Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Gambling, The Next Great Internet Industry -- Ignore unavailable to you. Want to Upgrade?

To: Herc who wrote (427)	8/24/2000 3:17:42 PM
From: kidl	Read Replies (1) \| Respond to of 827

August 23, 2000 Legalized Internet gaming chances improve MGM MIRAGE is in a contract By David Strow LAS VEGAS SUN MGM MIRAGE today took what could be the first step toward offering an Internet casino, in a move that could have huge ramifications for the fledgling online gaming industry. The Las Vegas casino giant announced today that it will offer six of its casinos in a virtual fashion on the Internet, allowing visitors the opportunity to not only tour the properties, but to play non-cash Internet versions of slots and table games. Both MGM MIRAGE and its partner, Silicon Gaming Inc., emphasized that the games will not be played for actual wagers -- and that the current goal of the site is to build the MGM MIRAGE brands on the Internet. But both acknowledged that legalized Internet gaming could be possible in the future -- and that the website they're developing could give MGM MIRAGE a big head start in the Internet gaming industry. "Our principal objective is brand marketing, but we're well aware of the implications down the road," said MGM MIRAGE spokesman Alan Feldman. "If and when the technological and regulatory environment changes ... we would be in a wonderful position to take advantage of that." An Internet gaming expert agreed, saying MGM MIRAGE's move could potentially "explode this market overnight." "It's inevitable that big branded companies will become a part of this business ... but it hasn't been inevitable that it will be Nevada licensed companies," said Sebastian Sinclair, vice president with Christiansen Capital Advisors. "I've threatened that business schools would teach that the Nevada gaming industry lost the global Internet market. This is an indication that maybe they won't." Six MGM MIRAGE-owned casinos -- MGM Grand, Mirage, Bellagio, Treasure Island, New York-New York and Beau Rivage -- will be offered in virtual fashion on "WagerWorks.com," an online "gaming community" operated by Silicon Gaming. Silicon Gaming President and Chief Executive Andrew Pascal said he expects the site to launch by the end of the year. The goal is to recreate on the Internet, as accurately as possible, the experience of playing in one of the megaresorts. WagerWorks is majority owned by Silicon. A 22 percent stake in the subsidiary was sold to a group of private investors in a $7.6 million private equity offering. Silicon produces a line of video-based slot machine products, and Pascal said the company plans to use these products for its Internet site. In a significant move, Pascal said the company plans to offer Action Gaming's popular "Multi-Play" video poker products on the site. The site will launch exclusively with MGM MIRAGE brands, though Pascal said Silicon may look to bring other casino operators onto the site as well. Both the MGM MIRAGE brands and the quality of the Silicon products are significant for the Internet gaming industry, Sinclair said. A big hurdle for online casinos has been the poor quality of games available -- but Silicon's games should mean a big step forward in that direction, Sinclair said. The power of MGM MIRAGE's brands, Sinclair said, "goes a long way toward eliminating one of the major depressing factors of the size of the Internet gaming market, and that's trust." Currently, Nevada regulators appear to be strongly against allowing Internet wagering by the state's licensees, primarily because online operators cannot be certain of the location of their players -- and cannot assure regulators they aren't accepting bets from jurisdictions where gambling is illegal. This issue came to the forefront with American Wagering Inc. of Las Vegas, operator of an online sports wagering service based in Australia. Though the AWI site prohibited betting by Americans, a Nevada Gaming Control Board agent was able to successfully place a wager on the AWI site. In January, the control board filed a formal complaint against AWI. In a subsequent settlement of this complaint, AWI agreed to sell off its online wagering service. In hearings, regulators said operators will need to be able to identify a wagerer's location without fail before Nevada would consider permitting its licensees to operate cash wagering operations on the Internet. Though Silicon is currently working on technology that might make this possible in the future, the current site will strictly avoid wagering for cash or prizes. Players will be able to accumulate points that can be redeemed for prizes such as vacations, shows and travel packages at MGM MIRAGE properties, but these points will be handed out based on time of play, not on how lucky a player is with the online games. Feldman said the technological ability to ensure the location of an Internet gambler may not be as far away as some people think. "Technology seems to go through generational changes every three to six months," Feldman said. "So what may be hard and fast as a rule today is a challenge answered in three to six months, or maybe in a year. Think about where we were today versus two years ago. "Today, for a variety of reasons, there's great concern about Internet gaming. Who knows what kind of technology will allow for that activity in the future?" Pascal said developing this capability is something Silicon will focus its efforts on, though he noted that he believes legal Internet gaming to be "way off in the future." "We're based in Silicon Valley, and this is where there's so much activity related to this new medium (the Internet)," Pascal said. "We'll take advantage of all of this new and emerging technology. When it's deemed to be legal and credible, we'll be able to not just participate, but to offer the best solution for participating in online gambling in some form."