A few years ago, a British businessman had the foresight, and luck, to get dibs on the incredibly lucrative domain name, "sex.com." Now he's disgustingly rich and he says that he wants to buy all eight of the Caesars casino/resort properties. Considering the many parallels between online porn and online gambling, such a sale would certainly accelerate the inevitable depolarization process of the Internet and traditional gaming industries. But don't hold your breath.
The Caesars properties are currently owned by Starwood Hotels & Resorts, however, they're being sold to Park Place Entertainment for $3 billion in a deal which Park Place says will be complete in the fourth quarter of 1999.
Ocean Fund International, owner of Sex.com, reported Monday that it submitted a $3.6 billion all-cash offer to purchase the properties. The company said in a news release that it has pledged an additional $2.5 billion in cash for capital improvements of the Caesars locations, including a sports arena at the Las Vegas Caesars Palace.
Company Chairman William Douglas said he was confident that the offer would be accepted and that the gaming commission would approve the deal quickly.
The view from the Douglas camp varies slightly from that of Park Place and Starwood. Park Place said it did not plan to respond to the unsolicited offer from Ocean Fund, which also caught Starwood officials by surprise. "We have never heard of Ocean Fund International,' Starwood spokesman Jim Gallagher said. "We have no knowledge whatsoever of their purported offer. They have talked to no one here. Their press relations guy said the offer was sent to one of our executives, but that executive has never heard of him.'
"We characterize that as bizarre and we underscore the word bizarre," said Jason Ader, a gambling industry analyst for Bear Stearns & Co. "Our advice to investors is to dismiss this as so much noise. It's not likely to have much credibility."
Experts say that obtaining licensing in Nevada, New Jersey, Mississippi and Indiana would be extremely difficult for an Internet porn business.
Dennis Neilander, a member of the Nevada Gaming Control Board pointed out that Nevada gambling laws include a morals clause, which would be "a tough one to overcome.'
Even Ocean Fund Attorney O. Robert Meredith agrees. "My thought is they're going to have an uphill battle," Meredith said.
Meanwhile, the Associated Press reported today that PR Newswire, which distributed the Ocean Fund press release, has launched an investigation into the release after an internal check system "raised red flags.'
Sex.com boasts over 9-million members who pay $24.95 per month for access to the world's largest sex-related Internet site, which receives more than 146-million unique "hits" daily. (You do the math.) The company reports that advertisers on the 1,000-page-deep porn site pay up to $1.5-million monthly to display their banners.
"There are some people in this industry who claim to make a lot of money. In fact, Sex.com does 86 percent of the sex-related business on the web," Douglas said. "We make more than Penthouse, Hustler, Playboy, and all other major sex web sites combined. I challenge anyone who claims to do more business in this industry to produce auditable numbers."
The AP also reported that Ocean Fund, which classifies itself as a British Virgin Island mutual fund, is not registered as a mutual fund in that territory. Nor is it registered with the ICI, a trade association of U.S. mutual funds with more than 1,7500 members.