If it was online, they would say online.
"Link the game with eight other players using a broadband adapter and race each other side-by-side using multiple game systems and multiple televisions!"
Tunneling requires you to have a PC hooked up on the same network to be used to essentially host the game, provide the chat screen, and run the software. In-game software would mean that you choose the option, and everything in controlled from the game. You can create games, join games, etc., all from an in-game interface.
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