(Updates with closing share prices.)
Oct. 31 (Bloomberg) -- MGM Resorts International and Boyd Gaming Corp., preparing for the U.S. to legalize online poker, agreed to form a venture with the biggest listed Internet gambling company, Bwin.Party Digital Entertainment Plc.
Bwin.Party, based in Gibraltar, will contribute technology and its PartyPoker and World Poker Tour brands to a new company that will be owned by all three. The U.S.-based company will offer online poker to U.S. players should it become legal, the companies said in separate statements.
MGM Resorts will own 25 percent of the venture, Boyd will hold 10 percent and Bwin.Party the rest, MGM Chief Executive Officer Jim Murren said today in an interview. The U.S. casino companies each will use Bwin.Party technology to run their own online poker services, Boyd CEO Keith Smith said.
“It’s all about preparing for the eventual opening of the market,” Bwin.Party Co-CEO Jim Ryan said in a phone interview. “There’s been an awful lot of momentum at the state and federal levels.”
Congress is considering federal regulations that would allow Internet poker while states explore their options. Casino companies are lobbying for rules would generate tax revenue and provide players a secure system that prevents under-age gambling and money laundering.
“It’s such a shadowy, amorphous market today,” Murren said in a telephone interview. “We do know that millions of Americans are gambling online, we do know that they’re gambling billions of dollars, we know that the U.S. government is deriving no benefit from this, no job creation, no tax revenue, and we know that many are at risk” from unregulated websites, he said.
Bwin.Party, listed on the London Stock Exchange, was formed by the March merger of Bwin Interactive Entertainment AG and PartyGaming Plc. The company reported revenue of 814 million euros ($1.13 billion) last year and employs 3,100 people, according to its website.
The Justice Department in April indicted PokerStars, Full Tilt Poker and Absolute Poker, alleging the three foreign companies circumvented a 2006 federal law barring banks from processing payments to offshore gambling websites. That prompted Wynn Resorts Ltd. to abandon an alliance announced weeks earlier with PokerStars.
MGM lost 4.2 percent to $11.52 at the close in New York trading and has declined 22 percent this year. BYD declined 2.9 percent to $6.48 and is off 39 percent year-to-date. Bwin.Party lost 0.6 percent to 109.7 pence in London.
--Editors: Anthony Palazzo, Rob Golum
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