Center in Philadelphia, Pennsylvania. As indicated above, we
provide no assurance that we will make any of that information available. If we
do not provide that information, a U.S. Holder will not be able to make a QEF
election, in which case, unless our American Depositary Shares or ordinary
shares held by a U.S. Holder are "marketable stock" or become "marketable
stock", a U.S. Holder will be subject to the rules described in the preceding
paragraph with respect to our American Depositary Shares or ordinary shares
unless if we are a PFIC or unless the U.S. Holder is able to rebut an assertion
by the IRS that we are a PFIC. Without information provided by us a U.S. Holder
may not be able to rebut an assertion by the IRS that we are a PFIC.

         Even if a QEF election is not made, if we are a PFIC in the hands of a
U.S. Holder, that U.S. Holder must file each year a completed IRS Form 8621 with
its U.S. Federal income tax return and file a second copy of that form with the
IRS Service Center in Philadelphia, Pennsylvania. The annual Form 8621 filed by
a person who has made a QEF election must include the information provided to
the shareholder in the PFIC Annual Information Statement. As indicated above, we
provide no assurance that we will make any of that information available. If we
were to make that information available but later were to cease to make that
information available, a QEF election by a U.S. Holder likely would terminate.
We provide no assurance that, if we make any of that information available, we
will continue to do so. Although a QEF election generally cannot be revoked, if
a U.S. Holder made a timely QEF election for the first taxable year it owned an
American Depositary Share or ordinary share and we are a PFIC, the QEF election
does not apply in a later taxable year in which we do not satisfy the tests to
be a PFIC. If a QEF election was not made for that first taxable year, certain
elections can be made while a foreign corporation continues to satisfy the
definition of a PFIC that, combined with a valid QEF election, provided that
election is available by reason of our provision of necessary information, can
cause the QEF election to be treated as having been made for that first taxable
year. Those elections may require the electing shareholder to recognize gain on
a constructive sale or to be taxable on the shareholder's share of certain
undistributed profits of the foreign corporation. If gain or income is
recognized pursuant to one of these elections, the rules set forth in the
preceding paragraph would apply to that gain or income.

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<PAGE>

         Even if a QEF election ceases to apply because in a later taxable year
we cease to satisfy the tests to be a PFIC, the QEF election will apply again in
any subsequent year in which we again satisfy the tests to be a PFIC, provided
that election is available by reason of our provision of necessary information.
Moreover, if you sell all of the American Depositary Shares or ordinary shares
you own and later reacquire other ordinary shares, any QEF election you have
made that remains in effect will apply to the shares acquired later, provided
that election is available by reason of our provision of necessary information.
Treasury regulations provide that the Commissioner of Internal Revenue has the
discretion to invalidate or terminate a QEF election if the U S. Holder or we,
or an intermediary, fails to satisfy the requirements for the QEF election. As
noted above, we provide no assurance that we will make any of the necessary
information available.

         The special PFIC rules described above also will not apply to a U.S.
Holder if the U.S. Holder elects to mark the U.S. Holder's American Depositary
Shares or ordinary shares to market each year, provided our stock is considered
"marketable stock" within the meaning of the Treasury regulations. A U.S. Holder
that makes this election will recognize as ordinary income or loss each year an
amount equal to the difference, if any, as of the close of the taxable year
between the fair market value of the holder's American Depositary Shares or
ordinary shares and the holder's adjusted tax basis in the American Depositary
Shares or ordinary shares. Losses would be allowed only to the extent of net
mark-to-market gain previously included in income by the U.S. Holder under the
election for prior taxable years. If the mark-to-market election were made, then
the rules set forth above would not apply for periods covered by the election.

         In general, the American Depositary Shares or ordinary shares will be
marketable stock within the meaning of the Treasury regulations if they are
traded, other than in de minimis quantities, at least 15 days during each
calendar quarter on a "qualified exchange or other market" within the meaning of
the Treasury regulations. A U.S. exchange is a "qualified exchange or other
market" if such exchange is a national securities exchange registered with the
SEC, or the national market system established pursuant to section 11A of the
Securities Exchange Act of 1934. A non-U.S. exchange is a "qualified exchange or
other market" if the exchange is regulated or supervised by a governmental
authority of the country where the market is located and (1) the exchange has
trading volume, listing, financial disclosure, surveillance and other
requirements designed to prevent fraudulent and manipulative acts and practices,
to remove impediments to and perfect the mechanism of a free and open, fair and
orderly market, and to protect investors, and the laws of the country where the
exchange is located and the rules of the exchange ensure that those requirements
are actually enforced, and (2) the rules of the exchange effectively promote
active trading of listed stocks. If a non-U.S. exchange has more than one tier
or market level on which stock may be separately listed or traded, each such
tier is treated as a separate exchange. If our American Depositary Shares and
ordinary shares were not "marketable stock" within the meaning of the Treasury
regulations, the mark-to-market election would not be available to U.S. Holders.
If a QEF election also is not available, for example, because we do not provide
the necessary information to U.S. Holders, or if a U.S. Holder does not make a
QEF election, the adverse PFIC rules set forth in the fifth preceding paragraph
will apply to all U.S. Holders or a non-electing U.S. Holder. As noted above, we
provide no assurance that we will make available any of the information
necessary for a QEF election.

         If a market-to-market election were available or were to become
available, and if a U.S. Holder were to make a mark-to-market election, but does
not make that election for the first taxable year in which the U.S. Holder owns
an American Depositary Share or ordinary share and in which we are a PFIC, and
if the U.S. Holder had not made a valid QEF election for that first such taxable
year, the rules set forth in the sixth preceding paragraph will apply to any
distributions on an American Depositary Share or ordinary share in the year of
the mark-to-market election, and to any gain recognized on an actual sale of an
American Depositary Share or ordinary share in that year, as well as in any
prior year that U.S. Holder owned our American Depositary Shares or ordinary
shares, and to any gain recognized in that year pursuant to the mark-to-market
election. Unlike the QEF rules, under which a U.S. Holder is not required

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to continue to include in income any of our undistributed earnings in any year
we do not satisfy the tests to be a PFIC if the U.S. Holder made, or is treated
as making, the QEF election in the first taxable year the U.S. Holder owned our
American Depositary Shares or ordinary and we were a PFIC, the mark-to-market
rules generally continue to apply to a U.S. Holder who makes the mark-to-market
election, even in years we do not satisfy the tests to be a PFIC.

         A U.S. Holder who owns American Depositary Shares or ordinary shares
during a year we are a PFIC, who did not make a valid and timely QEF election
for the first taxable year in which the U.S. Holder owns an American Depositary
Share or ordinary share and in which we are a PFIC, or a valid QEF election in a
later year while we continue to satisfy the definition of a PFIC, as described
in the fifth preceding paragraph, and who has not made a valid mark-to-market
election generally will remain subject to the rules set forth in the seventh
preceding paragraph for all taxable years. In that event, those rules will apply
to any gains on dispositions of American Depositary Shares or ordinary shares
and to any "excess distributions." It is, however, possible for a U.S. Holder to
avoid this "once a PFIC, always a PFIC" result by electing to treat all of the
U.S. Holder's American Depositary Shares or ordinary shares as sold for their
fair market value as of the last day of the last taxable year we satisfy the
tests to be a PFIC, provided that election is made within three years of the due
date, including extensions, for the U.S. Holder's taxable year that includes the
last day of the taxable year we satisfy the tests to be a PFIC. If a gain is
recognized on that constructive sale, the rules set forth in the seventh
preceding paragraph would apply to that gain.

         We may be a PFIC for the year 2002, 2003 or 2004. Many aspects of the
taxation of Internet businesses that could be relevant to our status as a PFIC
are subject to considerable uncertainty. In addition, as noted above, we have
not undertaken any determination of whether we are a PFIC and therefore cannot
provide any assurance that we are not. In addition, the tests for determining
PFIC status are applied annually, and it is difficult to make accurate
predictions of future income and assets, which are relevant to this
determination. Accordingly, there can be no assurance that, even if we were not
a PFIC for the year 2002, we will not be a PFIC in 2003 or any subsequent year.
Moreover, we provide no assurance that we will make any determination in the
future whether we are a PFIC at that time. Finally, in the absence of an
analysis of our status as a PFIC performed by us, any assertion by the IRS with
respect to a U.S. Holder that we are in any particular year a PFIC could be
upheld against that U.S. Holder, whether or not we are in fact a PFIC.

         U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS ABOUT THE PFIC
RULES, INCLUDING THE CONSEQUENCES TO THEM OF MAKING A QEF OR MARK-TO-MARKET
ELECTION, PROVIDED THOSE ELECTIONS ARE AVAILABLE, WITH RESPECT TO OUR AMERICAN
DEPOSITARY SHARES or ORDINARY SHARES IF WE ARE A PFIC.

         CONTROLLED FOREIGN CORPORATION RULES

         Special U.S. federal income tax rules apply to certain holders in a
foreign corporation classified as a "controlled foreign corporation," or CFC. A
foreign corporation will not constitute a CFC unless U.S. shareholders, each of
whom owns ten percent or more of its voting power, referred to hereafter as "10%
Voting U.S. Shareholders", collectively own more than 50 percent of the total
combined voting power or total value of the corporation's stock. Any U.S. person
that owns, directly or indirectly through foreign persons, or is considered to
own, by application of certain constructive ownership rules, ten percent or more
of the total combined voting power of all classes of stock of a foreign
corporation will be considered to be a 10% Voting U.S. Shareholder.

         For purposes of the special rules that apply on a taxable disposition
of stock, the status of the foreign corporation as a CFC or the status of a U.S.
Holder as a 10% Voting U.S. Shareholder at any time

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within five years prior to the taxable disposition can cause those rules to
apply. Based on the current ownership of our American Depositary Shares and
ordinary stock, we believe that we are not a CFC.

         FOREIGN PERSONAL HOLDING COMPANY AND PERSONAL HOLDING COMPANY RULES

         Special U.S. federal income tax rules apply to a holder in a "foreign
personal holding company," or FPHC, and to the U.S. source income of a foreign
corporation that is a "personal holding company." A foreign corporation will not
constitute a FPHC unless five or fewer individuals who are U.S. citizens or
residents own, directly or constructively, more than 50 percent of the voting
power or the value of its shares. A corporation will not constitute a "personal
holding company," or PHC, unless five or fewer individuals own, directly or
constructively, more than 50 percent of the value of its shares at any time
during the last half of its taxable year. Based upon the current ownership of
our stock, we believe that we are not a FPHC or PHC.

         FOREIGN INVESTMENT COMPANY RULES

         Special rules also apply to treat as ordinary income any gain realized
on the sale of shares of a "foreign investment company." We believe that we will
conduct our business and obtain controlling interests in subsidiaries so as not
to be a "foreign investment company."

