Progress in Isle of Man Raises Eyebrows in Nevada

A pro-Internet gaming group in Nevada is bemoaning the loss of tax revenue represented by MGM Mirage's plans to open an Internet casino in the Isle of Man.

MGM Mirage was one of three casinos to be awarded the first round of online gambling licenses in the U.K. territory yesterday. The move makes MGM Mirage the first American land-based casino company to venture into I-gaming.

"We feel that it was a great opportunity, and still is a great opportunity for Nevada to develop a substantial new tax base by becoming a home for Internet gaming. And if our major casinos feel it's necessary to go elsewhere, then we're going to lose that opportunity."

-Richard Fitzpatrick
Interactive Gaming Institute

Richard Fitzpatrick, president of the Interactive Gaming Institute, said MGM Mirage's online operations mean that Nevada, which approved Internet gambling in June but hasn't yet established the policy infrastructure it needs to issue licenses, could stand to lose millions of dollars in gambling-generated tax money.

"We feel that it was a great opportunity, and still is a great opportunity for Nevada to develop a substantial new tax base by becoming a home for Internet gaming," Fitzpatrick said. "And if our major casinos feel it's necessary to go elsewhere, then we're going to lose that opportunity."

Fitzpatrick said he doesn't blame MGM Mirage for wanting to jump into the Internet gambling business as soon as possible. He said his frustration is that if Nevada had a regulatory structure for online gaming, it could keep big casino names like MGM Mirage from taking their Internet betting sites offshore.

MGM Mirage simply couldn't wait any longer to get into the business, said Alan Feldman, a spokesman for the company.

"This is an industry that is legally uncertain all around the world, and an industry which has the potential for rather considerable revenue, and when a jurisdiction opens up and shows that they're going to properly regulate and properly license, they're going to show a level of probity that is similar to that which we expect in jurisdictions in the United States and elsewhere around the world where we operate," Feldman said.

"This is what we do--we're a global company; we operate on three continents already. When we're up in the Isle of Man, then we'll be on four."

While Fitzpatrick said he didn't expect MGM Mirage to wait for Nevada to offer licenses, he said that the company still might have held off on moving offshore if they thought Nevada could offer I-gaming licenses soon.

-Alan Feldman
MGM Mirage

"It would not be a very prudent decision for them to sit back and wait a year or two," he said. "In the mean time, companies that are not very well known in the United States will be running credible, solid, dependable, regulated Internet gambling sites, and they're going to do extremely well, and there's no reason the Nevada casinos should sit back on its hands when they see no progress being made."

The other companies to be given licenses yesterday to operate online casinos in the Isle of Man are Sun International Hotels Ltd., which is based in the Bahamas, and Littlewoods Leisure of England.

Foreign gaming law allows companies to participate in offshore gambling at their peril as long as they don't run afoul of their host country's laws, Feldman said. That is the reason that MGM Mirage will be able to operate a business that would technically be illegal under federal U.S. law.

"We will only operate our site in jurisdictions where it is legal, so in other words we won't be accepting bets from the United States, and we won't be accepting wagers from any other place where it is illegal to do so," he said.

MGM Mirage will use a variety of screens and policies to keep those who can't legally gamble online in their jurisdiction from doing so on the MGM site, Feldman said. The company is interviewing groups that provide user identification services and expects to have the site up and running within a year.