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Kevin Smith

Survivor - MGM Mirage Voted Off the Island

4 June 2003

MGM Mirage this morning announced it will shut down its Isle of Man-based online casino at the end of this month. Company officials said they based the decision on the "unclear political and legal climate" in Washington.

The announcement came one day after a scheduled vote on a bill that would have clarified some of the laws on Internet gambling and banned the use of credit cards and other banking instruments was delayed. Isle of Man gaming regulations make it illegal for any of the jurisdiction's licensees to accept wagers from punters who are in countries where Internet gambling is illegal. That meant that MGM couldn't use its brand to draw U.S. players.

"The day will clearly arrive when this activity will be legalized and regulated and we will participate fully at that time."
- Terry Lanni
MGM Mirage

Many offshore jurisdictions in the Caribbean and elsewhere, on the other hand, allow their operators to accept bets from U.S. players.

The company said it will record a loss from discontinued operations of approximately $5 million, net of tax, in the second quarter, related primarily to the unrecoverable costs of software and hardware utilized in the operation. The $5 million loss will also include the second-quarter operating losses for MGM Online.

The company, the first and only U.S.-based casino group to operate a play-for-pay online casino, isn't the only land-based gaming interest to fail in its online gaming venture.

Tattersall's, Australia's largest gaming company, closed down its online casino in January. Kerzner International, the parent company of Casino Atlantis in the Bahamas, then shut down its Internet casino in March, followed by the closure of media giant Publishing and Broadcasting's in May.

Like MGM Mirage, the three other failed operations were hampered by restrictions blocking them from operating in markets where their brands are strong.

MGM Mirage CEO Terry Lanni said his company proved to regulators that an online casino could be established with proper controls and regulations and is hopeful the legal picture in the States will clear up.

"We were successful in demonstrating a working model that provided the proper checks for jurisdictional control, age verification and the necessary security and responsible gaming measures required to function in a regulated market," Lanni said in a statement.

He added, "Unfortunately, even in light of a successful working model, the legal and political climate in the U.S. and several countries around the world remains unclear. The fact is that millions of U.S. citizens currently participate in online gaming in an unregulated environment. We believe that a more sound and realistic public policy would be to regulate the activity and hold operators to the highest standards of probity and integrity. MGM Mirage Online has clearly established that the regulatory model works."

Regardless of what happens in the short term, Lanni is confident MGM will eventually have an online presence.

"The day will clearly arrive when this activity will be legalized and regulated and we will participate fully at that time," he said.

Officials from MGM Mirage and its software supplier, WagerWorks, did not immediately return calls from IGamingNews.

Survivor - MGM Mirage Voted Off the Island is republished from
Kevin Smith
Kevin Smith