TAX CONSEQUENCES FOR NON-U.S. HOLDERS

         Except as described in "Information reporting and back-up withholding"
below, a Non-U.S. Holder of an American Depositary Share or ordinary share will
not be subject to U.S. federal income or withholding tax on any gain recognized
on the payment of dividends on, or gain from a disposition of, an American
Depositary Share or ordinary share, unless:

         o        the income or gain is effectively connected with the conduct
         by the Non-U.S. Holder of trade or business in the United States and,
         in the case of a resident of a country that has a treaty with the
         United States, the income is attributable to a permanent establishment
         or, in the case of an individual, a fixed place of business, in the
         United States;

         o        in case of gain from a disposition of an American Depositary
         Share or ordinary share, the Non-U.S. Holder is an individual who holds
         the American Depositary Share or ordinary share as a capital asset and
         is present in the United States for 183 days or more in the taxable
         year of the disposition and does not qualify for an exemption; or

         o        the Non-U.S. Holder is subject to tax pursuant to the
         provisions of U.S. tax law applicable to U.S. expatriates.

         INFORMATION REPORTING AND BACK-UP WITHHOLDING

         Under current U.S. federal income tax regulations, dividends we pay on
American Depositary Shares or ordinary shares will not be subject to U.S.
information reporting or to backup withholding unless they are paid in the
United States through a U.S. or U.S.-related paying agent, including a broker.
If a U.S. Holder furnishes the paying agent with a duly completed and signed IRS
Form W-9, the dividends will not be subject to backup withholding. Non-U.S.
Holders generally are not subject to information reporting or back-up
withholding with respect to dividends paid on, or upon the disposition of World
Gaming American Depositary Shares or ordinary shares, provided that the non-U.S.
Holder provides a taxpayer identification number, certifies to its foreign
status or otherwise establishes an exemption.

                                       81
<PAGE>

         The amount of any back-up withholding will be allowed as a credit
against a U.S. or Non-U.S. Holder's U.S. federal income tax liability and may
entitle the holder to a refund, provided certain required information is
furnished to the IRS.

TAXATION OF THE COMPANY

         We are subject to U.S. federal income tax only to the extent that we
derive U.S. source income that is subject to U.S. withholding tax or income that
is effectively connected with the conduct of trade or business within the United
States and is not exempt from U.S. tax under the U.S.-U.K. New Tax Treaty or Old
Tax Treaty. Our indirect U.S. subsidiary will continue to be subject to U.S. tax
on its worldwide income, including dividends, if any, we receive from non-U.S.
subsidiaries, and dividends, if any, we pay to WG International Limited may be
subject to a U.S. withholding tax, unless the earnings of the operating
subsidiaries qualify the dividends for an exemption from that tax. Pursuant to
the Old Tax Treaty, the 30% withholding tax imposed by U.S. Federal income tax
law was reduced to five percent for non-exempt dividends from the U.S.
subsidiary to WG International Limited. Under the New Tax Treaty, it is possible
that WG International Limited would not qualify for the benefits of the treaty,
in which case that rate reduction would not apply, and dividends from its
subsidiaries to WG International Limited would be subject to a U.S. withholding
tax. We believe, based on the current ownership and trading of our stock, that
there is a substantial risk that neither WG International Limited nor World
Gaming plc will qualify for benefits under the New Tax Treaty. Alternatively, if
WG International Limited were to qualify for the benefits of the New Tax Treaty,
U.S. withholding tax on those dividends could be eliminated entirely. In
addition, if WG International Limited were not to qualify for the benefits of
the New Tax Treaty, other income of WG International or World Gaming plc that is
from U.S. sources or that is effectively connected with trade or business
conducted in the United States may become subject to U.S. federal income tax at
higher rates.

DOCUMENTS ON DISPLAY

         We have filed this Annual Report on Form 20-F with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
Statements made in this annual report as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to this annual report, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.

         We are subject to the informational requirements of the Securities
Exchange Act and file reports and other information with the Securities and
Exchange Commission. Reports and other information which we file with the
Securities and Exchange Commission, including this Annual Report on Form 20-F,
may be inspected and copies at the public reference facilities of the Securities
and Exchange Commission at: 450 Fifth Street N.W., Room 1024, Washington, D.C.
20549. Additionally, copies of this material may also be obtained from the
Securities and Exchange Commission's Interest site at http://www.sec.gov. The
Commission's telephone number is 1-800-SEC-0330.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our reporting currency is the U.S. dollar. We are exposed to foreign
exchange risk on our net Canadian dollar asset position (approximately $20,000
CDN or $16,000 U.S. as of December 31, 2004). The main exposure in this regard
is the Canadian dollar weakening against the U.S. dollar, which would cause our
net Canadian position to "decline" after translation to the U.S. dollar.
Subsequent to December 31, 2003 and through 2004, the Canadian dollar has
appreciated against the U.S. currency.

                                       82
<PAGE>

         Exposure arises primarily from the operations of our subsidiaries in
Canada which incur certain administrative expenses in Canadian dollars
(approximately $4.3 million CDN or $3.5 million U.S. for the year ending
December 31, 2004) but do not derive any sales directly from customers.
Subsequent to October 1, 2004 such expenses have materially decreased as a
result of the Sportingbet Transaction (See Item 4: Sportingbet Transaction and
Item 10: Material Contracts). Funding for Inphinity and as of October 1, 2004,
WG Interactive, comes from our non-Canadian subsidiaries that derive their sales
in U.S. dollars. Therefore the ultimate cost of our operations in Canada is
dependent on the relative strength of the Canadian dollar to the U.S. dollar. We
have not hedged against this risk.

         Our net Canadian asset position at December 31, 2004 is summarized as
follows (in thousands of U.S. dollars with previous year comparatives included):

                                                          2004        2003

       Cash and cash equivalents                         $  20      $     95
       Other current assets                                 33           174
                                                         ------     ---------
             Total current assets                           53           269

       Other assets                                        112         1,079
       Current liabilities                                 (73)       (1,111)
       Long-term liabilities                                 -             -
                                                         ------     ---------
             Net Canadian dollar denominated assets      $  92      $    237
                                                         ======     =========

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Under the terms of the Sportingbet agreement (See Item 4: Sportingbet
Transaction and Item 10: Material Contracts), Sportingbet has irrevocably agreed
to the waiving of all voting, dividend, rights to transfer, rights to
participate (other than the right to attend meetings) and other similar rights
attaching to such shares in respect of the 13,506,204 issued ordinary shares of
the Company held by the Sportingbet Plc group of companies. Sportingbet Plc has
agreed to transfer these shares to World Gaming Plc for a total consideration of
$1 when requested to do so by the Company. The directors have confirmed that
these shares will be purchased by the Company when the Company has available
distributable profits. Until this occurs, these shares and the associated share
premium attached are treated as non-equity interests.


                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

         None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

         Other than as described in Item 12 (and Items 4 and 10 as
cross-referenced in Item 12) there are no material modifications to the rights
of security holders that are required to be disclosed.

USE OF PROCEEDS FROM OFFERING

         Not applicable.

                                       83
<PAGE>

ITEM 15. CONTROLS AND PROCEDURES

         Our principal executive officer and principal financial officer have
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934 ("Exchange Act")), as of the end of the period covered by this Annual
Report on Form 20-F. Based on such evaluation, they have concluded that as of
such date, our disclosure controls and procedures are effective and designed to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in applicable SEC rules and forms. There has
not been any change in the Company's internal control over financial reporting
that occurred during the year ended December 31, 2004 that has materially
affected, or is reasonably likely to affect the Company's internal control over
financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

         See Item 6. Committees of the Board of Directors.

ITEM 16B. CODE OF ETHICS

         In August 2003, the Board adopted a Code of Ethics, the principle terms
of reference of this code are described below:

         This Code of Ethics ("Code") for Senior Officers of World Gaming plc
and its subsidiaries (the "Company") applies to the Company's Chief Executive
Officer, Chief Financial Officer and its principal accounting officer or
controller, or persons performing similar functions (the "Senior Financial
Officers"). The Company expects all of its associates to conduct business in
accordance with applicable laws of England and Wales and the United States laws
and the Company's high standards of business ethics, and to abide by policies
and procedures adopted by the Company that govern the conduct of its associates,
including the specific associates to which this Code relates. In performing
duties, Senior Financial Officers will:

         o  Act with honesty and integrity, avoiding actual or apparent
            conflicts of interest in their personal and professional
            relationships.

         o  Promote full, fair, accurate, timely and understandable disclosure
            in the reports and documents that the Company files with, or submits
            to, the U.S. Securities and Exchange Commission (the "Commission")
            and in other public communications made by the Company.

         o  Comply with laws, rules and regulations of England and Wales as well
            as the United States and other appropriate private and public
            regulatory agencies.

         o  Act in good faith, responsibly, with due care, competence and
            diligence, without misrepresenting material facts or allowing one's
            independent judgment to be subordinated.

         o  Encourage and reward professional integrity in all aspects of the
            Company's financial organization and eliminate barriers to
            responsible behavior, such as coercion, reprisal or alienation from
            the financial organization of the Company.

         o  Not unduly or fraudulently influence, coerce, manipulate or mislead
            any aspect of any authorized financial audit or interfere with any
            auditor engaged in the performance of an internal or independent
            audit of the Company's financial statements or accounting books and
            records.

                                       84
<PAGE>

         If a Senior Financial Officer is aware of any suspected or known
violations of this Code, they have a duty to promptly report such concerns to
the Company's general counsel or to the audit committee (the "Audit Committee")
of the Company's board of directors (the "Board").

         Any violation of this Code and any violation by the Company, or its
directors or officers, of the securities laws, rules or regulations or other
laws, rules or regulations applicable to the Company may also be reported
anonymously via the Company's compliance hotline to be established by
management. The Audit Committee, as well as the Board, shall have the authority
to approve a waiver of any provision of this Code. Any request for a waiver of
any provision of this Code must be in writing and addressed to the Audit
Committee. Any waiver and the grounds for such waiver for a Senior Financial
Officer shall be disclosed by any means approved by the Commission.

         This Code is a statement of certain fundamental principles, policies
and guidelines that govern Senior Financial Officers in the conduct of the
Company's business, and is designed to assist the Company to conduct business in
accordance with applicable federal and state laws and the Company's high
standards of business ethics. It is not intended to and does not create any
rights in any associate, customer, supplier, competitor, stockholder or any
other person or entity.

         Senior Financial Officers understand that they will be subject to
action, including possible termination, if they violate or fail to comply with
this Code. The Audit Committee will assess compliance with this Code, report
violations of this Code to the Board and, based upon the relevant facts and
circumstances, recommend to the Board appropriate action.

                                       85
<PAGE>

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Set out below are fees charged for services provided by the Company's
principal accountants for the years ended December 31, 2004 and 2003:

                                     2004        2003
                                   -------     -------
         Audit fees                 60,500      68,465

         Audit - related fees            -      55,554

         Tax fees                    2,909       2,800

         All other fees                  -           -

                                   -------     -------
         Total                      63,409     126,819

In December 2003 the Company, at the recommendation of the Audit Committee,
resolved to change its principal accountants. The principal accountants were
changed on January 29, 2004 from Baker Tilly to HJ & Associates LLC for audit of
the Company's consolidated financial statements.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

         Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS.

