By Sue Zeidler
LOS ANGELES, May 2 (Reuters) – MGM Resorts International
CFO Dan D’Arrigo said the company was still deciding
whether or not to launch an Internet poker website in Nevada and
the state may be too small to provide a lucrative online market
on a standalone basis.
“We have to make an assessment on the cost to operate that
space. We haven’t ruled it out, but we haven’t given it a green
light either,” said D’Arrigo in an interview on Thursday. “We’re
not going to be the first or a pioneer from the state’s
perspective.”
Nevada, which legalized online poker in February, this week
became the first state to go live as Station Casinos
launched the first offering known as UltimatePoker.com.
New Jersey and Delaware have also legalized online gambling
and are scrambling with plans to go live as well.
While MGM is pursuing the regulatory and licensing process
in both New Jersey and Nevada, D’Arrigo and others believe
either federal legislation or state compacts are needed to
attract more gamblers and drive up liquidity to create a robust
market that will eventually generate billions of dollars in
revenue for companies and local governments.
Big casino operators would prefer federal standards or state
compacts as they would offer larger, more uniform markets which
would lure more gamblers and create better liquidity. State by
state legislation could lead to a patchwork of regulations and
different tax rates.
Some analysts project Nevada’s online gambling market will
yield only $50 million to $250 million in annual revenues. The
larger and more populated New Jersey is pegged to generate $500
million to $1 billion yearly.
“Our preference is for something to be done at the federal
level. We’re focused on these state by state initiatives, but it
makes (operating) more challenging and more complicated. The
opportunities are different in each state,” he said.
“Hopefully states will compact with one another and that
will create liquidity and critical mass,” he said.
On a conference call earlier, MGM officials said online
gambling will ultimately be a very profitable business for the
gaming industry if done correctly at the state level.
MGM reported a surprise profit for the first quarter,
boosted by a rebound in Las Vegas and continued strength in the
Chinese gambling region of Macau.
The casino giant earned $6.5 million, or one cent per share,
compared with a loss of $217.3 million or 44 cents per share a
year earlier. Analysts on average had forecast the company to
report a loss of 10 cents a share, according to Thomson Reuters
I/B/E/S.
MGM and Boyd Gaming have partnered with Web poker
firms like Bwin.party to provide software and other
services to their online gaming efforts across the U.S.,
including in both New Jersey and Nevada.
MGM and Boyd are co-owners of the Borgata Hotel and Casino
in Atlantic City, which would provide both companies a way into
the New Jersey online gambling market, which is restricting
access to companies who have land-based operations.
MGM’s D’Arrigo believes that if there are state compacts,
Nevada could emerge a leader in the industry due to its long
history of gambling regulation and proximity to huge states like
California, which is contemplating online gambling.
