The move could be a blow for online wagering because MGM is one of the most reputable names in gambling. Its move into Internet wagering in September 2001 had lent a sense of credibility to the market, which faces obstacles such as rejecting bets from minors and people living in areas where online gambling is not allowed. MGM Mirage Online, the company that entertainment honcho MGM set up to handle online gambling, is based in the Isle of Man, in the United Kingdom.
MGM Mirage said it had successfully implemented a gaming model that checked to make sure wagerers were adults and did not live in regions that prohibited gambling. But despite that, the company said, it could not continue operations.
"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," MGM Mirage CEO Terry Lanni said in a statement. "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 commonsense regulations that we believe should be implemented."
Several federal lawmakers have been trying for years to, mostly through laws that would make it illegal to place Internet wagers via credit cards, something that many credit card companies already do voluntarily. Although none of the bills has yet to pass, online gambling advocates fear they're garnering more support each year.
Further complicating the issue is the quandary over who can legally wager online. Gambling opponents say it's technically illegal for U.S. residents to place online bets under a law that bans gambling over telephone lines. That means big-name casinos such as MGM, which might be natural destinations for online wagerers from the United States, must turn away many of the very people they attract. Even so, online gambling experts say the majority of online betting originates here because of the high Internet penetration and incomes in the United States compared with other countries.
Many established Las Vegas casinos were, fearing online wagering would eat into their market share. But as they watched online casinos rake in cash from people who never had to leave their computers to make a bet, they changed their minds.
MGM plans to close its MGM Mirage Online site June 30. The company said the move will result in a second-quarter loss of $5 million related to hardware and software costs, operating losses, and lost tax benefits.
The Interactive Gaming Council, a trade group representing online gamers, said MGM's plan to close its online casino wasn't surprising, given that many legal issues remain unresolved.
"It basically discourages some of the most respected names in the gaming industry from getting into this new area," said Keith Furlong, deputy director of the council. "MGM looking to leave the industry because of legal and political uncertainty after investing money in technology and jobs is disappointing."