Chartwell Technology Inc.

CHARTWELL ANNOUNCES FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2006

Calgary, Canada, September 14, 2006, Chartwell Technology Inc. (“Chartwell” or the “Company”) (TSX: CWH) a leading provider of gaming software systems and entertainment content to the online and remote gaming industry, announces unaudited financial results for the three and nine months ended July 31, 2006.

Three months ended July 31, 2006

Revenue for this year’s third quarter was $4.7 million compared to $4.5 million for the same period a year earlier.  Net income was $0.5 million compared to $0.7 million for the prior year period, with fully diluted earnings per share of $0.03 compared to $0.04 for the comparative period of 2005.  The Company’s results reflect its continued investment in developing new products and operational functionality to meet requirements under new customer agreements and to address new market areas.

Software development and support expenses, net of deferred software development costs, were $2.1 million in the 2006 third quarter compared to $1.8 million for the same period of 2005.  The increased levels of expenditure represent higher staff levels required to meet new customer delivery dates and costs associated with increased traffic within the poker community. 

General and administrative (“G&A”) expenses increased to $0.8 million in the third quarter of 2006 from $0.4 million a year earlier.  Contributing to the increase was growth in personnel, facility costs, legal and professional fees related to corporate structuring and our expansion of operations in Malta. 

Sales and marketing expenses were $0.6 million for the three months ended July 31, 2006, up from $0.5 million a year earlier. The increase is primarily attributable to the cost of promotions to expand the poker community and higher costs related to industry trade events.

Nine months ended July 31, 2006

Revenue for this year’s first nine months was $13.9 million compared to $13.2 million for the same period a year earlier.  Although new business and growth in revenue from existing customers represented a significant increase in revenue, total revenue overall increased by only 5% due to declines in revenue from certain Chartwell customers, primarily those with exposure to the Italian market.  Controversial legislation introduced by the Italian government has limited access to the Italian market for certain of our licensees.

Net income was $1.1 million for nine months of 2006 compared to $3.1 million for the prior year period, with diluted earnings per share of $0.06 compared to $0.16 for the comparative period of 2005. The principal causes for the reduction in net income are:  a $1 million provision for a doubtful account taken in the second quarter of 2006; higher software development and support expenses to meet new customer deliveries under signed agreements; and higher G&A, primarily as a result of increased personnel and corporate structuring initiatives.

Software development and support expenses, net of deferred software development costs, increased to $5.7 million compared to $4.4 million for the same period of 2005.  The increase in expense reflects higher staff levels required to meet customer delivery dates and higher costs associated with more volume of traffic within the poker community. 

G&A expense was $3.0 million for the nine-month 2006 period, up from $1.1 million in the same period of 2005.  Contributing to the increase for comparative periods is a $1 million provision for a doubtful account recorded in the second quarter of 2006, together with personnel increases in each of Calgary and Malta.

Sales and marketing expenses increased to $1.7 million for the nine-month period of 2006 from $1.6 million a year earlier. The increase is attributable primarily to costs of promotion to expand the poker community and higher costs related to representation at industry events.

Balance Sheet Strength

The Company continued to maintain a strong balance sheet through positive cash flow and maintaining positive working capital.  At July 31, 2006 the Company had $15.2 million of cash and short-term investments and positive net working capital of $18.2 million with no debt.

During the nine months ended July 31, 2006, the Company repurchased 932,100 of its common shares under the Normal Course Issuer Bid.  Total consideration was $3.2 million or an average of $3.40 per share.

Other developments

On August 30, 2006, the Company announced its intention to enter into a business combination with Parlay Entertainment Inc. (“Parlay”) as agreed to in a binding Letter of Intent entered into that same day.  The Letter of Intent calls for Chartwell to acquire all of the issued and outstanding common shares of Parlay on the basis of 0.75 Chartwell common shares for each Parlay share, by way of a plan of arrangement or similar business combination, subject to obtaining all necessary regulatory and court approvals and the approval of the Parlay shareholders and subject to the completion of due diligence by both parties.  The definitive agreement to be entered into by Chartwell and Parlay will be subject to a number of conditions, including court approvals, stock exchange approvals and the approval of the shareholders of Parlay at a meeting expected to be held in October 2006.  If all necessary approvals are obtained and all other conditions to the completion of the transaction are satisfied or waived, the business combination is expected to be completed by October 31, 2006.

About Chartwell
Chartwell specializes in the development of leading-edge gaming applications and entertainment content for the Internet and wireless platforms and other remote access devices.  Chartwell’s Java and Flash based software products and games are designed for deployment in gaming, entertainment, advertising and promotional applications.  Chartwell does not participate in the online gaming business of its clients.  Chartwell’s team of highly trained professionals is committed to delivering the highest quality software and maintaining its leading edge through continuous development and unparalleled customer support.

Chartwell invites you to preview our company and gaming applications at www.chartwelltechnology.com

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The TSX does not accept responsibility for the adequacy or accuracy of this release.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical fact are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays in testing and evaluation of products, regulation of the online gaming industry, and other risks detailed from time to time in Chartwell's filings with the Securities & Exchange Commission. We assume no responsibility for the accuracy and completeness of these statements and are under no duty to update any of the forward-looking statements contained herein to conform these statements to actual results. This is not an offer to sell or a solicitation of an offer to purchase any securities.