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Analysts Optimistic About MGM Mirage's Online Casino

2 October 2002

by Jeff Simpson

LAS VEGAS--Most Wall Street experts see MGM Mirage's playmgmmirage.com as a plus for the company, with its brand-building and business-growing prospects outweighing concerns that a security lapse could jeopardize the company's relationship with regulators who police its land-based casinos in Nevada and elsewhere.

McDonald Investments casino industry analyst Harry Curtis said: "It makes sense for MGM Mirage to stick its toe in the water. $15 million isn't that much. It's really just research and development spending. As long as they stay on the right side of regulators, and I think they will, there's no worry for shareholders."

Deutsche Banc Securities casino debt analyst Andrew Zarnett said he thinks it may not take long for the site to contribute profit to MGM Mirage's bottom line.

"The upside is fantastic," Zarnett said. "This gives them a chance to capture business in Europe, and if and when the U.S. decides to allow Internet gambling they'd be years ahead of their competitors."

Fellow Deutsche Banc analyst Marc Falcone said MGM Mirage is using superior technology and will use the site to attract new customers and improve its brand recognition.

"They can't go after the whole world market, but initial results from the United Kingdom suggest that MGM Mirage will be tapping into a deep European market," Falcone said.

Bear, Stearns & Co. casino industry analyst Jason Ader took a different approach from his Wall Street colleagues and said he thinks the MGM Mirage Web operation is more pie in the sky than a significant part of the company's business.

"There's a lot of 'if, if, if,' " Ader said. "It's a lot of energy and publicity for what will be a very small part of their business for a long time."

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