Here Comes the Future

23 August 2000
When the Nevada Gaming Commission announced plans for the April 13 Internet Gaming Informational Seminar, the question of the hour was whether Las Vegas casinos were Internet bound. The daylong meeting proved there was a lot of interest among Las Vegas operators, who turned up in droves to learn about the ins-and-outs of Internet betting. So, perhaps it's not very surprising that MGM Mirage announced today that it's teaming with Silicon Gaming, Inc. to develop an online gaming community that could set the stage for Nevada's first licensed online casino.

The community, which will house play-for-free casino games, according to a Silicon Gaming press release, could potentially offer "cash Internet gaming when and where such activities satisfy all applicable law and regulations." The MGM/Silicon partnership comes on the heals of an announcement by Silicon gaming that its subsidiary had been awarded licenses to operate a virtual casino and a virtual sportsbook in Norfolk Island.

MGM Mirage Chairman Terry Lanni is no stranger to the Internet either. After Lanni briefly resigned from MGM Grand last December, he took a seat on the board of interactive horse betting company (which coincidentally has the ticker symbol "UBET"), from which he stepped down upon re-assuming the MGM Mirage chairman's mantle earlier this year. Lanni, who also sits on the board of, was enthusiastic about the new entirely Flash-based portal, which will be located at "The Internet has proven to be an exciting, emerging medium for both information exchange and entertainment," says Lanni. "Our agreement with WagerWorks will allow us to better leverage the Internet as a marketing tool for our family of properties."

As part of the deal, Silicon Gaming has formed a subsidiary, WagerWorks, Inc., to recreate the Las Vegas strip online featuring virtual versions of MGM Mirage's properties: The Mirage, The MGM Grand, Bellagio, Treasure Island, New York-New York, and the Beau Rivage resorts. When visitors enter each virtual property, they will have the opportunity to choose from up to eight games from Silicon Gaming's proprietary WagerWareTM technology. Cash and prize points will be given out based upon length of play, which can then be redeemed for vacations, shows, special events, and travel packages at the various MGM properties. A fourth quarter 2000 launch is expected.

Silicon Gaming has also secured exclusive rights to the Action Gaming, Inc. MULTI-PLAYTM patents for Internet casino use, including three-play poker, five-play poker and fifty-play poker. WagerWorks president and CEO Andrew Pascal commented, "The Action Gaming intellectual property is among the most valuable in our industry. It's an important complement to our already extensive portfolio of proprietary gaming content and supporting technologies."

Along with securing certain exclusive online rights to the intellectual property of MGM Grand and Action Gaming, WagerWorks, Inc. has secured more than $7 million private equity financing, which gives Silicon Gaming 78 percent ownership interest in WagerWorks' currently outstanding equity. The financing will be used to further develop the WagerWareTM system and related game content, subsidize the launch of the MGM Mirage/WagerWorks gaming community, and fund efforts to develop the ability to offer cash Internet gaming when and where it is legal.

MGM Mirage VP of Public Affairs Alan Feldman points out that both the Internet and online gaming industries have changed dramatically over the last two years, which prompted MGM Mirage to look more closely at Net betting. The main concern, he said, is whether technology for Internet gambling can be developed to provide the same level of regulation that already exists for land-based casinos in the U.S. At this point, Feldman added, "We're using the site as a marketing tool for the properties." He was unaware of any target date to offer real-play games.