8K FOR eLOTTERY RISK FACTORS 4/14/99

                    SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC 20549



                                 FORM 8-K



                              CURRENT REPORT

                  PURSUANT TO SECTION 13 or 15(d) OF THE
                   SECURITIES AND EXCHANGE ACT of 1934



     Date of Report (Date of Earliest Event Reported): April 14, 1999



                   EXECUTONE INFORMATION SYSTEMS, INC.
          (Exact name of registrant as specified in its charter)


          Virginia                   0-11551                    86-0449210
(State or other jurisdiction   (Commission File No.)         I.R.S. Employer
     of incorporation)                                     (Identification No.)


                         478 Wheelers Farms Road
                     Milford, Connecticut  06460-1847
                 (Address of principal executive offices)


                              (203) 876-7600
           (Registrant's telephone number, including area code)


                                   N/A
      (former name or former address, if changed since last report)




ITEM 5.  OTHER EVENTS

     On April 14, 1999, EXECUTONE Information Systems, Inc.
("Executone") withdrew the Registration Statement on Form S-1
(No. 333-63523) (the "Registration Statement") of eLottery, Inc.
("eLottery"), a wholly-owned subsidiary of Executone, because of
certain tax consequences to be incurred by Executone and its
shareholders in connection with the distribution of shares of
common stock of eLottery pursuant to the Registration Statement.
The Board of Directors of Executone has announced its intention
to separate Executone's telephone and healthcare businesses (the
"Core Business") from the electronic lottery business of eLottery
through the sale of the Core Business, subject to the approval of
the Executone shareholders (the "Sale"). The Board has received
an offer from a group led by Stanley Kabala, Executone's Chairman
and Chief Executive Officer, in the range of $70 million and
subject to a number of conditions.  In connection with the Sale,
Executone also intends to submit to its shareholders a proposal
to amend its Articles of Incorporation to change its name to
eLottery, Inc.

     In light of the withdrawal of the Registration Statement and
the impending Sale, Executone deems it appropriate to disclose
the following risk factors that could materially adversely affect
the performance of eLottery:

No Prior Market for Common Stock Independent of the Core Business
- -----------------------------------------------------------------
     Until the date of closing of the Sale, the common stock of
Executone (the "Common Stock") will not have traded independently
of the Core Business in the public market.  There can be no
assurance that an active trading market for the Common Stock will
be sustained following the Sale nor can there be any assurance as
to the prices at which the Common Stock will trade following the
Sale.

No Current Source of Revenue
- ----------------------------
     On December 17, 1998, the Idaho Federal District Court
issued an opinion and order granting declaratory judgment in
favor of AT&T in the action styled AT&T v. Coeur D'Alene Tribe.
In response to that decision, eLottery and the Coeur D'Alene
Tribe (the "CDA") terminated operation of the National Indian
Lottery (the "NIL") and the US Lottery, the trade name under
which the NIL operated, which were the only existing operations
of eLottery.  eLottery has yet to enter into any agreements with
any state, national or international lotteries for the use of its
lottery systems.  Although eLottery believes it is well
positioned in the event that the state, national or international
lotteries decide to sell their tickets over the Internet,
Intranet, by telephone or through networked custom-designed
electronic lottery terminals and is currently in various stages
of negotiation with several U.S. and international lotteries,
there can be no assurance that the state, national or
international lotteries will sell their tickets by these methods
or, if sold by these methods, that such lotteries will enter into
contracts with eLottery to utilize the applications of the
systems.

Risk of Delisting from Nasdaq
- -----------------------------
     There can be no assurance that the Common Stock will
continue to be included on the Nasdaq National Market after the
closing of the Sale.  Failure to meet the listing requirements
for the Nasdaq National Market or the Nasdaq SmallCap Market
could result in the Common Stock being delisted from the Nasdaq
Stock Market.  If the Common Stock is delisted from trading on
Nasdaq, trading, if any, would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or the
"Electronic
                              2


Bulletin Board" of the National Association of Securities Dealers, Inc.
and consequently, an investor may find it more difficult to dispose of,
or to obtain accurate quotations as to the price of, the Common Stock.

Potential Volatility of Common Stock Price
- ------------------------------------------
     The prices at which the Common Stock trades may fluctuate
significantly in response to such factors as: (i) actual or
anticipated variations in quarterly operating results; (ii)
announcements of new product or service offerings; (iii)
technological innovations; (iv) competitive developments; (v) the
entering into or loss of a long-term governmental contract; (vi)
changes in financial estimates by securities analysts; (vii)
conditions and trends in the lottery and the internet and
electronic commerce industries; and (viii) general market
conditions and other factors.  Prices for the Common Stock will
be determined in the trading markets, to the extent that such
markets exist, and may be influenced by other factors, including
the depth and liquidity of the market for the Common Stock and
investor perceptions of eLottery.

eLottery's History of Losses and Lack of Assurance of Future Profitability
- --------------------------------------------------------------------------
     eLottery has generated no revenues as of the date hereof.
eLottery is in the development stage and its activities to date
have been primarily related to organization of the Company and
development of the business and computer and lottery systems
necessary to further its business plan.  There is no assurance
that enough future revenues will be generated by, or that
alternative sources of funding will be available to, eLottery to
support the furtherance of its business plan or to meet its
operating expenses.

eLottery Has Never Operated as an Independent Entity
- ----------------------------------------------------
     eLottery has never operated as a separate, independent
entity, and has never operated as a public company.  Management's
ability to operate eLottery as a public company on a stand-alone
basis, including eLottery's ability to obtain additional
financing, will impact the performance of eLottery and ultimately
the return on each shareholder's investment in eLottery.

