Count The Venetian In

In May of 1999, Sheldon Adelson forever changed the way hotels and casinos were built on the Strip in Las Vegas.

Nearly three years later, the owner of The Venetian, and the mega-resort's parent company Las Vegas Sands Inc., may be getting ready to jump into the Internet gaming marketplace.

The indication was made this week when Adelson's company filed its annual report with the U.S. Security and Exchange Commission.

Although the company was unclear about what direction its Internet gaming plan would take, the company said it is "actively pursuing the possibility of developing and operating an Internet gaming site."

Adding to the mystery, the company said it entered into a joint venture in January "to assess the feasibility of developing and operating an Internet gaming site." The company didn't reveal, however, whom the join venture is with.

Officials with The Venetian declined to comment when reached by IGN for further details about the plan.

If The Venetian intends to run an online casino through an offshore jurisdiction, it won't be the only Strip-based property to do so.

MGM Mirage was awarded an Internet gaming license from the Isle of Man in September and plans to go live with a site by the end of the year.

Earlier this year, Station Casinos Inc., another player on the Strip, entered an agreement to purchase 50 percent of Sun International's Isle of Man Internet casino operation. Sun was one of the first licensees in the Isle of Man and was the first company to launch a site based there. The deal is expected to be finalized by the third quarter. Station plans on branding its own online casino once the deal is cemented.

The land-based gaming industry has seen an overall shift in its approach to online gaming. The American Gaming Association, the industry's lobbying group, recently announced it would lobby against an anti-Internet gambling bill making its way through the U.S. House of Representatives.

Adelson, however, has always been open to the idea of Internet casinos. Last year he told the Las Vegas Sun that The Venetian would have no problem becoming on online operator.

"Our hat will be in that ring," he said.

The problem for Adelson, and other Strip properties like MGM Mirage and Station, is that to take advantage of a known brand, any online operation will have to be set up outside of the United States.

Although the Nevada legislature passed a bill enabling online gaming to move forward in Nevada, the process has stalled. The bill was written to give the Nevada Gaming Commission the authority to license online casinos, but only after the federal government approved the practice. The NGC began to draft regulations and guidelines for potential licensees but is still awaiting feedback from the Department of Justice.

The Venetian didn't disclose which jurisdictions it would consider for online operations. The company has ruled out any unregulated area, though, saying that it will need a license "to operate the venture from a jurisdiction where Internet gaming is legal."

Despite entering the interactive gaming picture after other Vegas-based operators, and with little fanfare, The Venetian could win the race to be the first Strip operator to open an online casino. Even more important than being the first to merge a Strip brand with online gaming, however, is exploring new sources of revenue.

The Las Vegas Sands has transferred $7 million from its mall subsidiary to its Venetian operation to meet cash flow requirements, the company's recent SEC filing shows. The Sands, which is privately held, filed with the SEC because The Venetian was partially financed with public debt.

The 3,000-plus room resort took a major financial hit after the terrorists attacks on Sept. 11. Last year, the Las Vegas Sands suspended construction of a 1,000-room addition to The Venetian to save money as travel to Las Vegas plummeted after the attacks.

The company's fourth-quarter profits fell to $1 million from $5.1 million, while net revenue fell 17.9 percent to $121.8 million. For the year, the company reported a loss of $1.26 million, down from a $15.9 million profit in 2000, while net revenue was down 9.8 percent to $523.9 million.

Cash flow, a commonly used measure of casino industry success, fell in the fourth quarter to $42.2 million from $49 million. For the year it was down 14.9 percent to $164.6 million.