Multimedia Games reports results

Summary and Review of Q3 Results:

       (In millions, except per-share and player terminal data)

                                                  For the Three Months
                                                     Ended June 30,
                                                    2007       2006
                                                  ---------  ---------
Revenue                                               $30.9      $32.2
EBITDA(1)                                             $17.5      $15.1
Net income (loss)                                      $0.7     $(0.6)
Diluted earnings (loss) per common share              $0.02    $(0.02)
Average installed player terminals:
  Class II
  (Legacy and Reel Time Bingo(R) games)               5,110      8,402
  Oklahoma compact games(2)                           3,846      1,484
  Other gaming units(3)                               4,555      2,886
-------------------------------------------------

(1) EBITDA is defined as earnings before interest, taxes,
 amortization, depreciation, and accretion of contract rights. A
 reconciliation of EBITDA to net income (loss), the most comparable
 Generally Accepted Accounting Principles ("GAAP") financial measure,
 can be found attached to this release.

(2) "Oklahoma compact games" includes stand-alone offerings and
 server-based games.

(3) "Other gaming units" include those placed in charity halls, Iowa
 lottery, Mexico, and Malta.

For the Q3 FY '07 period, Multimedia Games' ("Multimedia") revenue of $30.9 million represents a modest quarterly sequential improvement over Q2 FY '07 levels, driven by a 24% improvement in revenue from games played under the compact in Oklahoma, a 51% increase in revenue from the electronic bingo market in Mexico, and a 17% improvement in revenue derived from the New York Lottery operations. In aggregate, these increases offset a 22% quarterly sequential decline in revenue from Class II operations and a 13% decline in revenue from domestic charity bingo markets.

In addition to the quarterly sequential improvement in revenue, Q3 FY '07 net income benefited from a reduction in SG&A expenses of approximately 7% from Q2 FY '07 levels and from the pre-tax benefit of approximately $1.6 million in Other Income, primarily related to the termination of a non-compete agreement. As a result, Multimedia reported net income of approximately $0.7 million, or $0.02 per diluted share, for Q3 FY '07, compared to net income of $6,000, or $0.00 per diluted share, for Q2 FY '07. Q2 FY '07 included the benefit of approximately $1.1 million in Other Income, primarily related to a one-time payment received from a limited partnership interest.

Clifton E. Lind, Multimedia's President and Chief Executive Officer, commented, "Multimedia's Q3 FY '07 results reflect continuing progress in growing our installed base of recurring revenue gaming terminals. Our unit placements at June 30, 2007 increased by approximately 10% compared to the installed base as of March 31, 2007. On a quarterly sequential basis, our installed base of units in Mexico grew by more than 160%, and our installed base of one-touch, stand-alone units in Oklahoma rose by approximately 22%. The expanded base is particularly important, because it offsets the previously disclosed removal of 560 Class II units from a high earning facility in southern Oklahoma during Q3 FY '07. While these removals led to a quarterly sequential decline in revenue derived from our Oklahoma placements, the expanded share of the floor and attractive economics we have secured pursuant to our support of the expansion of this facility are expected to result in long-term revenue growth in this market beginning mid-year calendar 2008.

"During Q3 FY '07, we continued the conversion of our installed base in Oklahoma with approximately 56% converted to stand-alone devices as of June 30, 2007. As anticipated, these units continue to outperform the Class II and server-based compact games they replaced, and the higher hold per day generated by the stand-alone devices is more than offsetting the lower revenue resulting from the change in revenue share percentage associated with the conversion from Class II to Class III stand-alone units.

"Later this quarter, we expect to achieve a significant milestone with the first placements in Oklahoma of Multimedia's new proprietary stand-alone offerings on our mGAME(TM) cabinets. This introduction of our first Class III stand-alone units in Oklahoma will continue throughout the first half of FY '08 and will feature a large number of new video and mechanical reel offerings, which we expect to further advance our competitive footing in this market. Also later in the quarter, we will begin to place new-to-the-market, third-party, 5-reel mechanical units in addition to our own proprietary games. These conversions and placements are expected to increase revenue derived from this market.

"In Mexico, our customer has achieved a steady pace of facility openings over the past several months and we now have more than 2,400 units placed in eight locations. If construction remains on current schedules, our customer anticipates having 15 facilities open by calendar year-end. Our customer is currently expected to open three facilities later this quarter, which will expand the installed base to more than 3,200 units. We continue to expect to have 4,000 units in play in Mexico by December 31, 2007 with steady growth expected thereafter.