Unavailability of the Financial and Other Resources of the Core Business
- ------------------------------------------------------------------------
     Executone, through the revenues generated by the Core
Business, has provided all of eLottery's financial support and
will continue to provide such support until the closing of the
Sale.  Executone, until the closing of the Sale, has agreed to
continue to provide financial support to eLottery not to exceed
an average sum of $1.5 million per quarter in accordance with the
terms of the Agreement for Redemption and Conversion of Preferred
Stock, dated as of March 31, 1999 (the "Conversion Agreement"),
between Executone and eLottery and Watertone Holdings L.P.,
Cooper Life Sciences, Inc., John C. Shaw, Richard Bartlett, Jerry
M. Seslowe, 10-26 S. William Street Associates, Louis K. Adler
and Resource Holdings Ltd., the holders of the Executone
Preferred Stock (the "Executone Preferred Holders").  Following
the date of closing of the Sale, however, eLottery will no longer
be able to rely on the Core Business for either financial support
or to obtain credit for the purpose of supporting its operations.
It is the current intention of the Board of Directors, however,
that the proceeds of the Sale will remain in eLottery to help it
implement its business plan.  eLottery expects the proceeds from
the sale of the Core Business to adequately fund its operations
for at least the next 18 months.

Dependence upon Key Personnel
- -----------------------------
     eLottery is dependent upon the ability and experience of its
executive officers. Although eLottery currently has employment
contracts with three of its executive officers, it does not
maintain key man life insurance on the lives of such executive
officers.  The loss of the services of any or all of its
executive
                              3


officers or eLottery's inability in the future to attract and retain
management and other key personnel could have a material adverse
effect on eLottery.

Certain Antitakeover Effects of Certain Provisions of Executone's
Certificate of Incorporation
- -----------------------------------------------------------------
     Certain provisions of the Amended and Restated Certificate
of Incorporation of Executone currently in effect, which
Certificate of Incorporation, other than the name change, will be
the same Certificate of Incorporation in effect for eLottery
after the closing of the Sale (the "Certificate"), may have the
effect of making more difficult an acquisition of control of
Executone in a transaction not approved by the Board of
Directors.  The Certificate would, in some circumstances,
eliminate certain liabilities of directors in connection with the
performance of their duties.

Substantial Percentage Ownership of Executone By Former Executone
Preferred Holders
- -----------------------------------------------------------------
     The Executone Preferred Holders have entered into the
Conversion Agreement with Executone and eLottery, pursuant to
which all of the outstanding shares of Executone Preferred Stock
were redeemed and converted automatically into approximately 21%
of the outstanding shares of the Common Stock.  As a result, one
of the former Executone Preferred Holders now owns a substantial
percentage of the Common Stock.  As a result of this substantial
percentage ownership, this former Executone Preferred Holder
could be deemed to control certain significant decisions of
Executone and could prevent certain transactions that would be
beneficial to its other common shareholders.

Competition
- -----------
     The development, licensing and management of gaming
technology and the provision of gaming entertainment are highly
competitive.  The gaming market is served by state and nationally
sponsored lotteries and by many domestic and foreign gaming
companies, including several large land-based casino companies.
A number of large, mature lottery services companies serve both
the domestic and international markets.  All these competitors
have substantially more capital, and therefore broader based
resources to apply to technology and marketing than eLottery.
eLottery also competes with other forms of leisure and
entertainment activities for the public's disposable income.

Market Development Risks
- ------------------------
     There are market risks associated with the development of
eLottery's business.  eLottery's existing products have not been
subjected to extensive market exposure.  All of eLottery's
products currently in development are also products that employ
new technologies and may not find sufficient customer or consumer
support to become economically viable.

Risks Associated with International Sales and Operations
- --------------------------------------------------------
     Although eLottery has not to date sold its products
internationally except to the extent that the NIL had  foreign
customers, part of its current strategy is to distribute lottery
products internationally and to license its lottery distribution
systems to lotteries worldwide.  Entry into the international
market would subject eLottery to certain risks.  The risks
associated with international sales include, but are not limited
to, the length of time required to establish a foreign market
presence, costs of localizing products for foreign countries,
trade laws and business practices favoring local competition,
dependence on local vendors, compliance with multiple,
conflicting and changing government laws and regulations, longer
sales and payment cycles, import and export restrictions and
tariffs, difficulties in staffing and managing foreign
operations, greater difficulty or delay in accounts receivable
collection, foreign currency exchange rate fluctuations, in some
countries, a lesser degree of intellectual property protection,
multiple and conflicting 
                              4


tax laws and regulations and political and economic instability. 
The occurrence of any of these factors could have a material adverse
effect on eLottery's business, financial condition and results of
operations.

Concentration in Single Industry
- --------------------------------
     eLottery's current operating strategy is to focus on lottery
distribution, technologies and services.  Although eLottery will
seek to develop other lines of business from the existing lottery
business, eLottery is subject to risks associated with
concentrating on a single industry.  Therefore, the adverse
effect on eLottery's operating revenue resulting from an economic
downturn in the lottery industry would be more pronounced than if
eLottery had diversified its line of business.

     For further information, contact Edward W. Stone, Jr.,
Senior Vice President and Chief Financial Officer, at (203) 882-
6260, 478 Wheelers Farms Road, Milford, Connecticut  06460.



                           SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.

                                   
                                   EXECUTONE INFORMATION SYSTEMS, INC.



April 29, 1999                     By:/s/ Edward W. Stone, Jr.
                                   Edward W. Stone, Jr., 
                                   Senior Vice President
                                     and Chief Financial Officer

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