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Gaming Guru

Chris Jones
 

Gaming Giants Sue Newspaper Owners

22 September 2004

A pair of Nevada gaming giants have sued the owners of Las Vegas' two largest newspapers to try to resolve questions about the future of the lasvegas.com Web site.

Stephens Media Intellectual Property Limited Liability Co., a sister company of the Las Vegas Review-Journal, and Vegas.com LLC, which is owned by the Greenspun family, publishers of the Las Vegas Sun, were named co-defendants in a Sept. 16 lawsuit jointly filed by divisions of Las Vegas-based hotel-casino operators Caesars Entertainment and Mandalay Resort Group.

The two gaming companies have co-managed the nearly 7-year-old lasvegas.com for the past 2 1/2 years through a 2002 agreement with site owner Stephens Media. But problems arose this summer when the gaming companies tried to transfer management of the domain name to the Greenspuns, who own the rival Vegas.com. Stephens Media exercised its contractual option to match any offer from a Greenspun company.

Last week's lawsuit asks Clark County District Court Judge Ron Parraguirre to clarify which company may acquire rights to the Web site, which will remain under Stephens Media ownership.

In February 2002, Stephens Media agreed to license the lasvegas.com Web site to lasvegas.com LLC, a newly formed joint venture owned and operated by subsidiaries of Caesars Entertainment (then called Park Place Entertainment Corp.) and Mandalay.

Stephens Media continued to own lasvegas.com, though it had no ownership or management interest in lasvegas.com LLC, which later changed its name to LAS Travel.

Prior to that accord, Stephens Media used lasvegas.com to offer links to Review-Journal news stories; community Web sites; travel, retail and restaurant information; and room bookings. But Caesars' PPE-IM Inc. and Mandalay's MRG Vegas Portal Inc. redesigned the Internet portal, shifting its focus toward the sale of hotel rooms at local resorts that included Caesars Palace, Paris Las Vegas, Luxor and Mandalay Bay.

The deal guaranteed Stephens Media a percentage of the room revenue generated by the site.

On July 22, Caesars and Mandalay struck a deal to sell their interests to Vegas.com, and one day later, the parties notified Stephens Media of their plans.

Court documents said Stephens Media President Sherman R. Frederick on Aug. 19 notified Caesars and Mandalay of his company's plans to repurchase the gaming companies' interest in lasvegas.com, but Vegas.com President Howard Lefkowitz responded five days later with claims that Stephens Media's offer did not in fact match his company's.

Lefkowitz then moved to close his company's sale offer, claiming Stephens Media's 30-day matching period had expired without a valid counteroffer. On Aug. 25, Stephens Media general counsel Mark Hinueber responded, claiming his company had met its contractual obligations and would also move to close its deal with Caesars and Mandalay.

Both Stephens Media and Vegas.com subsequently sent draft purchase agreements to LAS Travel, which has so far failed to act upon either offer until the court rules which bidder is entitled to buy its rights.

Said Hinueber: "We believe we properly exercised our right to purchase the interests of Mandalay and Caesars in LAS Travel and expect the courts to agree with that position."

Lefkowitz on Tuesday said Vegas.com and its attorneys are reviewing the lawsuit but declined additional comment.

Attorney Gregory Gilbert, who filed the lawsuit for Caesars and Mandalay, did not return a phone call seeking comment Tuesday.

Caesars and Mandalay are subjects of takeover offers by Harrah's Entertainment and MGM Mirage, respectively. Those deals, valued at $9.4 billion and $7.9 billion, remain subject to state and federal regulatory approval.

A gaming industry source said Tuesday he does not believe Caesars and Mandalay's efforts to exit lasvegas.com were related to their pending mergers, however.

Vegas.com claims to attract 850,000 unique visitors per month, while lasvegas.com claims to draw approximately 1 million visitors per month.

The Review-Journal and Sun are published under a joint operating agreement but maintain independent newsrooms and ownership.