Enters into Purchase Agreements to Sell Certain Payments Assets

MONTREAL, QUEBEC -- (Marketwire) -- 08/06/08 -- Optimal Group Inc. (NASDAQ: OPMR) today announced its financial results for the second quarter ended June 30, 2008. All references are in U.S. dollars.

Revenues for the second quarter ended June 30, 2008 consisted of revenues from both the Optimal Payments segment and the WowWee segment. The WowWee segment operates in an industry that is seasonal by nature and where a significant portion of revenues and corresponding cash flow are typically generated in the second half of the year.

Revenues for the second quarter ended June 30, 2008 were $41.6 million (which includes approximately $15.5 million related to the WowWee segment; due to seasonality, the first and second quarters are typically the weakest quarters of the year for this segment) compared to $28.0 million for the second quarter ended June 30, 2007.

The Company's quarterly results for the second quarter of 2008 were significantly affected by certain non-cash charges and seasonality. The net loss for the second quarter ended June 30, 2008 was $48.4 million or $1.87 per diluted share compared to net earnings of $1.2 million or $0.05 per diluted share in the second quarter ended June 30, 2007. The net loss in the quarter is mainly attributable to non-cash charges relating to the transactions described under the heading "Divestitures-Payments Segment" in this press release and that include an impairment of goodwill of $29.1 million that was recognized in the Optimal Payments segment. This charge resulted from Optimal's analysis of goodwill at June 30, 2008, where it was determined that the estimated fair value of Optimal Payments was less than its carrying value. As a result of the impairment of goodwill, Optimal also incurred non-cash tax charges of approximately $13.3 million in the quarter. In addition, the WowWee segment operates in an industry in which the first half of the year typically has lower levels of shipments, resulting in lower revenues, increased costs and weaker financial results.

EBITDA for the second quarter ended June 30, 2008 was a loss of $0.5 million or $0.02 per diluted share compared to EBITDA of $3.3 million or $0.13 per diluted share for the comparable period in 2007.

EBITDA is a non-GAAP (generally accepted accounting principles) financial measure calculated as earnings before investment income, taxes, depreciation and amortization and excludes the impact of impairment loss, non-controlling interest, stock-based compensation, and discontinued operations. A reconciliation of Optimal's EBITDA is included in Annex A.

Optimal's consolidated balance sheet remains strong. Optimal's cash position grew slightly from the last quarter-end and, as at June 30, 2008, the Company had cash and cash equivalents, short-term investments (including amounts held in reserve) and settlement assets net of customer reserves and security deposits, of $43.1 million or $1.67 per issued and outstanding share; working capital, excluding cash and short-term investments held as reserves, of $11.9 million; and shareholders' equity of $147.2 million, or $5.70 per issued and outstanding share. The Company continues to evaluate potential acquisition opportunities and expects to grow the WowWee segment by executing on internal growth initiatives and by actively pursuing complementary acquisitions.

Divestitures - Payments Segment

The divestitures described below relate to the Company's activities in the following payments areas: card-present transaction processing in Canada; card-present transaction processing in the United States; and "card-not-present" transaction processing.

Divestiture of "Card-Not-Present" Transaction Processing

Optimal Payments Inc., a wholly-owned subsidiary of Optimal Group Inc. has entered into an asset purchase agreement with an affiliate of Card One Plus Ltd., a Toronto-based provider of electronic payments solutions, under which they will purchase substantially all of the assets that relate to Optimal Payments "card-not-present" payments processing business. The purchase price for this transaction will be $7.0 million plus the assumption of certain liabilities. The purchaser will acquire the assets from Optimal's Canadian-based subsidiary, Optimal Payments Inc., its Irish-based subsidiary, Optimal Payments (Ireland) Limited, UK-based Optimal Payments Limited, and U.S.-based Optimal Payments Corp. Under the terms of this transaction, the purchaser will take over Optimal Payments' head office facilities in Montreal, Quebec.

The closing of this transaction is anticipated to take place on August 29, 2008 and will result in impairment charges that are previously described in this press release.