         Set out below are purchases made by or on behalf of the Company or any
affiliated purchaser of shares or ADRs of the Company's equity securities:

                                       86
<PAGE>
<TABLE>
<CAPTION>
          Period              Total number of      Average price paid       Total number of       Maximum number of
                             shares purchased          per share          shares purchased as    shares that may yet
                                                                           part of publicly      be purchased under
                                                                          announced plans or    the plans or programs
                                                                               programs
_____________________________________________________________________________________________________________________
<S>                                 <C>                    <C>                    <C>                     <C>
January 1, 2004 - January           -                      -                      -                       -
31, 2004

February 1, 2004 -                  -                      -                      -                       -
February 28, 2004

March 1, 2004 - March 31,           -                      -                      -                       -
2004

April 1 2004 -
April 30, 2004

May 1, 2004 -                       -                      -                      -                       -
May 31, 2004

June 1, 2004 -                      -                      -                      -                       -
June 30, 2004

July 1, 2004 -                      -                      -                      -                       -
July 31, 2004

August 1, 2004 - August             -                      -                      -                       -
31, 2004

September 1, 2004 -                 -                      -                      -                       -
September 30, 2004

October 1, 2004 - October           -                      -                      -                       -
31, 2004

November 1, 2004 -                                                                -                       -
November 30, 2004

December 1, 2004 -                  -                      -                      -                       -
December 31, 2004

Total
____________________
</TABLE>
Mr. Grossman, a Director of the Company purchased 10,000 ADRs on the open market
in February, 2005. This brings Mr. Grossman's total beneficial ownership in the
Company's ADRs to 20,002 or 0.4% of the outstanding ADRs at December 31, 2004.

                                       87
<PAGE>
                                    PART III

ITEM 17. FINANCIAL STATEMENTS

         Our consolidated financial statements together with the reports of HJ &
Associates and Baker Tilly with respect to the years ended December 31, 2004,
2003 and 2002, are filed as part of this annual report.

         CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page
Independent Auditors' Reports ............................................. F-3
Consolidated Balance Sheets ............................................... F-5
Consolidated Statements of Operations and Other Comprehensive Income (Loss) F-7
Consolidated Statements of Stockholders' Equity............................ F-9
Consolidated Statements of Cash Flows...................................... F-10
Notes to Consolidated Financial Statements................................. F-12

ITEM 18. FINANCIAL STATEMENTS

         Our consolidated financial statements have been prepared in accordance
with Item 17 hereof.

ITEM 19. EXHIBITS

1.1      Memorandum of Association of World Gaming plc (incorporated herein by
         reference from Exhibit 3.1 to a Registration Statement on Form F-4 (SEC
         File No. 333-48280, dated 10/19/00) filed by World Gaming plc)
1.2      Articles of Association of World Gaming plc adopted by special
         resolution on May 17, 2001 (incorporated herein by reference from
         Exhibit 4.2 to a Registration Statement on Form S-8 (SEC File No.
         333-70056, dated 09/24/01) filed by World Gaming plc)
1.3      Articles of Association of World Gaming plc adopted by special
         resolution on June 20, 2002 (incorporated herein by reference from
         Exhibit 1.3 to the annual report on Form 20-F filed by World Gaming plc
         on June 30, 2003)
2.1      Form of ordinary share certificate of World Gaming plc. (incorporated
         herein by reference from Exhibit 1 to a Registration Statement on Form
         8-A (Sec File No. 000-32793, dated 05/23/01) filed by World Gaming plc)
2.2      Form ADR (incorporated herein by reference from Exhibit A to the Form
         Deposit Agreement filed as Exhibit (a) to a Registration Statement on
         Form F-6 (SEC File No.333-13286, dated 05/24/01) filed by World Gaming
         plc)
2.3      Form Deposit Agreement among World Gaming plc and Continental Stock
         Transfer and Trust Company, as depositary, and others named therein
         dated as of March 2001 (incorporated herein by reference from Exhibit
         (a) to a Registration Statement on Form F-6 (SEC File No.333-13286,
         dated 05/24/01) filed by World Gaming plc)
2.4      World Gaming 2001 Share Option Plan (incorporated herein by reference
         from Exhibit 4.3 to a Registration statement on Form S-8 (SEC File No.
         333-70056, dated 09/24/01) filed by World Gaming plc)
4.1      Agreement and Plan of Reorganization (incorporated herein by reference
         from Exhibit 2.1 to a report on Form 8-K (SEC File No. 000-29290, dated
         06/14/01) filed by Starnet Communications International, Inc.)

                                       88
<PAGE>

4.2      Employment Agreement of Liam Gillen, dated November 27, 2000
         (incorporated herein by reference from Exhibit 10.14 to a quarterly
         report on Form 10-Q (File No. 000-29290, filed 03/19/01) filed by
         Starnet Communications International, Inc.)
4.3      Loan Agreement between World Gaming plc and Sportingbet Plc, dated
         08/01/02 (incorporated herein by reference from Exhibit 4.8 to the
         annual report on Form 20-F filed by World Gaming plc on 8/22/02)
4.4      General Security Agreement with Sportingbet Plc, dated 08/01/02
         (incorporated herein by reference from Exhibit 4.9 to the annual report
         on Form 20-F filed by World Gaming plc on 8/22/02)
4.5      Escrow Agreement with NCC Escrow International Limited, dated 08/01/02
         (incorporated herein by reference from Exhibit 4.10 to the annual
         report on Form 20-F filed by World Gaming plc on 8/22/02)
4.6      Accord and Satisfaction Agreement with Simpson Bay, Ltd., and AIM
         Investments Ltd. (incorporated herein by reference from Exhibit 4.5 to
         the Form 20-F filed by World Gaming plc on 11/1/01)
4.7      Unsecured Convertible Note with Goodison Park Limited, dated April 4,
         2003 (incorporated herein by reference from Exhibit 4.7 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.8      Stock Acquisition Agreement with Goodison Park Limited, dated April 4,
         2003 (incorporated herein by reference from Exhibit 4.8 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.9      Contract for Services with James Grossman, dated June 4, 2003
         (incorporated herein by reference from Exhibit 4.9 to the annual report
         on Form 20-F filed by World Gaming plc on June 30, 2003)
4.10     Contract of Employment with A. Daniel Moran, dated June 4, 2003
         (incorporated herein by reference from Exhibit 4.10 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.11     Employment Agreement with Nicholas Jackson, dated January 29, 2003
         (incorporated herein by reference from Exhibit 4.11 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.12     Employment Agreement with David Craven, dated November 20, 2002
         (incorporated herein by reference from Exhibit 4.12 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.13     Contract of Employment with David Naismith, dated June 4, 2003
         (incorporated herein by reference from Exhibit 4.13 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.14     Offer of Employment with Simon Coulthard, dated August 1, 2002
         (incorporated herein by reference from Exhibit 4.14 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.15     Offer of Employment with David Fleming, dated August 27, 2001
         (incorporated herein by reference from Exhibit 4.15 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.16     Offer of Employment with Mark Thompson, dated November 21, 2002
         (incorporated herein by reference from Exhibit 4.16 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.17     Letter regarding resignation of Mark Thompson dated 6/2/02
         (incorporated herein by reference from Exhibit 4.17 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.18     Engagement letter for Mark Thompson as Financial Consultant dated
         9/11/02 (incorporated herein by reference from Exhibit 4.18 to the
         annual report on Form 20-F filed by World Gaming plc on June 30, 2003)

                                       89
<PAGE>

4.19     Employment Agreement with Michael Aymong, dated 9/6/01 (incorporated
         herein by reference from Exhibit 4.19 to the annual report on Form 20-F
         filed by World Gaming plc on June 30, 2003)
4.20     Employment Offer Letter with Rodney Davis, dated July 5, 2001
         (incorporated herein by reference from Exhibit 4.20 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.21     Letter regarding resignation of Rodney Davis, dated May 16, 2002
         (incorporated herein by reference from Exhibit 4.21 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.22     Settlement Agreement with Starnet, Nicholas Jackson, Sportingbet and
         Goodison Park (incorporated herein by reference from Exhibit 4.22 to
         the annual report on Form 20-F filed by World Gaming plc on June 30,
         2003)
4.23     Compromise Agreement by David Craven dated June 27, 2003 (incorporated
         herein by reference from Exhibit 4.23 to the annual report on Form 20-F
         filed by World Gaming plc on June 30, 2003)
4.25+    Software License Agreement between Real Entertainment Ltd. and Softec
         Systems Caribbean Inc. dated May 10, 1999 (incorporated herein by
         reference from Exhibit 4.25 to the annual report on Form 20-F filed by
         World Gaming plc on June 30, 2003)
4.26     Internet Service Agreement between EFS Caribbean Inc. and Cable and
         Wireless (West Indies) Ltd. (incorporated herein by reference from
         Exhibit 4.26 to the annual report on Form 20-F filed by World Gaming
         plc on June 30, 2003)
4.27     Letter regarding termination of Liam Gillen dated September 6, 2002
         (incorporated herein by reference from Exhibit 4.27 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.28     Guarantee from Nicholas Jackson in favor of Goodison Park Limited
         (incorporated herein by reference from Exhibit 4.28 to the annual
         report on Form 20-F filed by World Gaming plc on June 30, 2003)
4.29     Settlement Agreement between EMC Corporation and EMC Corporation of
         Canada and Starnet Communication Canada Inc., World Gaming PLC., and
         Inphinity Interactive dated December 30, 2003 (incorporated herein by
         reference from Exhibit 4.29 to the annual report on Form 20-F filed by
         World Gaming plc on April 5, 2004)
4.30     Settlement Agreement between Sunrise International Leasing Corporation
         of Canada and World Gaming PLC dated August 15, 2003 (incorporated
         herein by reference from Exhibit 4.30 to the annual report on Form 20-F
         filed by World Gaming plc on April 5, 2004)
4.31+    License and Services Agreement between Oracle Corporation Canada Inc.
         and World Gaming PLC dated May 29, 2003 (incorporated herein by
         reference from Exhibit 4.31 to the annual report on Form 20-F filed by
         World Gaming plc on April 5, 2004)
4.32+    Amendment Agreement between Oracle Corporation Canada Inc. and World
         Gaming PLC in respect of the License and Services Agreement dated
         February 24, 2004 (incorporated herein by reference from Exhibit 4.32
         to the annual report on Form 20-F filed by World Gaming plc on April 5,
         2004)
4.34     Settlement Agreement between Sinsational Intertainment Inc. and Softec
         Systems Caribbean Inc. and World Gaming PLC dated October 31, 2003
         (incorporated herein by reference from Exhibit 4.34 to the annual
         report on Form 20-F filed by World Gaming plc on April 5, 2004)

