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Casino will close Web site

After investing millions of dollars to build the first Internet gambling site operated by a major US casino company, MGM Mirage Inc plans to discontinue the site at the end of the month.

"Unfortunately, even in light of a successful working model, the legal and political climate in the US and several countries around the world remains unclear," Terry Lanai, MGM Mirage's chairman and chief executive, said in a statement Wednesday.

The company will take a US$5 million loss in the second quarter to dissolve its MGM Mirage Online division.

MGM Mirage introduced the site in September 2001, and said it succeeded in showing that Internet gambling could be regulated in a fashion similar to casinos.

The site was based in the Isle of Man, a small island-nation off the cost of Britain that created Internet gambling regulations to offset a declining tourism economy.

The Web site contained security verification technology that pinpointed where gamblers were located to block wagers from the US, where Internet gambling is illegal. It accepted bets from a few countries that allowed Internet gambling, primarily the UK.

The move won't have a significant effect on efforts to legalize Internet gambling in the US, experts say.

"You're not going to see any US companies taking advantage of [online gambling] if there's no clarity coming soon," said Sue Schneider, president of River City Group, a St. Louis-area Internet gambling consultant.

MGM Mirage's actions follow a string of other closures by Internet operators who have struggled to make a profit operating under a more regulated framework than the hundreds of Web casinos that now accept bets from US gamblers.

The MGM Mirage site wasn't intended to be an instant moneymaker, company spokesman Alan Feldman said. However, the lack of regulation in the US -- where up to 70 percent of Internet gamblers are located -- make it difficult to compete, he said.

"There may be a business outside of the US but the cost of doing this when you're complying with US-style regulations is significant," Feldman said. "To lock out 70 percent of the market ... means it's not a viable business in the long term."

MGM Mirage could quickly re-enter Internet gambling if it becomes legal in the US, but Feldman said the mood in Congress would have to change. Lawmakers are pursuing a bill to ban online gambling by outlawing the financial transactions used to place bets.
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