INNOVA Subsidiary Announces Termination of AGP Lease Agreement in Texas

LOS ANGELES, CA, Jan. 6, 2016 /CNW/ - INNOVA Gaming Group Inc. ("INNOVA", the "Company") (TSX: IGG), today announced that, as of January 5, 2016, an equipment lease agreement (the "Lease") between its wholly owned subsidiary, Diamond Game Enterprises ("Diamond Game"), and Blue Stone Entertainment LLC ("Blue Stone"), has been terminated (the "Termination") by Diamond Game. Prior to the Termination, Blue Stone operated the donation-based sweepstakes terminals ("Terminals") that were the subject of the Lease at the Ysleta del Sur Pueblo's ("the Pueblo") two entertainment centers in Texas pursuant to a separate agreement between Blue Stone and the Pueblo.  The Terminals, which have been removed from the Pueblo's entertainment centers, are part of a class of products previously referred to in the Company's communications as alternative gaming products, or AGPs.

Leading up to the Termination and removal of the Terminals, the Pueblo received notice from the National Indian Gaming Commission ("NIGC") on or about October 5, 2015 that certain Pueblo lands are eligible for Class II gaming under the Indian Gaming Regulatory Act.  Following receipt of the NIGC notice, the Pueblo began preparations to improve and expand its facilities as well as prepare for the potential Class II gaming opportunities. The Pueblo removed certain Terminals as it prepared to close its smaller Socorro Entertainment Center and renovate and expand its Speaking Rock Entertainment Center ("Speaking Rock").  Subsequently, the Pueblo removed the remaining Terminals and Diamond Game terminated the Lease with Blue Stone.

It is the Company's understanding that the Pueblo will complete the renovations at Speaking Rock in the second quarter of 2016.  Its plans for machine placements in the new areas are not known at this time, but Diamond Game will aggressively pursue redeployment of as many Terminals as possible.  "It is unfortunate that the Pueblo has decided to remove the Terminals at this time, but we support its efforts as it renovates and expands Speaking Rock," said Richard Weil, Chairman and CEO of INNOVA. "Diamond Game has a long history of positive working relations with the Pueblo and we hope to renew that relationship in the near future."

In connection with INNOVA's initial public offering, the Company entered into an EBITDA support agreement ("EBITDA Support Agreement") with Amaya Inc. pursuant to which, subject to certain terms and conditions, Amaya Inc. will pay INNOVA each year for up to five years from July 1, 2015 an amount equal to the shortfall, if any, between (i) the Company's EBITDA directly or indirectly derived from the deployment of Diamond Game's products at the Pueblo's entertainment centers or in connection with INNOVA's relationship with Blue Stone and/or the Pueblo, and (ii) C$2.0 million.  The Company believes that the EBITDA Support Agreement will substantially mitigate any adverse financial impact resulting from this development.

About INNOVA Gaming Group Inc.

INNOVA develops unique games and products for the global gaming industry, with particular focus on state and provincial lotteries. Through the Company's wholly owned subsidiary, Diamond Game Enterprises, INNOVA focuses on enhancing revenues by offering its unique "stay-and-play" products in traditional and non-traditional gaming venues. Its primary product is the LT-3, a machine that dispenses tickets while simultaneously displaying the results of each ticket on a monitor in an entertaining fashion. For more information, please visit www.innovagaminggroup.com.

Forward-Looking Statements

Certain statements included herein, including those that express management's expectations or estimates of our future performance or future events, constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic, regulatory and competitive risks, uncertainties and contingencies that could cause actual results or events to differ materially from those expressed or implied in such statements. Such risks and uncertainties include those identified under the heading "Risk Factors" in INNOVA's Management's Discussion and Analysis for the period ended September 30, 2015, available on SEDAR at www.sedar.com, and in other filings that INNOVA has made and may make with applicable securities authorities in the future. Investors are cautioned not to put undue reliance on forward-looking statements. The forward-looking statements contained herein reflect INNOVA's current views with respect to future events, and except as required by law, INNOVA does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events, or otherwise.

SOURCE INNOVA Gaming Group

Jonathan Ross, CFA, LodeRock Advisors, INNOVA Investor Relations, [email protected], Tel: [phone]