A bold bet on British online gambling

On his way to New York in 1995 to work for Doug Morris, a prominent music industry executive, Eric Semel made a detour that changed his life.

He left his home in Los Angeles and drove to Las Vegas, where he met with Stephen Wynn, the legendary casino developer who built up Mirage Resorts before selling it to MGM Grand last year. Wynn is a friend of Semel's father, Terry, the longtime co-chairman of the Warner Brothers studio and now chief executive of Yahoo Inc, the Internet portal.

During a conversation with Wynn, Semel said he had confessed a secret desire to run a casino. "Given the opportunity, in another life, I always thought it would be really cool to work in Vegas," Semel, who is 32, recalled saying.

Wynn hired him immediately.

"His eyes lit up," Wynn recalled. "The chemistry clicked."

Semel apologized to Morris, who was also a friend of his father's, and spent the next six years working for Wynn instead -- first at the Mirage and then the Bellagio, becoming a savvy gambling executive himself.

After MGM Grand bought Wynn's company, Semel struck out on his own. Last month, he bought ukbetting.com, an online sports bookmaker in London, for ?6 million, or roughly US$8.5 million.

At first glance, it seems an odd choice to leave the gambler's paradise of Sin City for London, where gambling limits are almost puritanical. Regulations require gamblers to become members of a casino 24 hours before they can play. The government limits the number of slot machines, prohibits live entertainment in casinos and forbids gamblers from drinking alcohol while betting.

But a sweeping government review released last month proposes abolishing many of those restrictions. The review, subject to rounds of negotiations before its recommendations become law, also suggests legalizing all forms of online gambling, which would make Britain one of the few countries to allow it. Currently, casinos in Britain cannot offer Internet versions of blackjack, roulette and other games, but bookies can accept sports bets online.

Going a step further, Gordon Brown, the chancellor of the exchequer, is wooing online sports-betting sites with a tax break, hoping they will set up shop in Britain instead of places like the Caribbean or Gibraltar.

Online gambling is still dwarfed by casino gambling, partly because of legal questions surrounding who can make bets on the Internet. But over the next few years, with a number of countries likely to adopt more relaxed rules, annual revenue from online gambling is expected to double to US$5 billion, analysts from Bear, Stearns say.

None of which is lost on Semel, who is not the only American gaming entrepreneur eyeing Britain. Encouraged by the Isle of Man's decision to legalize online gambling, MGM Mirage has applied for a license there. Although technically part of Britain, the Isle of Man has its own Legislature and makes many of its own laws.

"The market in Britain has great potential," said Alan Feldman, an MGM spokesman.

Britons have a reputation for betting on everything from the weather to political elections, in addition to horse and dog racing. They place more bets per capita than Americans, but trail Australians, who are among the heaviest gamblers, according to Merrill Lynch.

Most punters -- as gamblers are called in Britain -- place bets with a few large firms, including Ladbrokes, owned by the Hilton Group; William Hill and the Rank Group, which owns casinos and the Hard Rock Cafe chain. New entrants face a challenge.