MGM’s Online Casino Proves to Be a Mirage

Citing an uncertain U.S. legal and political climate, MGM Mirage said Wednesday it will shutter its online casino on June 30. The casino giant said it opened its online operations in September of 2001 to develop an operational model for a regulated Internet gambling industry.

MGM Mirage Online is based in the Isle of Man, a dependency of the British Crown, and confined its activities to jurisdictions in which online wagering was permitted and did not accept customers from the U.S. and other jurisdictions which do not permit such activities.

“We set out to prove that online casino gaming could be implemented with the same high standards of regulatory integrity as land-based operations,” said Terry Lanni, chairman and CEO of MGM Mirage. “We were successful in demonstrating a working model that provided the proper checks for jurisdictional control, age verification and the necessary security and responsible gaming measures required to function in a regulated market.”

The U.S. Congress, however, is debating legislation designed to ban, not regulate, Internet gambling. While Rep. John Conyers (D.-Mich.) has urged Congress to study the possibilities of a regulated online gambling industry and its potential tax revenue, his fellow members are more focused on legislation that would prohibit credit card companies and other online payment systems from making payments to online casinos.

The fate of the legislation is uncertain and while Congress dithers, offshore casinos beyond the reach of U.S. laws are raking in billions from Americans. For the MGM Mirage, it is a losing combination.

“We have proven critics wrong who said that online gaming could never be properly regulated,” Lanni said. “Unfortunately, even in light of a successful working model, the legal and political climate in the U.S. and several countries around the world remains unclear. The fact is that millions of U.S. citizens currently participate in online gaming in an unregulated environment.”

MGM Mirage, Lanni said, believes a “more sound and realistic public policy” is needed for the major Las Vegas and Atlantic City casinos to enter the online market.

“In the meantime, millions of U.S. citizens who are currently playing casino games online every day must continue to do so without the protections provided by common sense regulations that we believe should be implemented,” Lanni said. “The day will clearly arrive when this activity will be legalized and regulated and we will participate fully at that time.”

MGM Mirage will take a $5 million loss in its second quarter as a result of closing its online casino.

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