                                       90
<PAGE>

4.35     Independent Contractor Agreement between Inphinity Interactive Inc. and
         Mark Hetherington (incorporated herein by reference from Exhibit 4.35
         to the annual report on Form 20-F filed by World Gaming plc on April 5,
         2004)
4.36*    Contract of Employment with Jonathan Moss, dated January 1, 2005
4.37*+   Software License Agreement between Internet Empire Entertainment Ltd.
         and Softec Systems Caribbean Inc. dated May 23, 2000
4.38*+   Internet Empire Entertainment Amendment to Software License Agreement
         dated November 22, 2004
4.39*    License and Services Agreement between Oracle Corporation Canada Inc.
         and World Gaming PLC dated May 20, 2004
4.40     Framework Agreement between World Gaming plc and Sportingbet PLC
         (incorporated herein by reference from Exhibit 99.1 to the Report of
         Foreign Private Issuer on Form 6-K filed by World Gaming plc on April
         4, 2005)
4.41     Amendment to Framework Agreement between World Gaming plc and
         Sportingbet PLC(incorporated herein by reference from Exhibit 99.2 to
         the Report of Foreign Private Issuer on Form 6-K filed by World Gaming
         plc on April 4, 2005)
4.42     Limited Partnership Agreement among Internet Opportunity Entertainment
         Limited, Starnet Systems International, Inc., Gwladys Street Limited
         and Bullen Road, LP. (incorporated herein by reference from Exhibit
         99.3 to the Report of Foreign Private Issuer on Form 6-K filed by World
         Gaming plc on April 4, 2005)
21.1*    List of Subsidiaries
23.1*    Consent of HJ & Associates, LLC
31.1*    Sarbanes-Oxley Act Certification by A. Daniel Moran, CEO
31.2*    Sarbanes-Oxley Act Certification by David Naismith, CFO
32.1*    Sarbanes-Oxley Act Certification by A. Daniel Moran, CEO
32.2*    Sarbanes-Oxley Act Certification by David Naismith, CFO
____________________
*Filed herewith.
+Certain terms of this agreement are subject to a request for confidential
treatment with the SEC.

                                       91
<PAGE>




                        WORLD GAMING PLC AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                     DECEMBER 31, 2004 AND DECEMBER 31, 2003




                                       F-1
<PAGE>

                                 C O N T E N T S


Report of Independent Registered Public Accounting Firm......................F-3

Consolidated Balance Sheets..................................................F-5

Consolidated Statements of Operations and Other Comprehensive Income/(Loss)..F-7

Consolidated Statements of Stockholders' Equity..............................F-9

Consolidated Statements of Cash Flows.......................................F-10

Notes to the Consolidated Financial Statements..............................F-12


                                       F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


Board of Directors
World Gaming Plc and Subsidiaries
London, England

We have audited the accompanying consolidated balance sheets of World Gaming plc
and Subsidiaries as of December 31, 2004 and 2003 and the related consolidated
statements of operations and other comprehensive income, stockholders' equity
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of World
Gaming plc and Subsidiaries as of December 31, 2004 and 2003 and the
consolidated results of their operations and other comprehensive income, and
their cash flows for the years then ended, in conformity with United States
generally accepted accounting principles.


/s/ H.J. & Associates LLC
H.J. & Associates LLC
Salt Lake City, Utah, U.S.A.
March 10, 2005

                                       F-3
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


Board of Directors
World Gaming Plc and Subsidiaries
Reading, England

We have audited the accompanying consolidated balance sheet of World Gaming Plc
and Subsidiaries (the Group) as of December 31, 2002 and the related
consolidated statements of operations and other comprehensive income,
stockholders' equity and cash flows for the year ended December 31, 2002. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of World
Gaming Plc and Subsidiaries as of December 31, 2002 and the consolidated results
of their operations and other comprehensive income, and their cash flows for the
year ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Group will continue as a going concern. As discussed in Note 13 to the
2002 consolidated financial statements, the Group has accumulated significant
losses, has negative working capital, a deficit in stockholders equity and
significant litigation, all of which raises significant doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 13 to the 2002 consolidated financial statements. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


/s/ Baker Tilly
Baker Tilly
London, UK
June 30, 2003

                                       F-4
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF US$)

<CAPTION>

                                                                             DECEMBER 31, 2004        DECEMBER 31, 2003
_______________________________________________________________________________________________________________________
<S>                                                                               <C>                     <C>
ASSETS
Current assets
       Cash and cash equivalents                                                  $      7,944            $       2,657
       Reserves and deposits with credit card processors (Note 4)                        2,234                    5,948
       Accounts receivable, net (Note 5)                                                   587                      242
       Accounts receivable from related party (Note 6)                                   3,851                    1,296
       Prepaid expenses and deposits (Note 7)                                              344                      594
       Consideration receivable (Note 8)                                                 7,000                        -
_______________________________________________________________________________________________________________________

            Total Current Assets                                                        21,960                   10,737

CAPITAL ASSETS, Net (Note 9)                                                             1,419                    1,854

_______________________________________________________________________________________________________________________

            TOTAL ASSETS                                                          $     23,379            $      12,591
_______________________________________________________________________________________________________________________


                The accompanying notes are an integral part of these consolidated financial statements.

                                                          F-5
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS OF US$)

<CAPTION>

                                                                             DECEMBER 31, 2004        DECEMBER 31, 2003
_______________________________________________________________________________________________________________________
<S>                                                                               <C>                     <C>
LIABILITIES
Current liabilities
       Accounts payable and accrued liabilities (Note 10)                         $      7,080            $       6,444
       Accrual for legal claims (Note 11)                                                    -                      215
       Funds held on deposit (Note 12)                                                       -                    2,160
       Current portion of loans payable to related party (Note 13)                           -                      803
       Current portion of loans payable (Note 13)                                            -                      645
       Current portion of capital lease obligations (Note 14)                               14                      596
_______________________________________________________________________________________________________________________

            Total Current Liabilities                                                    7,094                   10,863

Long-term liabilities
       Convertible Note payable to related party (Note 15)                                   -                      900
       Provisions (Note 16)                                                                257                        -
_______________________________________________________________________________________________________________________

            TOTAL LIABILITIES                                                            7,351                   11,763
_______________________________________________________________________________________________________________________

STOCKHOLDERS' EQUITY
       Capital stock (Note 17)                                                          23,654                   25,992
       Deficit                                                                          (6,353)                 (23,723)
       Accumulated other comprehensive loss                                             (1,273)                  (1,441)
_______________________________________________________________________________________________________________________

            TOTAL STOCKHOLDERS' EQUITY                                                  16,028                      828
_______________________________________________________________________________________________________________________

            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $     23,379            $      12,591
_______________________________________________________________________________________________________________________


                The accompanying notes are an integral part of these consolidated financial statements.

                                                          F-6
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME/(LOSS)
(IN THOUSANDS OF US$)

<CAPTION>

                                                               YEAR ENDED        YEAR ENDED       YEAR ENDED
                                                             DECEMBER 31,      DECEMBER 31,     DECEMBER 31,
                                                                     2004              2003             2002
____________________________________________________________________________________________________________
<S>                                                            <C>               <C>             <C>
REVENUE
       Royalties and fees                                      $   15,650        $   17,621      $    16,145
       Licensing                                                        -                 -              632
       Gateway Development Fees                                       638                77                -
____________________________________________________________________________________________________________

                                                                   16,288            17,698           16,777

COST OF SALES                                                       1,871             2,150            1,704
____________________________________________________________________________________________________________

                                                                   14,417            15,548           15,073

EXPENSES
       Development, selling, general and administrative             7,143            10,157           12,970
       Provision for bad debts                                        203               344            3,400
       Legal                                                          406               739              798
       Accrued settlement of legal issues                               -                45                -
       Depreciation and amortization                                1,420             1,933            3,168
       Interest and bank charges                                       62               203              147
____________________________________________________________________________________________________________

                                                                    9,234            13,421           20,483
____________________________________________________________________________________________________________

PROFIT/(LOSS) FROM OPERATIONS                                       5,183             2,127           (5,410)

Conversion feature on Convertible Debt (Note 17)                        -              (150)               -
OTHER INCOME (Note 14)                                                  -               981               92
____________________________________________________________________________________________________________

PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEM AND INCOME TAXES            5,183             2,958           (5,318)

EXTRAORDINARY ITEM (Note 3)                                        12,187                 -                -
____________________________________________________________________________________________________________

PROFIT/(LOSS) BEFORE INCOME TAXES                                  17,370             2,958           (5,318)
____________________________________________________________________________________________________________

INCOME TAX EXPENSE (RECOVERY)
       Current (Note 18)                                                -                 -                -
       Deferred (Note 18)                                               -                 -                -
____________________________________________________________________________________________________________

            Total Income Taxes                                          -                 -                -
____________________________________________________________________________________________________________


NET PROFIT/(LOSS)                                              $   17,370        $    2,958      $    (5,318)
____________________________________________________________________________________________________________


           The accompanying notes are an integral part of these consolidated financial statements.

                                                     F-7
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME/(LOSS) (CONTINUED)
(IN THOUSANDS OF US$)

<CAPTION>

                                                               YEAR ENDED        YEAR ENDED       YEAR ENDED
                                                             DECEMBER 31,      DECEMBER 31,     DECEMBER 31,
                                                                     2004              2003             2002
____________________________________________________________________________________________________________
<S>                                                            <C>               <C>             <C>
NET PROFIT/(LOSS) brought forward                              $   17,370        $    2,958      $    (5,318)

OTHER COMPREHENSIVE INCOME/(LOSS)

       Foreign currency translation                                   168              (385)             (85)
____________________________________________________________________________________________________________

            Total Other Comprehensive Loss                            168              (385)             (85)
____________________________________________________________________________________________________________

NET COMPREHENSIVE INCOME/(LOSS)                                $   17,538        $    2,573      $    (5,403)
____________________________________________________________________________________________________________


BASIC PROFIT/(LOSS) PER SHARE                                  $     0.38        $     0.07      $     (0.16)
-      Excluding non-voting                                          0.53              0.07            (0.16)
-      Before extraordinary item                                     0.11              0.07            (0.16)
-      Excluding non-voting and before
       extraordinary item                                            0.16              0.07            (0.16)
____________________________________________________________________________________________________________


FULLY DILUTED PROFIT/(LOSS) PER SHARE                          $     0.34        $     0.05      $     (0.16)
-      Excluding non-voting                                          0.46              0.05            (0.16)
-      Before extraordinary item                                     0.10              0.05            (0.16)
-      Excluding non-voting and before
       extraordinary item                                            0.14              0.05            (0.16)
____________________________________________________________________________________________________________

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING           45,981,407        42,932,416       34,193,181
____________________________________________________________________________________________________________

FULLY DILUTED WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                             50,890,157        56,402,085       34,193,181
____________________________________________________________________________________________________________

Earnings per share excluding shares with no voting or economic rights refers to the 13,506,204 shares held
by Sportingbet PLC and its affiliates that have been set aside as a result of the Transaction with
Sportingbet PLC and may be repurchased by the Company for $1 when the Company has retained earnings to do
so. This transaction had no impact on the earnings per share calculations for 2003 or 2002.


           The accompanying notes are an integral part of these consolidated financial statements.

