MGM takes its show on the superhighway

Oct 8, 2002 6:58 AM

            The last time a Nevada gaming licensee, Vic Salerno, got involved with online gaming, state regulators warned him he was walking through a minefield with clown shoes on.

            The prophesy may have been self-fulfilling as Salerno was eventually fined and had to give up his Australian sports betting operation because its technology wasn’t secure enough to keep out prohibited players.

            So far, there’s been no such admonition to MGM Mirage, which last week launched its online casino, which is located on and licensed by the Isle of Man.

            But, sources say, you can be sure Nevada regulators are looking closely at the operation to ensure underage and unwanted players aren’t able to gamble online.

            Gaming Control Board officials said last week they will “test” the security and database providers that are designed to exclude gamblers who don’t qualify (by age and location) for play.

            MGM’s site is called “playmgmmirage.com” and it includes a mix of about 19 electronic games that include roulette (American and European), blackjack, craps, draw poker, keno, baccarat, bingo and several slot games.

            The games can be played for fun or for cash. Currently, there is a betting limit of 1,000 pounds, or about $1,570 U.S. dollars. Wagers can be placed in euros, pounds and dollars.

            The cost MGM Mirage about $15 million to build, plus an annual licensing fee of about $125,000.

            While Internet gambling is virtually illegal everywhere in the United States except Nevada, MGM’s operation is run from a location off the coast of Great Britain.

            Because of prohibitions, the MGM site only accepts wagers from players in the United Kingdom, Ireland, South Africa and other countries.

            While many off-shore sites don’t enforce restrictions, the MGM Mirage online casino has built-in safeguards to keep unwanted players from gambling.

            MGM chose the Isle of Man to set up shop because of its strict regulation of Internet casinos, company officials said.

            Company officials said it’s too early to predict how much money the site will generate. But MGM is banking on its “brand” name to lend credibility to an industry that is otherwise in a gray area.

            In addition to its online casino games, the MGM site features references and links to MGM Mirage’s Las Vegas properties, as well as numerous promotions and contests.

            Wall Street analysts seem to split on the potential of Internet gambling, but most agree that MGM Mirage would have a “leg up” on the fledgling industry if it ever gets off the ground.

            In a report last month, Bear Stearns predicted that regulated jurisdictions such as Isle of Man “appear to have strong growth prospects over the next several years.”

            Nevertheless, Bear Stearns acknowledged the volatile nature of online gaming when it reeled in its growth predictions from 43 percent in 2002-2003 to about 20 percent.

            Moreover, the Wall Street analysts estimated Internet gaming would generate about $4.2 billion in worldwide revenue, down from $5 billion, in 2003.