MGM Mirage launches online casino for gamblers outside U.S.

Thursday, Oct. 3, 2002 | 1:35 a.m.

LAS VEGAS - Las Vegas resort operator MGM Mirage has quietly launched the first online casino by a major U.S. gambling company, a Web site that welcomes Internet gamblers with 19 games and photographs of showgirls.

The site is open to all for free play, but only gamblers in six countries outside the United States can bet real money.

The owner of such hotel-casinos as Bellagio, The Mirage and MGM Grand entered the online gambling world with about a $15 million investment and a small office on the Isle of Man, an island-nation off the coast of Great Britain that has licensed four other web casinos.

Because of its established brand name and its 19 land-based casinos on three continents, the MGM Mirage has more to lose than most online gambling sites should it run afoul of regulators.

Only residents of the United Kingdom, Portugal, Spain, Ireland, South Africa and New Zealand were allowed to open accounts and start betting when the Web casino went online last week.

The "soft launch" Sept. 26 will be followed by a flurry of online ads and promotions on Western European portal sites, said Bill Hornbuckle, president and chief operating officer of MGM Mirage Online.

The site offers slots, roulette and animated card games including poker and blackjack. There's also baccarat, craps, bingo and keno. Each pops up in a separate window and allows gambling without software downloads. It operates using much of the same software that powers the Hard Rock Internet casino, launched in July by British company Rank Group PLC.

The MGM Mirage site is networked with layers of database-searching software designed to ensure gamblers are who - and where - they say they are.

Five different companies working for MGM verify the age and residency of a potential online bettor. Teams of regulators and auditors on the Isle of Man and in London monitor that network of systems.

The site for now rejects gamblers from dozens of countries, including the United States, where federal law prohibits using the Internet or phone lines to offer casino or sports betting.

But while MGM Mirage is hoping it will lead other big casino companies online - and other offshore gambling sites hope it will lend credibility to their companies - federal lawmakers are pushing in the opposite direction.

A bill passed by voice vote in the House on Tuesday would make it a crime for a gambling business to accept credit cards, checks or fund transfers in connection with unlawful Internet gambling.

"Internet gambling serves no legitimate purpose in our society - it is a danger to the family, it is a danger to society at large," said the bill's sponsor, Rep. James Leach, R-Iowa.

Investigators with the federal General Accounting Office reported last week that Internet gambling is susceptible to money laundering and related criminal activity.

In Nevada, where MGM has ownership in 12 casinos, regulators will monitor the site through quarterly reports filed by the company. Online violations could jeopardize the company's state gambling licenses. But the Nevada Gaming Control Board did not approve the site and can only react to violations found by Isle of Man regulators.

"The burden is on (MGM Mirage) to ensure that they report to us, keep us informed," board chairman Dennis Neilander said.

The MGM site accepts Euros, British pounds and dollars, but does not explicitly state who is allowed to make bets. Potential gamblers must click on "Policies" then "Legal" or "Terms of Use" tabs, only to find out that they are responsible for determining whether they're allowed to gamble.

Gambling industry analysts say regulated online casinos are likely to become an established niche in the industry. Bear Stearns Co. estimates 1,800 largely offshore Internet gambling sites generate $3.5 billion in yearly revenues.

"This is really a revolutionary time for the industry," Bear Stearns analyst Michael Tew said.

Keith Furlong, deputy director of the Interactive Gaming Council, said the group representing smaller gambling sites is hoping for a "domino effect" of regulation.

"The challenge right now is to find one or two major states or countries that will step in with sensible regulation," Furlong said.

Other major U.S. casino companies - Park Place Entertainment and Harrah's Entertainment - have not yet committed to the Internet.

Park Place has applied for a license on the Isle of Man, but has not decided whether it would open an online venture. Harrah's has said it is too soon to seek a license.

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On the Net:

MGM Mirage Inc.: http://www.mgmmirage.com

MGM Mirage Online: http://www.playmgmmirage.com

Hard Rock Casino Online: www.hardrockcasino.com