MGM Mirage, the first and only licensed American casino operators to take its brand online, announced Wednesday that it's pulling the plug on its Isle of Man-based Internet casino at the end of the month.
The decision makes MGM one of several casualties among land-based operators trying to enter the Internet space.
Some feel the failure of land-based brands online proves the strength of established leading Internet-only operators; others say that as long as MGM Mirage and other industry heavyweights are prohibited from accepting Internet bets from U.S. players, they shouldn't be investing in online ventures.
We asked the experts:
What message does the closure of MGM Mirage's online casino send to the online gaming industry?
Sebastian Sinclair: It really depends on who you are. The most interesting message that it may send is to the Venetian and the future of their plans in Alderney. Three major land-based companies have tried this and all three failed. Crown, Sun and now MGM all tried and were unable to be successful. To Golden Palace and Casino-on-Net, it is party on.
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"The most interesting message that it may send is to the Venetian and the future of their plans in Alderny."
- Sebastian Sinclair
Christiansen Capital Advisors
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Nothing has really changed over the last four or five months that I can see, so the timing seems a little odd. I am sure they are frustrated with the process on Capitol Hill, but fundamentally, if they went into this business expecting that in the near to immediate term they were going to be offering this to U.S. citizens, I think they were misguided. I don't see this Congress, at least with the people that are in there now, endorsing any regulatory bill.
This is always a long-term proposition. When Sun closed they said they couldn't see how they could be profitable in the near- to mid-term.
I think that you are already seeing the land-based brands having an impact online, it is just that the brands are William Hill and Ladbrokes, not MGM Mirage, Park Place or Harrah's. I think that is kind of interesting because there is a lot of globalization going on in the gambling industry in general. MGM Mirage just announced they were getting into the U.K. market last month and there is a lot of interest in U.S. companies about what is going on over there. But I think this will be a slow process and it will continue. It will be a process measured in decades not years. I think in 10 to 20 years you will have global gaming brands. The interesting thing about that, given the recent development, is who those brands will be.
Once you lift this fog of regulatory uncertainty and it clears your perspective, I don't think there is doubt in anyone's mind that this will be a phenomenal, huge business. This expansion of gambling just keeps going and going, and sure there are lulls, but the restrictions of gambling will continue to ease and in my view of the future I never see that clock being turned back.
Sebastian Sinclair is a research analyst for Christiansen Capital Advisors, a privately held independent consulting and financial services firm serving communications, entertainment, gambling and sports industries and government agencies that regulate these activities. He has conducted studies of the economics, financial structure and valuation of existing and proposed gambling facilities.
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" How can you run a successful business without support from U.S. policy makers when so much of the demand for Internet gaming is in North America?"
- Keith Furlong
Interactive Gaming Council
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Keith Furlong: The news that MGM Mirage is closing its Internet gaming operation is disappointing, but not surprising from a business perspective. How can you run a successful business without support from U.S. policy makers when so much of the demand for Internet gaming is in North America? It is my guess that MGM Mirage, and Kerzner International before them, rejected a significant number of players with a nexus to the U.S. each day.
The only good that could come of the MGM Mirage news is if it sends a message to policy makers that the issue of Internet gaming needs to be addressed in a more sensible manner than its currently addressed in the U.S.
At the end of the day, the MGM Mirage decision is an example how misguided public policy decisions are keeping the most responsible and reputable companies from entering this industry.
A strictly regulated Internet gaming industry, including proper due diligence and continuous monitoring, would provide an opportunity for policy makers to protect citizens against underage and problem gambling as well as money laundering.
The fear is that current policies are pushing the Internet gaming industry further underground, where there is less control and no tax monies available to assist with player protections.
Keith Furlong is a vice president with the Catania Consulting Group, a government relations and consultancy firm with extensive experience in gaming issues. He also serves as the deputy executive director of the Interactive Gaming Council, a trade association established to promote strict government regulation and fair and responsible trade guidelines in the interactive gaming industry.