                                                     F-8
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

<CAPTION>
                                          Common Stock                                        Accumulated
                                     _______________________                                     Other       Retained
                                                               Subscription     Deferred     Comprehensive   Earnings
                                       Shares       Amount      Receivable    Compensation   Income (Loss)   (Deficit)
_______________________________________________________________________________________________________________________
<S>                                  <C>          <C>             <C>            <C>           <C>           <C>
Balance, January 1, 2002             34,193,181   $   24,188      $ -            $ (168)       $   (971)     $ (21,363)

Options issued below market value             -            4        -               168               -              -

Movement in other comprehensive
income(loss) - foreign currency
translation adjustments                       -            -        -                 -             (85)             -

Net loss for the year ended
December 31, 2002                             -            -        -                 -               -         (5,318)
_______________________________________________________________________________________________________________________

BALANCE, DECEMBER 31, 2002           34,193,181       24,192        -                 -          (1,056)       (26,681)
_______________________________________________________________________________________________________________________

Balance, January 1, 2003             34,193,181       24,192        -                 -          (1,056)       (26,681)

Issues of Class Action settlement
shares during 2003                    6,588,226        1,050        -                 -               -              -

New Share issued to Goodison Park
Ltd.                                  5,000,000          600        -                 -               -              -

Beneficial conversion feature
related to convertible debt                   -          150        -                 -               -              -

Movement in other comprehensive
income (loss) - foreign currency
translation adjustments                       -            -        -                 -            (385)             -

Net profit for the year ended
December 31, 2003                             -            -        -                 -               -          2,958
_______________________________________________________________________________________________________________________

BALANCE, DECEMBER 31, 2003           45,781,407       25,992        -                 -          (1,441)       (23,723)
_______________________________________________________________________________________________________________________

Balance, January 1, 2004             45,781,407       25,992        -                 -          (1,441)       (23,723)

Exercise of Stock Options               200,000           62        -                 -               -              -

Waiver of rights on Sportingbet
shares (note 3)                               -       (2,400)       -                 -               -              -

Movement in other comprehensive
income (loss) - foreign currency
translation adjustments                       -            -        -                 -             168              -

Net profit for the year ended
December 31, 2004                             -            -        -                 -               -         17,370
_______________________________________________________________________________________________________________________

BALANCE, DECEMBER 31, 2004           45,981,407   $   23,654      $ -            $    -        $ (1,273)     $  (6,353)
_______________________________________________________________________________________________________________________


                The accompanying notes are an integral part of these consolidated financial statements.

                                                          F-9
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF US$)

<CAPTION>
                                                                YEAR ENDED        YEAR ENDED      YEAR ENDED
                                                              DECEMBER 31,      DECEMBER 31,    DECEMBER 31,
                                                                      2004              2003            2002
____________________________________________________________________________________________________________
<S>                                                            <C>               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Profit/(Loss) for the period                             $   17,370        $    2,958      $    (5,318)
      Adjustments to reconcile net profit/(loss) to net
       cash provided by operating activities:
         Depreciation and amortization                              1,420             1,933            3,168
         Loss on disposal of fixed assets                             206                 -               74
         Deferred compensation                                          -                 -              168
         Gain on Sale                                             (12,187)                -                -
      Change in current assets and liabilities-
         Decrease (increase) in reserves with credit
          card processors                                           5,874            (4,464)           1,048
         Decrease (increase) in accounts receivable                (2,975)            1,272             (151)
         Decrease (increase) in prepaid expenses and
          Deposits                                                    325              (364)             208
         Decrease (increase) in other assets                            -                 -              209
         Increase (decrease) in accounts payable and
         accrued liabilities                                       (1,739)            1,246             (713)
         Increase (decrease)in legal claims accrual                                      65             (448)
         Increase (decrease) in funds held on deposit              (2,160)              440             (133)
         Increase (decrease) in provisions                            257                 -                -
         Exchange movements                                            86                 -                -
____________________________________________________________________________________________________________
          Net Cash Provided by (Used in) Operating
              Activities                                       $    6,477        $    3,086      $    (1,888)
____________________________________________________________________________________________________________

CASH FLOWS FROM INVESTMENT ACTIVITIES
      Purchase of capital assets, net                              (1,065)             (219)          (1,412)
      Proceeds from sale of assets                                  6,300                 -                -
      Payment of costs associated with asset sale                    (968)                -                -
      Proceeds allocated to purchase of capital stock rights       (2,400)                -                -
____________________________________________________________________________________________________________

         Net Cash (Used in) Investing Activities               $    1,867        $     (219)     $    (1,412)
____________________________________________________________________________________________________________


           The accompanying notes are an integral part of these consolidated financial statements.

                                                     F-10
</TABLE>
<PAGE>
<TABLE>

WORLD GAMING PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(IN THOUSANDS OF US$)

<CAPTION>
                                                                YEAR ENDED        YEAR ENDED      YEAR ENDED
                                                              DECEMBER 31,      DECEMBER 31,    DECEMBER 31,
                                                                      2004              2003            2002
____________________________________________________________________________________________________________
<S>                                                            <C>               <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
      Payments received on long-term receivable                $        -        $        -      $         4
      Proceed from issuance of shares                                  62               600                -
      Proceeds from New Loans                                           -             1,002            2,213
      Oracle Note, net                                                  -               595                -
      Repayment of convertible note payable                          (900)                -                -
      Net repayments of Loans payable                              (1,596)           (1,346)               -
      Principal repayment under capital lease
      obligations                                                   (647)            (1,598)            (116)
____________________________________________________________________________________________________________

      Net Cash Provided by (Used in) Financing Activities          (3,081)             (747)           2,101
____________________________________________________________________________________________________________

EFFECT OF EXCHANGE RATES ON CASH                                       24              (385)             (85)
____________________________________________________________________________________________________________

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT
  DURING THE PERIOD                                                 5,287             1,735           (1,284)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                      2,657               922            2,206
____________________________________________________________________________________________________________

CASH AND CASH EQUIVALENTS, END OF PERIOD                       $    7,944        $    2,657      $       922
____________________________________________________________________________________________________________


____________________________________________________________________________________________________________

Supplementary cash flow information:
Other non-cash financing and investing transactions:
      Leased assets acquired                                   $        -        $    1,002      $       452
      Beneficial conversion feature on Note Payable            $        -        $      150      $         -
      Issue of Shares in settlement of class action suit       $        -        $    1,050      $         -
      Settlement of Capital Lease obligations                  $        -        $    1,105      $         -
      Convertible loan note forgiven                           $      900        $        -      $         -

Cash paid for:
     Interest paid                                             $      103        $      203      $       147


           The accompanying notes are an integral part of these consolidated financial statements.

                                                     F-11
</TABLE>
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

On May 25, 2001, pursuant to an Agreement and Plan of Reorganization executed on
May 17, 2001, Starnet Communications International Inc. ("Starnet") became a
direct, wholly-owned subsidiary of World Gaming Plc ("World Gaming"), a company
organized in England and Wales for the purpose of facilitating a new holding
company structure. As part of the reorganization, World Gaming established
December 31 as its year end.

Starnet Systems International Inc., a subsidiary of the Company incorporated and
operating out of Antigua, licenses its gaming software to third parties for an
initial licensing fee and monthly royalties. Inphinity Interactive Inc., a
wholly-owned subsidiary of the Company develops gaming software and web pages.
The Company's Internet casino, which targets only customers outside North
America, is operated by its subsidiary, World Gaming Services, Inc., also
incorporated and operating out of Antigua.

Effective October 1, 2004 the Company transferred its software into a
partnership arrangement with its then major licensee. As a result of this
arrangement the Company received certain consideration, no longer pays
development expenses and recovers the majority of its hosting expenses. In
addition, the Company no longer receives royalties from this licensee. Further
details of this transaction are contained in Note 3 to these consolidated
Financial Statements.

NOTE 2 - ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. A
summary of significant accounting policies is set out below:

a. Basis of Presentation

The consolidated financial statements include the accounts of World Gaming and
all its wholly-owned subsidiaries (collectively the "Company"). All significant
inter-company balances and transactions have been eliminated. Unless otherwise
stated, all amounts are in thousands of US Dollars. The Company has 11
subsidiaries which have been listed below:

                                      F-12
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 2 - ACCOUNTING POLICIES (CONTINUED)

a. Basis of Presentation (continued)
<TABLE>
<CAPTION>
                                                                Type of     Percentage             Country of
   Subsidiary                    Principal Activity         Shares Held          Owned          Incorporation
   __________________________________________________________________________________________________________
<S>                              <C>                           <C>                <C>         <C>
   WG International Ltd          Holding Company               Ordinary           100%        England & Wales
   LVA Holdings Inc. (formerly   Holding Company               Ordinary           100%                 U.S.A.
   Starnet Communications
   International Inc) (1)
   Interactive Systems Inc.      Licensing of Internet         Ordinary           100%                Antigua
                                 Gaming Systems
   WG Interactive Inc.           Systems Administration        Ordinary           100%                 Canada
   World Gaming Europe Ltd (1)   Dormant                       Ordinary           100%        England & Wales
   SSII Ltd (formerly Starnet    Licensing of Internet         Ordinary           100%                Antigua
   Systems International Inc)    Gaming Systems
   (2)
   EFS Caribbean Inc (2)         Dormant                       Ordinary           100%                Antigua
   EFS St Kitts Inc (2)          Dormant                       Ordinary           100%                Antigua
   Inphinity Interactive Inc     Dormant                       Ordinary           100%                 Canada
   (2)
   World Gaming Services Inc     Dormant                       Ordinary           100%                Antigua
   (2)
   ESCE Inc. (formerly Starnet   Dormant                       Ordinary           100%                 Canada
   Communications
   Canada Inc) (2)
</TABLE>
   All of the above companies operate within their country of incorporation and
   their financial condition and operating results have been included in these
   consolidated financial statements.
   (1) Shares are owned by World Gaming International Ltd
   (2) Shares are owned by Starnet Communications International Inc.

The Company holds a 50 percent interest in Bullen Road LP, a limited partnership
between Starnet Systems International Inc ("SSII")and IOE Limited ("IOE"), a
wholly-owned subsidiary of Sportingbet PLC. Bullen Road LP is an exempt limited
partnership formed in the Cayman Islands as a result of the transaction with
Sportingbet described at Note 3 and owns the gaming software operated by the
Company. The General Partner is Gwladys Street Limited, a company incorporated
in the Cayman Islands and is jointly owned by SSII and IOE. The Company is not
required to make any capital contributions to the partnership beyond the initial
transfer of the proprietary gaming software, which was done in the year. The net
book value of the assets transferred was $nil. The partnership had no income or
expenditure in the period ended December 31, 2004. Accounts have not yet been
prepared for the partnership. Consistent with the accounting treatment of the
Intellectual Property prior to its transfer to Bullen Road LLP, the Company's
share of the assets and liabilities of the partnership at December 31, 2004 has
not been included in the consolidated financial statements. The cost and
carrying value of the investment at December 31, 2004 was $nil in these
consolidated financial statements.

