EXECUTONE Information Systems, Inc. Announces Complaint Against UniStar by the State of Wisconsin

Business Wire, Sept 18, 1997

MILFORD, Conn.--(BUSINESS WIRE)--Sept. 18, 1997--EXECUTONE Information Systems, Inc. (NASDAQ:XTON) today announced that the State of Wisconsin, by its Attorney General, filed an action in the Wisconsin State Circuit Court for Dane County against the Company, its UniStar Entertainment subsidiary and the Coeur d'Alene Tribe of Idaho, to permanently enjoin the US Lottery offered by the Tribe on the Internet and managed by UniStar. The complaint, filed on September 15, 1997, alleges that the offering of the US Lottery violates Wisconsin anti-gambling laws and that legality of the US Lottery has been misrepresented to Wisconsin residents in violation of state law. In addition to an injunction, the suit seeks restitution, civil penalties, attorneys fees and court costs.

Alan Kessman, President and Chief Executive Officer of the Company, stated, "The Company and UniStar believe, based on a recent court ruling and the opinion of our outside counsel, that the case has no merit and the activities of the US Lottery are legal. The US Lottery is different from other Internet gaming activities. The Lottery is conducted by the Tribe on the Coeur d'Alene Reservation in Idaho, and is authorized by Federal law, the Indian Gaming Regulatory Act of 1988 (IGRA), and by a compact with the State of Idaho. This legal action by Wisconsin is not surprising. Since our initial investment in UniStar, we have been aware of certain states' opposition to the lottery and their sensitivity to the issues of gaming and the Internet, particularly in the lottery business in which these states are themselves engaged. Wisconsin itself conducts a state lottery. As in the Missouri litigation, UniStar and the Tribe intend to vigorously defend the rights of the Tribe under IGRA to offer the US Lottery to consumers accessing the Internet site from Wisconsin."

The Wisconsin case is almost identical to one filed in May by the State of Missouri which is currently being opposed by the Tribe and the Company. The Missouri case has been removed to federal district court. In that case, motions by the State to remand it back to state court and by the Tribe and Unistar to dismiss the case, based on sovereign immunity and lack of personal jurisdiction, are currently pending.

The Company noted that US Lottery transactions are conducted via a customer service and computer center located on the Tribe's Reservation in Idaho. No orders for lottery tickets will be accepted or are valid until received by the Tribe on the Reservation. No Internet requests for tickets or accounts, or mail or telephone orders, are accepted from minors, or currently from residents of any states that do not have a state-conducted lottery.

As previously announced, on August 23, 1997, AT&T Corporation filed a complaint for declaratory judgment in the United States District Court for the District of Idaho against the Coeur d'Alene Tribe, seeking a federal court ruling as to the validity and enforceability of the Coeur d'Alene Tribal Court's May 1, 1996 Order regarding the Tribe's National Indian Lottery. The Tribal Court ruled, in a February 28, 1996 opinion and the May 1, 1996 Order, that the proposed telephone lottery is lawful and complies with the federal Indian Gaming Regulatory Act of 1988 ("IGRA"), that the lottery will be conducted on the Reservation and will therefore be conducted on Indian lands as required by IGRA, and that the notices sent to AT&T and other carriers by several State Attorneys General under 18 U.S.C. Section 1084 are invalid and could not be relied upon by AT&T to refuse telephone service to the lottery. The Tribal Court's analysis and ruling were affirmed by the Tribal Appellate Court on July 2, 1997.

Alan Kessman, President and Chief Executive Officer of the Company, further stated, "The Tribe and UniStar are confident that the Idaho District Court will uphold the valid and binding rulings of the Tribal Court. The Tribe and UniStar have complied and will continue to comply with all conditions of IGRA, and based upon the opinion of our legal counsel we believe that the Tribal Court rulings should be upheld by the federal courts."

Executone Information Systems, Inc. develops, markets and supports voice and data communications systems. Products and services include telephone systems, voice mail systems, inbound and outbound call center systems, and specialized healthcare communications systems. The Company, through its UniStar Entertainment subsidiary, also has the exclusive right to design, develop and manage the National Indian Lottery, including the Internet-based US Lottery offered at http://www.uslottery.com. Products and services are sold under the EXECUTONE, INFOSTAR, IDS, LIFESAVER, INFOSTAR/ILS and UNISTAR brand names. Executone is on the World Wide Web at http://www.executone.com. The US Lottery is on the World Wide Web at http://www.uslottery.com.

CONTACT: Executone Information Systems, Inc.

David Krietzberg (203) 876-7600