MGM MIRAGE: Prohibition futile

By Liz Benston (contact)

Wednesday, Oct. 2, 2002 | 11:10 a.m.

One of the world's largest casino companies -- continuing to argue that prohibiting Internet gambling is futile -- launched its offshore online gambling site last week.

MGM MIRAGE'S site, www.playmgmmirage.com, marks the first Web casino by a major U.S. gaming company and is based in the Isle of Man, a small island nation off the coast of Britain that devised Internet gambling regulations to boost its ailing tourist economy. MGM MIRAGE's site began accepting bets Thursday.

The launch comes amid some regrouping by the casino industry, which is exploring how to offer online gambling without running afoul of federal laws. After receiving a letter from the U.S. Department of Justice stating that gambling over interstate lines is illegal, Nevada regulators announced a series of meetings to discuss options such as limiting Web casinos to Nevada residents.

MGM MIRAGE's commitment to online gambling will help further the argument for legalization worldwide, said Bill Hornbuckle, president of the company's Web casino subsidiary MGM MIRAGE Online.

"We think the industry, save for a few significant players around the world, is underregulated."

MGM MIRAGE's site includes a bold-print disclosure stating that it doesn't intend the site to be used by people in the United States or to become a promotional tool for online gambling in areas where it is illegal.

For now, MGM MIRAGE has limited bets on the site to a test group of customers in Western Europe and the United Kingdom. The company will launch the site officially in about a month.

The Department of Justice letter didn't influence the launch, Hornbuckle said.

"We made a commitment over a year ago to get into the space," he said. "We recognize that the U.S., in the immediate future, is off limits. But we believe that prohibition has not worked. (It) is going to chase more operators underground and take legitimate financial institutions out of the market."

The site will only represent a small percentage of the company's casino business, Hornbuckle said. Yet it also presents an opportunity to understand the market and position the company for potentially lucrative opportunities in the long term, he said.

Two-thirds of Internet users reside outside of the United States, he said, and the U.K. and Europe are way ahead in terms of using other interactive technology.

Hornbuckle declined to reveal the cost of the site and any potential revenues it could generate.

The site allows gamblers to set their own limits on bet increments, total losses and time played.