Harrah’s shuts down U.K. gambling Web site

By Liz Benston (contact)

Thursday, March 3, 2005 | 10:58 a.m.

Harrah's Entertainment Inc. has suspended the operations of an online gambling site based in the United Kingdom after posting losses of $9.3 million last year.

The move marks the second time a Las Vegas casino giant has tried and failed to tap into the lucrative Internet gambling market.

The site, called Lucky Me, was introduced in November 2003 for British bettors and was suspended in October, the company disclosed Tuesday in its annual report to shareholders.

The site was discontinued because it was losing money, Harrah's spokesman David Strow said.

Rather than the typical method of gambling for money, the Web site allowed players to access as many games as possible -- with new games offered every seven-and-a-half minutes -- with a monthly subscription. Gamblers paid from about $17 to $84 per month for access to bingo and other games with cash prizes ranging from $8.50 to $1.7 million.

Lucky Me featured an identification process that prohibited bets from U.S. residents as well as from other countries where Internet gambling is prohibited.

The site was developed in partnership with Revahertz Networks, a Boston-based, privately-held software game developer that founded Gamesville, a games-for-prizes site that was sold to the Internet search engine Lycos in 1999.

Harrah's in January said it would dissolve a partnership with Gala Group Ltd., a U.K. bingo hall operator, to build casinos in Britain after lawmakers there significantly restricted the number of casinos that can be built under a pending gambling bill. The bill, in its present form, is expected to allow up to eight Las Vegas-style resort casinos.

At the time of the Gala deal, Harrah's and other U.S. operators were optimistic that more casinos would be legalized. But concerns about problem gambling and a proliferation of neighborhood casinos led to a more restrictive gambling bill than had been anticipated.

Strow said the gambling bill and legislative concerns didn't factor into the decision to abandon the Web site.

Similarly, MGM Mirage in 2003 shut down a gambling Web site that catered to U.K. and European customers. The site didn't attract enough bettors because it prohibited bets from U.S. bettors in order to comply with state and federal laws against Internet gambling, MGM Mirage officials said.

Many big gambling Web sites operate in a legal gray area because they accept bets from Americans over the objections of the U.S. Department of Justice. These sites tend to be profitable because the United States, which hasn't prosecuted online bettors, remains the biggest market for Internet gambling.