                                      F-13
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 2 - ACCOUNTING POLICIES (CONTINUED)

b. Revenue Recognition

Initial license fees of gaming software are recognized as revenue upon the
completion of the license sale transactions. Before the revenues are recognized,
deposits from licensees are recorded as deferred revenue. Gaming and monthly
licensing royalty revenues and other fees are recognized over the period
services are provided. Revenues from the resale of Antigua government issued
gaming licenses are recognized when collection is assured. Gaming revenues,
which represent less than 1% of total revenues in 2003, were presented net of
customer winnings.

c. Capital Assets

Property and equipment are recorded at cost and are depreciated or amortized
using the straight-line method over the estimated useful life of the assets at
the following rates:


         Furniture and fixtures               3 years
         Computer hardware and equipment      3 years
         Computer software                    3 years
         Automobiles                          4 years

Leasehold improvements are amortized over the term of the related lease using
the straight-line method.

d. Cash

For the purposes of the statement of cash flows, cash consist of cash on hand,
balances with banks, and investments in money market instruments

e. Foreign Currency Translation

All transactions in currencies other than the United States dollar during the
year are translated at the exchange rates on the transaction dates. Monetary
assets and liabilities denominated in a foreign currency are translated at the
prevailing year-end rates of exchange. Exchange gains or losses are included in
the consolidated statements of operations and other comprehensive income (loss).
The financial statements of all subsidiaries expressed in currencies other than
the United States dollar are translated into US dollars. All assets and
liabilities are translated at the exchange rate on the balance sheet date and
all revenues and expenditures are translated at the average rate for the year.
Translation adjustments are reflected as a separate component of stockholders'
equity.

In accordance with SFAS No. 95, "Statement of Cash Flows," the cash flows of the
Company's foreign subsidiaries are translated using the weighted average
exchange rates during the respective period. As a result, amounts in the
statement of cash flows related to changes in asset and liabilities will not
necessarily agree with the changes in the corresponding balances on the balance
sheet which was translated at the exchange rate at the end of the period. The
effect of exchange rate changes on foreign cash and cash equivalents is reported
as a separate element of the statement of cash flows, if significant.

                                      F-14
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 2 - ACCOUNTING POLICIES (CONTINUED)

f. Leases

Leases which transfer substantially all of the benefits and risks of ownership
are recorded as the acquisition of assets and incurrence of obligations. Under
this method of accounting, both assets and obligations, including interest
thereon, are amortized over the life of the lease.

g. Net Profit/(Loss) Per Common Share

The Company has adopted Statement of Financial Accounting Standards No. 128
("FAS 128") regarding the determination and disclosure of profit/(loss) per
share for the purpose of preparing its consolidated financial statements. The
calculations of net profit/(loss) per common share are based upon the weighted
average number of common shares of the Company outstanding during each year. The
adoption of FAS 128 has no impact on previously reported information. Fully
diluted profit/(loss) per share has been determined with the inclusion of common
stock equivalents.

The calculation of the basic profit/(loss) per ordinary share is based on a
weighted average of 45,981,407 (2003: 42,932,416) (2002: 34,193,181) ordinary
shares in issue and a profit on ordinary activities after taxation of US$17,370
(2003: $2,958) (2002: ($5,318)).

The calculation of the diluted profit/(loss) per ordinary share includes the
same earnings figure as used for the basic earnings and a weighted average
number of ordinary shares of 50,890,157 (2003: 56,402,085) (2002: 34,193,181).
The number of shares includes ordinary shares issued and potential ordinary
shares from options granted and rights to convert loans into ordinary shares.
The potential ordinary shares include only "in the money" option shares which
are those shares where the grant price was below the average share price of the
company's issued ordinary shares in the year.

Profit/(loss) per ordinary share before exceptional items is calculated on
profit of $5,183 (2003: $2,958) (2002: ($5,318).The weighted average number of
ordinary shares used in the calculations are unchanged from those used in the
other basic and diluted earnings figures.

Earnings per share excluding shares with no voting or economic rights refers to
the 13,506,204 shares held by Sportingbet PLC and its affiliates that have been
set aside as a result of the Transaction with Sportingbet PLC and may be
repurchased by the Company for $1 when the Company has retained earnings to do
so. This transaction had no impact on the earnings per share calculations for
2003 and 2002.

h. Stock Options

As permitted by FASB Statement 123 "Accounting for Stock Based Compensation"
(SFAS No. 123) as amended by FASB Statement 148 (SFAS No. 148), the Company
elected to measure and record compensation cost relative to employee stock
option costs in accordance with Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees," and related interpretations and make
proforma disclosures of net income and earnings per share as if the fair value
method of valuing stock options had been applied. Under APB Opinion 25,
compensation cost is recognized for stock options granted to employees when the
option price is less than the market price of the underlying common stock on the
date of grant.

                                      F-15
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 2 - ACCOUNTING POLICIES (CONTINUED)

i. Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Company's management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and related notes
to the consolidated financial statements. Actual results may differ from those
estimates.

j. Recent and Newly Issued Accounting Pronouncements

On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based Payment, which
is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation. This
new standard eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and generally requires such
transactions to be accounted for using a fair-value-based method and the
resulting cost recognized in our financial statements. This new standard is
effective for awards that are granted, modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested options granted prior to the effective date. We will
adopt this new standard effective for the fourth fiscal quarter of 2005, and
have not yet determined what impact this standard will have on our financial
position or results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment
of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . ." This Statement requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, this Statement requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. This statement is effective
for inventory costs incurred during fiscal years beginning after June 15, 2005.
Management does not believe the adoption of this Statement will have any
immediate material impact on the Company.

In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate
Time-sharing Transactions, which amends FASB statement No. 66, Accounting for
Sales of Real Estate, to reference the financial accounting and reporting
guidance for real estate time-sharing transactions that is provided in AICPA
Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing
Transactions. This statement also amends FASB Statement No. 67, Accounting for
Costs and Initial Rental Operations of Real Estate Projects, to state that the
guidance for (a) incidental operations and (b) costs incurred to sell real
estate projects does not apply to real estate time-sharing transactions. The
accounting for those operations and costs is subject to the guidance in SOP
04-2. This Statement is effective for financial statements for fiscal years
beginning after June 15, 2005. Management believes the adoption of this
Statement will have no impact on the financial statements of the Company.

                                      F-16
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 2 - ACCOUNTING POLICIES (CONTINUED)

j. Recent and Newly Issued Accounting Pronouncements (continued)

In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary Assets.
This Statement addresses the measurement of exchanges of nonmonetary assets. The
guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that Opinion,
however, included certain exceptions to that principle. This Statement amends
Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetrary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. This Statement is
effective for financial statements for fiscal years beginning after June 15,
2005. Earlier application is permitted for nonmonetary asset exchanges incurred
during fiscal years beginning after the date of this statement is issued.
Management believes the adoption of this Statement will have no impact on the
financial statements of the Company.

The implementation of the provisions of these pronouncements are not expected to
have a significant effect on the Company's consolidated financial statement
presentation.

k. Software Development Costs

The Company applies the provisions of SOP 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use".

l. Long-lived assets

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,
long-lived assets, including goodwill associated with other long-lived assets,
are evaluated for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Any
changes in estimated useful life are recorded prospectively and any impairment
adjustments are recorded as expense in the period the impairment occurs. The
amount of any impairment considered necessary would be determined by comparing
the book value of the net assets in the applicable line of business to fair
value using methods such as the present-value of estimated future cash flows,
sale value or other valuation methodologies available at the time, depending on
the stage of development of the line of business and the Company's intentions at
the time an impairment adjustment was considered necessary.

                                      F-17
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 3 - EXTRAORDINARY ITEM

Joint Venture Arrangements, effective October 1, 2004, were entered into on
October 12, 2004 between the Company and Sportingbet. The principle terms of the
arrangements are as follows:

      o  The ownership of the Intellectual Property rights of the Gaming
         Software was transferred into a new exempt limited partnership, Bullen
         Road LP, based in the Cayman Islands, which was established under the
         equal joint ownership of SSII Limited and Sportingbet;
      o  In consideration of this transfer, Sportingbet agreed to pay a total of
         $10 million in cash to the Company ($3 million was paid on each of
         October 12, 2004 and March 1, 2005 and the balance of $4 million is
         payable on or before November 1, 2005). In addition, the economic value
         of Sportingbet's then 29.6 per cent. shareholding in the Company was
         eliminated by the cancellation of all rights of any value attached to
         the Ordinary Shares then held by Sportingbet, and a convertible loan
         note representing indebtedness of $900,000 owing from the Company to
         Sportingbet was cancelled;
      o  Each of the Company and Sportingbet has the right to appoint two
         directors to the four person board of Bullen Road LP which controls the
         development objectives of Alea Software Ltd, a wholly owned subsidiary
         of Sportingbet and the developer of the Gaming Software under the Joint
         Venture Arrangements;
      o  During the period of the Joint Venture Arrangements, Sportingbet is
         responsible for all of Alea's costs associated with the development and
         maintenance of the Gaming Software (with a minimum spend of $4.5
         million per year in the first 3 years and a minimum of $2.5 million in
         the fourth year);
      o  The Company retains the right to determine 30 per cent of the
         development time on the Gaming Software;
      o  The Company has a worldwide royalty free license allowing it to
         continue to use and sublicense the Gaming Software. In the event that
         World Gaming becomes an operator it would pay a 5 per cent royalty only
         on those revenues to Sportingbet;
      o  Sportingbet has a worldwide royalty free license to use the Gaming
         Software. Royalty payments of five per cent. are due from Sportingbet
         in the event that they license the Gaming Software to any new
         licensees;
      o  Sportingbet pays its proportion of the hosting costs on the Company's
         systems and IT services at cost 10 per cent;
      o  The Joint Venture Arrangements may be terminated by the Company on
         three months notice. Except in the event of breach by World Gaming,
         Sportingbet may not terminate the Joint Venture Arrangements for three
         years. Thereafter, Sportingbet may terminate on 12 months notice to the
         Company; and
      o  On termination of the Joint Venture Arrangements, (a) Sportingbet must
         pay $3 million to the Company (which would be retrospectively reduced
         by the amount of consideration if the Company sells its rights to the
         Gaming Software within 2 years); and (b) each of the Company and
         Sportingbet will be granted a perpetual, non-exclusive royalty free
         license to use, sub-licence and assign of all of the then intellectual
         property rights underlying the improved Gaming Software, and neither
         party will have the rights to any further improvements or developments
         made by the other party.

The gain arising from the transaction has been calculated after charging
associated costs as follows:

                  Consideration                     $13,300
                  Legal & Professional costs         (1,043)
                  Loss on disposal of fixed assets      (70)
                                                    -------
                                                    $12,187
                                                    =======

                                      F-18
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 3 - EXTRAORDINARY ITEM (CONTINUED)

The additional $3 million payable to the Company upon termination of the
agreements by Sportingbet has not been included in these financial statements.

During the year ended December 31, 2003, the group was able to negotiate certain
settlements with its lease creditors which enabled the group to record gains of
$834,000 in interest and capital amounts that were waived by the lease creditors
for full settlement.