Divestiture of Canadian Card-Present Transaction Processing

Optimal Payments has also entered into an asset purchase agreement with Sterling Payment Solutions Inc., a company led by an executive of Optimal Payments, under which the purchaser will purchase substantially all of the assets that relate to Optimal Payments "card-present" payments processing business in Canada. The purchase price for this transaction will be $2.0 million plus the assumption of certain liabilities. The purchaser will acquire the assets from Optimal's Canadian-based subsidiary, Optimal Payments Inc.

The closing of this transaction is anticipated to take place on August 29, 2008 and will result in impairment charges that are previously described in this press release.

United States Card-Present Transaction Processing

As a result of these transactions, substantially all of the employees and infrastructure involved in those payments businesses will be transferred to the prospective purchasers. Optimal will maintain its continued rights to residual payments and other interests in Optimal's U.S.-based card-present transaction processing sector, which generates the majority of Optimal's cash flow from its payments business. Optimal believes that it is more likely than not that all or part of its remaining interest in this segment will be sold over the course of the next 12 months.

Under the Card One agreement, Optimal has secured transition services arrangements under which Card One will perform certain processing services on Optimal's behalf. These services relate to Optimal's continued rights to residual payments and other interests in merchant account portfolios in Optimal's U.S.-based card-present transaction processing sector.

Preliminary Outlook for 2008

In its WowWee segment, the Company remains very cautious in the face of a weak economy, diminished consumer spending, one of the most challenging retail environments in recent times, rising raw materials and transportation costs and the continuing difficulties affecting companies that manufacture in China. As well, due to the foregoing, retailers in general are delaying their orders as they balance the risks in the general economy. This is affecting all wholesalers and forcing companies to make challenging supply chain decisions. For this segment, the Company continues to anticipate revenue in the range of $130-140 million. This will represent year over year revenue growth in this segment of 25-30%. Also, the Company continues to significantly invest to execute upon its growth strategies for the WowWee segment, which will compress operating margins for 2008. These anticipated results should continue to be viewed as preliminary and with caution due to the seasonality of the WowWee segment and the industry in which it operates, as well as the difficult circumstances facing the general economy. The Company anticipates that greater clarity relating to its operations and financial results will occur as the year progresses.

During 2008, the Company continued to implement its strategies for the WowWee segment. It continues to make significant investments in its sales and distribution, as well as marketing and promotion. The Company is also actively building out its online presence, enhancing the consumer's ability to experience and explore the Company's products through the Internet. As well, the Company is pursuing a program of developing and distributing products based on licensed properties. For 2008, the WowWee segment has developed the broadest and most dynamic product offerings in its history. These products have begun to be shipped in the second quarter of 2008.

Key assumptions and sensitivities

In connection with any projections contained in this press release, we have made the following principal assumptions: in assessing the anticipated year over year revenue growth for the WowWee segment, we have assumed the accuracy of the 2007 revenues for the period ended November 6, 2007, as reported to us by the vendors of the business; customers of the WowWee segment will fulfill their anticipated purchases and the levels of sales discounts will be consistent with levels experienced by the vendors of the business over recent quarters, as reported to us; the cost of producing the WowWee segment's products in China will not increase more than currently anticipated.

Our statement as to projections is forward looking, and does not take into account the potential impact of any future divestitures, acquisitions, mergers or other business combinations. Furthermore, our actual WowWee revenue is subject to the risks and uncertainties summarized below under "Cautionary Statements Regarding Forward-Looking Statements" and could differ materially from our projection. As well, the non-GAAP financial results of Optimal's results of operations are not meant to be considered superior to or a substitute for Optimal's results of operations prepared in accordance with GAAP.

Legal Matters

Following announcements by the U.S. Attorney's Office in the Southern District of New York relating to its investigation of the U.S. Internet gambling industry, the Company, in March 2007, initiated discussions with the U.S. Attorney's Office and is in the process of responding to a voluntary request for information issued by the U.S.