"With new placements in Mexico throughout the balance of calendar 2007, and the continued strategic conversions of selected units in Oklahoma to higher-earning stand-alone devices, we believe we have the potential to earn higher margins on increased future revenue, because we should only incur limited incremental operating costs as growth in the Mexico market and in Oklahoma conversions continue.

"We continue to make progress in markets beyond Oklahoma and Mexico. In Q3 FY '07, the revenue generated by providing the central determinant system to the New York Lottery increased by approximately 134% from Q3 FY '06 levels, and we are now approximately at break-even for this market on a direct cost basis. With relatively fixed costs to provide and support this system, we are positioned to benefit financially if expansion in the market occurs. Pending final regulatory approval, in Q1 FY '08 we will deploy our first systems and units in Washington State under the new compacts, and we believe that this market will make a meaningful contribution to earnings in FY '08 and FY '09. We also intend to pursue other Class III market opportunities, and considering our operating base, achieving even a modest share of this large market can provide a meaningful benefit to our operating results. Also during the first half of FY '08, we plan to deploy the first of our proprietary, 5-reel mechanical units in the Mexico, Charity and Class II markets."

Lind concluded, "Multimedia is poised to benefit from our progress to date and potential growth in our current markets, new placements, and the launch of new products, while continuing to actively manage SG&A expense. In July, we successfully completed a modified 'Dutch Auction' tender whereby we repurchased approximately 1.9 million common shares, or approximately 7% of the Company's approximately 28.2 million outstanding shares, and our Board of Directors continues to review additional opportunities to enhance shareholder value."

The table below sets forth Multimedia's end-of-period installed player terminal base by product line or market for the fiscal quarters June 30, 2007 March 31, 2007 and June 30, 2006.

                                               Mexico
           Reel   Legacy   Total    Oklahoma Electronic
  Month    Time    and    Class II  Compact    Bingo    Charity Total
  Ended    Bingo  Other    Units    Units(1)   Units     Units  Units
---------  -----  ------  --------  -------- ---------- ------- ------
6/30/2007  4,624     519     5,143     3,973      2,426   2,569 14,111
3/31/2007  5,354     353     5,707     3,662        919   2,588 12,876
6/30/2006  7,635     376     8,011     1,593        600   2,583 12,787
---------

(1) "Oklahoma Compact Units" represents installations of games
 pursuant to the approved gaming compact between Native American
 tribes, racetracks and the State of Oklahoma, including Multimedia's
 and other vendors' stand-alone games.

The Company had units installed at eight locations in Mexico as of June 30, 2007, and at five locations as of March 31, 2007.

The table below breaks out by product line Multimedia's end-of-period, Oklahoma installed player terminal base for the fiscal quarters ended June 30, 2007, March 31, 2007 and June 30, 2006.

             Total                    Other       Total
  Month     Class II   Stand-Alone   Compact     Compact     Total
  Ended      Units        Units      Units(1)     Units      Units
---------  ----------  -----------  ----------  ---------  ---------
6/30/2007       2,194        3,448         525      3,973      6,167
3/31/2007       2,915        2,824         838      3,662      6,577
6/30/2006       4,516          ---       1,593      1,593      6,109
---------

(1) "Other Compact Units" represents server-based games.

Multimedia will provide an update on its total installed base and product mix at July 31, 2007 on or about August 15, 2007.

Research and development expense in the June 30, 2007 quarter decreased by $0.6 million, or 15%, to $4.0 million, from $4.6 million for the June 30, 2006 quarter. During the quarter ended June 30, 2007, Multimedia capitalized $0.6 million in costs related to the internal development of software for its gaming products and systems, compared to $0.7 million during the quarter ended March 31, 2007. Approximately $0.3 million of the capitalized costs in the June 2007 quarter were related to the development of new content, and approximately $0.3 million was for systems. For the three months ended June 30, 2007, capital expenditures were $10.2 million, of which $10.1 million was for gaming equipment and license purchases, and $0.1 million was for all other capital expenditures. Included in the gaming equipment purchases was $4.5 million of gaming equipment and licenses purchased under the third party vendor agreements. The remaining equipment purchases relate primarily to the hardware upgrade of the rental pool and systems. Multimedia's "Share-based Payment" under the Statement of Financial Accounting Standards, or SFAS, No. 123®, reflects a charge of approximately $0.3 million on a pre-tax basis in Q3 FY '07, compared with a pretax charge of $0.7 million in Q3 FY '06.