NOTE 4 - RESERVES WITH CREDIT CARD PROCESSORS

Reserves held with transaction processors of $2,234 (2003: $5,948) represents
deposits and rolling reserves held at merchant banks awaiting clearance and
transfer to the Company's bank accounts. These amounts are receivable on behalf
of the Company's licensees. No amount is payable to the licensee in respect of
these balances until the amount has been collected from the respective
processor. This division of the Company was closed in February of 2004. There
are no further balances accruing in respect of this activity.

NOTE 5 - ACCOUNTS RECEIVABLE

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Amounts due from licensees                $ 817                 $  386
    Other                                        16                    102
    Less: allowance for bad debts              (246)                  (246)
                                        -----------------      -----------------
                                              $ 587                 $  242
                                        -----------------      -----------------

NOTE 6 - ACCOUNTS RECEIVABLE RELATED PARTY

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Sportingbet                              $   354               $ 1,296
    Licensee settlement - Sportingbet          3,497                     -
                                        -----------------      -----------------
                                             $ 3,851               $ 1,296
                                        -----------------      -----------------

Trade debtors from a related party represent trade balances due at 31 December
2004 from Sportingbet Plc. These amounts are usually collected within 30 days.
The balance at December 31, 2004 was collected in January 2005.

NOTE 7 - PREPAID EXPENSES AND DEPOSITS

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Rental security deposits                  $  40                 $   57
    Insurances                                  143                    188
    Oracle technical support                      -                     79
    Other prepayments and deferred costs        161                    270
                                        -----------------      -----------------
                                              $ 344                 $  594
                                        -----------------      -----------------

                                      F-19
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 8 - CONSIDERATION RECEIVABLE

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Sportingbet                              $ 7,000                $    -
                                        -----------------      -----------------
                                             $ 7,000                $    -
                                        -----------------      -----------------

Consideration receivable relates to amounts due in respect of the transaction
with Sportingbet described at Note 3. The amounts are receivable as $3,000 on
March 1, 2005 and $4,000 on or before November 1, 2005.

NOTE 9 - CAPITAL ASSETS

Capital assets are recorded at cost less accumulated depreciation and consist of
the following:

DECEMBER 31, 2004                                      ACCUMULATED      NET BOOK
                                            COST       DEPRECIATION       VALUE
                                          --------     ------------     --------

Computer hardware and equipment           $  3,511       $  2,942       $   569

Automobiles                                     75             67             8
Leasehold improvements                          47              6            41
Furniture and fixtures                          62             62             -
Computer software                            1,970          1,169           801

                                          --------     ------------     --------
                                          $  5,665       $  4,246       $ 1,419
                                          --------     ------------     --------


DECEMBER 31, 2003                                      ACCUMULATED      NET BOOK
                                            COST       DEPRECIATION       VALUE
                                          --------     ------------     --------
Computer hardware and equipment           $  7,035       $  6,415       $   620
Computer hardware under capital leases       1,627          1,627             -
Automobiles under capital leases               180            111            69
Leasehold improvements                         469            353           116
Furniture and fixtures                         394            342            52
Computer software                            3,660          2,663           997
Domain name                                     45             45             -

                                          --------     ------------     --------
                                          $ 13,410       $ 11,556       $ 1,854
                                          --------     ------------     --------

During the years ended December 31, 2004, 2003 and 2002 the Company recorded
depreciation expense of $1,420, $1,933 and 3,168 respectively.

                                      F-20
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 10 - ACCOUNTS PAYABLES AND ACCRUED LIABILITIES

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Accounts payable                         $   523               $   762
    Amounts due to licensees                   5,684                 4,567
    Accrued liabilities                          873                 1,115
                                        -----------------      -----------------
                                             $ 7,080               $ 6,444
                                        -----------------      -----------------

Amounts due to licensees primarily represent funds that are due to licensees
from transaction processors, these amounts will be paid as they are collected on
the licensees' behalf.

NOTE 11 - ACCRUAL FOR LEGAL CLAIMS

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Accrual for legal claims                 $     -               $   215
                                        -----------------      -----------------
                                             $     -               $   215
                                        -----------------      -----------------

Legal claim accruals for the year ending December 31, 2003 represent a final
payment of three equal payments in respect of a settlement with a prospective
licensee and for other legal matters pending. These amounts were paid in full
during the year ended December 31, 2004.

NOTE 12 - FUNDS HELD ON DEPOSIT

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Licensee customer deposits               $     -               $ 2,160
                                        -----------------      -----------------
                                             $     -               $ 2,160
                                        -----------------      -----------------

Funds held on deposit in 2003 represented balances of our licensees' customer
accounts, these balances were transferred to a third party upon closure of the
transaction processing division of the Company in February 2004.

                                      F-21
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 13 - LOANS PAYABLE

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Loans - current                          $     -               $   803
    Oracle loan note                               -                   645
                                        -----------------      -----------------
                                             $     -               $ 1,448
                                        -----------------      -----------------

At December 31, 2003, the Company had a loan from Sportingbet, a related company
with a balance payable of $769 and imputed interest of $18 which is included in
the loan balances above. This loan balance from Sportingbet is secured by a
floating charge on some intellectual property of the company and on certain
identified equipment. A further $16 was payable to a licensee.

On May 30, 2003 the Company entered into a License and Services Agreement with
Oracle Corporation Canada Inc for the provision of limited rights to use certain
Oracle software products together with product support and software updates. The
total commitment in respect of this agreement was $1,002 payable in accordance
with a monthly payment schedule over twenty months ending December 2004. All
amounts due under this agreement were paid in full in 2004.

NOTE 14 - CAPITAL LEASE OBLIGATIONS

The future payments for the 12 months ended December 31, 2004 are:

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
            Total minimum lease payments          15                   599
    Less amounts representing
    interest at rates varying
    from 6.0% to18.0%                             (1)                   (3)
                                        -----------------      -----------------
    Present value of minimum lease
     payments                                     14                   596
    Less: Current portion of capital
     lease obligations                           (14)                 (596)
                                        -----------------      -----------------
    Long-term portion of capital lease
     obligations                             $     -               $     -
                                        -----------------      -----------------

At December 31, 2004, the Company had entered into capital leases for equipment
and automobiles.

During the year ended December 31, 2003, the Company entered into settlement
agreements with all its disputed capital leases and payments are being made in
accordance with the settlement agreements. As a result of these settlements, an
amount of $834 was recognised and included in other income in the profit and
loss account for the year. All scheduled repayments due had been paid at
December 31, 2004 in accordance with the settlement agreements.

                                      F-22
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 15 - CONVERTIBLE NOTE PAYABLE - RELATED PARTY

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Convertible loan note                    $     -               $   900
                                        -----------------      -----------------
                                             $     -               $   900
                                        -----------------      -----------------

On April 4, 2003 Goodison Park Ltd., a wholly owned subsidiary of Sportingbet
Plc, a related party, invested in World Gaming Plc through a $900,000 loan note,
convertible into 7,500,000 shares of the Company's common stock at $0.12 per
share at Sportingbet Plc's discretion after a two year term. Under the terms of
the Sportingbet Agreement (See note 3) the loan note was effectively settled in
full and any conversion rights were cancelled.

The company recorded imputed interest of $11 in 2003 related to this loan which
is included in the current loans payables balances in note 10 above.

NOTE 16 - PROVISIONS

                                        December 31, 2004      December 31, 2003
                                        -----------------      -----------------
    Deferred compensation                    $   257               $     -
                                        -----------------      -----------------
                                             $   257               $     -
                                        -----------------      -----------------

The balance at 31 December 2004 represents a provision for deferred bonuses
payable to certain directors under the terms of their service agreements. The
bonuses are payable only if these directors are still employed by the company on
their third anniversary of service.

                                      F-23
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 17 - CAPITAL STOCK

Authorized 500,000,000 ordinary shares, par value STG 0.002.

(a) The Company had the following shares issued and outstanding:
<TABLE>
<CAPTION>
                                             Year ended December 31,     Year ended December 31,
                                                      2004                        2003
                                             -----------------------     -----------------------
<S>                                          <C>            <C>          <C>            <C>
Outstanding Class A shares, beginning of
year                                         45,781,407     $ 25,992     34,193,181     $ 24,192

Waiver of rights on Sportingbet shares
(note 3)                                              -       (2,400)             -            -

Shares issued pursuant to settlement of
Class Action suit                                     -            -      6,588,226        1,050

Shares issued to Goodison Park Ltd.                   -            -      5,000,000          600

Beneficial conversion feature related to
convertible debt                                      -            -              -          150

Exercise of Options                             300,000           62              -            -
                                             ----------     --------     ----------     --------

Outstanding Class A shares, end of year      46,081,407     $ 23,654     45,781,407     $ 25,992
                                             ==========     ========     ==========     ========
</TABLE>

(b) Stock Options

On March 12, 1998, the Board of Directors approved a stock option plan, which
authorized the issuance of 3,000,000 options to employees of the Company and its
subsidiaries at an exercise price of $0.74. The options expire on January 1,
2008. On December 31, 1998, the Board of Directors authorized the issuance of up
to 4,000,000 additional options at an exercise price to be determined based on
the trading price of the Company's shares on the grant date. On December 23,
1999, the Board of Directors authorized the issuance of up to 5,000,000
additional options at an exercise price to be determined based on the trading
price of the Company's shares on the grant date.

On August 5, 2003 the Board of Directors authorized the issuance of up to
1,500,000 additional options to employees at an exercise price of $0.15, being
the closing market price on the grant date, of which 1,475,000 were issued.
Options issued subsequent to April 11, 2003 to employees generally vest at the
conclusion of two years of service, while options issued to directors vest
partially within 1 year with the remainder vesting at the conclusion of a two
year service period. Options expire ten years after the date granted.

                                      F-24
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 17 - CAPITAL STOCK (CONTINUED)

A summary of the Company's stock option activity and related information
follows:

                            Year ended December 31,      Year ended December 31,
                                      2004                         2003
                            -----------------------      -----------------------
Beginning of period         10,818,724         .78        6,942,219     $  1.49
Granted                      2,550,000        0.37        5,475,000        0.15
Exercised                     (300,000)      (0.20)               -           -
Forfeited and adjusted      (2,133,836)      (1.12)      (1,598,495)      (1.65)
                            ----------      -------      ----------     -------

End of period               10,934,888      $ 0.63       10,818,724     $  0.78
                            ----------      -------      ----------     -------

At December 31, 2004, options outstanding were as follows:
<TABLE>
<CAPTION>
                           Options Outstanding                   Options Exercisable
                  ------------------------------------   -----------------------------------
                                 Weighted                             Weighted
                                  Average     Weighted                Average       Weighted
                                 Remaining    Average                 Remaining      Average
Range of          Number of     Contractual   Exercise   Number of   Contractual    Exercise
Exercise Prices    Options     Life (Years)    Price      Options    Life (Years)     Price
---------------   ----------   ------------   --------   ---------   ------------   --------
<C>               <C>               <C>        <C>       <C>             <C>          <C>
$0.14 - $0.50      8,545,000        5.3         0.24     6,340,000       4.9           0.25
$0.51 - $1.00        611,667        3.3         0.74       456,667       2.2           0.77
$1.10 - $3.00      1,169,054        3.0         1.86     1,169,054       3.0           1.86
$3.00 - $8.50        609,167        3.8         3.60       609,167       3.8           3.60

---------------   ----------   ------------   --------   ---------   ------------   --------

$0.14 - $8.50     10,934,888        4.8        $0.63     8,574,888       4.1          $0.74
---------------   ----------   ------------   --------   ---------   ------------   --------
</TABLE>

On March 18, 2005 a former Director of the Company relinquished all rights to
purchase 2,200,000 ordinary shares in the Company that had been fully vested.

(c) Accounting for Stock Based Compensation

The Company has adopted the disclosure-only provisions of FAS 123 as amended by
SFAS No. 148, Accounting for "Stock-Based Compensation". Accordingly, no
compensation cost has been recognized for the stock option plan. Had
compensation cost for the Company's stock option plan been determined based on
the fair value at the grant date for awards in 2004 and 2003 consistent with the
provisions of SFAS No. 123, the Company's loss and loss per share would have
been increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                         Year ended December        Year ended December
                                                               31, 2004                  31, 2003
                                                         --------------------       -------------------
<S>                                                            <C>                       <C>
Net profit/(loss) as reported                                  $ 17,370                  $ 2,958
Pro forma net profit/(loss) under FAS 148                      $ 16,628                  $ 2,754
Net profit/(loss) per share - basic, as reported               $   0.53                  $  0.07
Pro forma net profit/(loss) per share excluding
non-voting
Basic                                                          $   0.51                  $  0.06
Fully Diluted                                                  $   0.44                  $  0.05
</TABLE>

                                      F-25
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 17 - CAPITAL STOCK (CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of options
granted is amortized to expense over a 2 year period. The fair value of option
grants is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions.

                            December 31, 2004          December 31, 2003
                            -----------------          -----------------
Dividend yield                         0%                         0%
Expected volatility                  173%                       146%
Risk-free interest rate            2.530%                     2.377%
Expected lives                    2 years                    3 years

NOTE 18 - INCOME TAXES

The Group's operations located in Canada are subject to tax to the extent that
income is generated in that country. No tax is expected to be payable for any
period up to December 31, 2004 because losses arose on the development
activities to the extent that costs for such activities exceeded the recovery
received from charging other relevant Group Companies for the services provided.
The holding Company's operations in the United Kingdom has losses relating to
the costs it incurs consisting primarily of general administrative costs. The US
subsidiary has no business activities other than acting as a holding company for
a number of group subsidiaries. It had tax losses carried forward at December
31, 2004 subject to confirmation by the US Internal Revenue Service, There were
no significant Group expenses disallowable for tax purposes or depreciation
charges materially different from available tax allowances on fixed assets.
There are substantial tax losses available within the Group. Utilization of
these losses is contingent upon agreement with the relevant tax authorities. A
deferred tax asset for the benefit of future tax losses has not been included in
these financial statements because of the uncertainty of the amount of losses
available and when they will be utilized.

The Company's operations located in Antigua, operate under the offshore gaming
laws of Antigua and Barbuda and therefore enjoy a 50 year tax holiday, apart
from an annual gaming licensing fee of US $85,000 (2003: $75,000).

                                      F-26
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 19 - COMMITMENTS AND CONTINGENCIES

COMMITMENTS

At December 31, 2004, the Company has entered into commitments for leases for
premises. The future committed payments as at December 31, 2004 are:

                  2005         $ 101
                  2006           106
                  2007           112
                               -----
                               $ 319
                               -----

At December 31, 2004, the Company had employment contracts with its three
principal officers. The salary and bonus compensation resulting from these
contracts are as follows:

                                                                POTENTIAL BONUS
                                                                (AS A PERCENTAGE
NAME AND PRINCIPAL POSITION  TERM OF THE CONTRACT  BASE SALARY  OF BASE SALARY)
---------------------------  --------------------  -----------  ----------------
      A. Daniel Moran,             ongoing           GBP 132       Up to 50%
      Director & CEO

 David Naismith, Director          ongoing           GBP 108       Up to 50%
           & CFO

 Mark Thompson, Operations        terminated          $130         Up to 30%
         Director               March 31, 2005

James H. Grossman was appointed as a director and Chairman of the Board on April
11, 2003. His annual compensation for such service and up to five hours a month
of legal services is GBP 55, plus up to US $2 per month for certain additional
legal services.

On April 11, 2003 the company entered into an employment agreement with Mr.
Daniel Moran as a Director of the Board and Chief Executive Officer. The
agreement provides for an annual salary of GBP 132, an annual housing allowance
of $25, in addition to other normal executive employment benefits.

On August 1, 2003 the company entered into an employment agreement with Mr.
David Naismith as a Director of the Board and Chief Financial Officer. The
agreement provides for an annual salary of GBP 108, an annual housing allowance
of $25, in addition to other normal executive employment benefits.

Mr. Mark Thompson was appointed to the position of Operations Director and
Managing Director of Starnet Systems on December 1, 2002 on a salary of $130
with an annual housing allowance of $30 and certain other additional benefits.
Mark Thompson's employment with the Company was terminated by resignation
effective March 31, 2005.

                                      F-27
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 19 - COMMITMENTS AND CONTINGENCIES (continued)

CONTINGENCIES

On August 6, 1998 Mitchell White commenced an action against Starnet
Communications Canada Inc. ("Starnet Canada") for breach of his employment
agreement and wrongful termination of him as a Director. Mr. White alleges that
as a result of his wrongful termination as an employee and Director, he was not
provided with a severance package in lieu of reasonable notice and he did not
receive stock options that he would have otherwise received. Mr. White claims
that his losses are in excess of $1.5m. The trial of this action is scheduled to
begin in Spring, 2005. In February 2004, Starnet Canada commenced a third party
claim against a former Director of Starnet International, Mr. Jack Carley. It is
alleged that Mr. Carley was responsible for the termination of Mr. White in
1998. Mr. Carley is also Mr. White's father-in-law. Management intends to
vigorously contest the claim by Mr. White and, in doing so, pursue its third
party claim against Mr. Carley. The likelihood of loss, if any, and the costs
associated therewith are not determinable at this time.

In March 2000, Starnet Communications Canada Inc.(" Starnet Canada"), sold
substantially all of the assets and undertakings comprising its adult
entertainment division to 596773 B.C. Ltd. ("Chisel Media"). The sale price for
the assets was $2.3 million, of which $460,000 was paid on March 31, 2000 into
an attorney trust account, but subsequently was released to Starnet Canada on
April 30, 2000. The balance was to be paid in monthly instalments through July
1, 2003. The deferred portion of the purchase price is secured by a general
security agreement in favour of Starnet Canada, and a pledge of the shares of
Chisel Media Inc. The monthly instalments referred to above which were to begin
July 1, 2000 have not been paid by Chisel Media Inc. and at December 31, 2001,
we reserved for the potential of not being able to collect the principal amount
from the buyer. Starnet Canada has commenced arbitration proceedings against
Chisel Media and in March 2004 we received confirmation that the case would go
before an arbitrator. From June 19, 2002 until July 17, 2002, James MacKay, the
shareholder of Chisel Media, served as interim CEO and a Director of the
Company. Any settlement will be scrutinized by the Board as a related party
transaction, and will be subject to the Board's approval as such.

On March 10, 2004, Robert Hiscox commenced action against the Company in the
United States District Court, Southern District of New York. Hiscox alleges that
the Company breached two consultancy agreements (for 2001 and 2002) by failing
to make certain payments due under the agreement. The amount of the claim is
$521,103 and 25,002 shares in the Company (plus interests and costs).

The Company has filed a statement of defense alleging, inter alia, that Hiscox
did not provide the services he agreed to provide to the Company. The matter is
still in the discovery stage.

NOTE 20 - MAJOR CUSTOMERS

Pertinent details of the gross sales to major customers during the year ended
December 31, 2004 are as follows:

                                                     GROSS        PERCENT GROSS
                     CUSTOMERS                       SALES           SALES
---------------------------------------------       --------      -------------

Customer A/ Sportingbet Plc, a related party*       $  9,651            59%
Customer B                                             3,264            20%
Customer C                                             1,868            11%
                                                    --------       ----------
                                                    $ 14,783            90%
                                                    --------       ----------
*See Note 3.

                                      F-28
<PAGE>
                        WORLD GAMING PLC AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                     December 31, 2004 and December 31, 2003

NOTE 21 - SUBSEQUENT EVENTS

On March 1, 2005 the Company announced that it had appointed Daniel Stewart &
Co. as its nominated advisors in seeking a listing on the Alternative Investment
Market ("AIM") of The London Stock Exchange. It further advised that it may seek
to raise funds through a private placement at the time of listing on AIM.

Pursuant to the transaction with Sportingbet described at Note 3, consideration
of $3,000,000 was received on March 1, 2005. The remaining initial consideration
of $4,000,000 is receivable on November 1, 2005.

On March 3, 2005, Mr Jonathon Moss and Mr Michael Cumming were appointed to the
Board of Directors of World Gaming PLC with effect March 1, 2005. No changes
were made to Mr. Moss' compensation, who was already an employee of the Company
as a result of this appointment. Mr Cumming's remuneration is disclosed in the
Directors' Report.

                                      F-29
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                           WORLD GAMING PLC


Date: May 23, 2005         By: /s/ A. Daniel Moran
                               ------------------------------------------------
                               A. Daniel Moran
                               Chief Executive Officer (principal executive
                               officer) and Director


Date: May 23, 2005         By: /s/ David Naismith
                               ------------------------------------------------
                               David Naismith
                               Chief Financial Officer (principal accounting
                               and financial officer) and Director


Date: May 23, 2005         By: /s/ Clare Roberts
                               ------------------------------------------------
                               Clare Roberts
                               Director


Date: May 23, 2005         By: /s/ James H. Grossman
                               ------------------------------------------------
                               James H. Grossman
                               Director

<PAGE>
                                  EXHIBIT INDEX

Exhibit
No.                                Description
-------                            -----------

4.36     Contract of Employment with Jonathan Moss, dated January 1, 2005

4.37     Software License Agreement between Internet Empire Entertainment Ltd.
         and Softec Systems Caribbean Inc. dated May 23, 2000

4.38     Internet Empire Entertainment Amendment to Software License Agreement
         dated November 22, 2004

4.39     License and Services Agreement between Oracle Corporation Canada Inc.
         and World Gaming PLC dated May 20, 2004

21.1     List of Subsidiaries

23.1     Consent of HJ & Associates, LLC

31.1     Sarbanes-Oxley Act Certification by A. Daniel Moran, CEO

31.2     Sarbanes-Oxley Act Certification by David Naismith, CFO

32.1     Sarbanes-Oxley Act Certification by A. Daniel Moran, CEO

32.2     Sarbanes-Oxley Act Certification by David Naismith, CFO