Tuesday, Sept. 21, 2004 | 10:53 a.m.
A Clark County District Court judge has been asked to sort out who has the right to one of the world's most coveted Internet domain names, lasvegas.com.
Companies operated by Las Vegas' two dominant media groups have been sued by two of the city's largest casino companies in order to determine who will own the Internet address, which attracts millions of viewers who plan to visit the city.
Stephens Media Intellectual Property LLC, a subsidiary of the company that owns the Las Vegas Review-Journal, and VEGAS.com LLC, a subsidiary of the company that owns the Las Vegas Sun, were named as defendants in a suit filed in Clark County District Court last week by companies affiliated with Mandalay Resort Group and Caesars Entertainment Inc.
Mandalay Resort Group is in the process of being acquired by MGM Mirage while Caesars Entertainment is being acquired by Harrah's Entertainment Inc., two gaming industry-changing mergers that would create the two largest casino companies in the world.
MRG Vegas Portal Inc., a subsidiary of Mandalay, and PPE-IM Inc., a subsidiary of Caesars, filed the action, which asks a judge to declare who should be entitled to the lasvegas.com domain name. Judge Ron Parraguirre has been assigned the case.
MRG and PPE own a controlling interest in a limited liability company known as LAS Travel, which formerly was known as LasVegas.com LLC.
According to the suit, Stephens Media, in February 2002, negotiated an exclusive, transferable license to LAS Travel to use the lasvegas.com name, which the companies used to help sell hotel rooms for Mandalay and Caesars properties.
According to the agreement, LAS Travel or its owners had the right to transfer their interest in the domain name to the Greenspun Media Group, which owns the rival VEGAS.com.
Under terms of the agreement, if PPE and MRG wanted to transfer their interests to the Greenspun Media Group, they were required to give Stephens a "notice of intent." The agreement also stated that Stephens would then have a 30-day option to acquire the controlling interests in LAS Travel "at the price and on the same terms set forth in the notice of intent."
If Stephens failed to exercise its option, the agreement said, PPE and MRG could transfer their controlling interests to the Greenspun Media Group.
According to the suit, PPE, MRG and VEGAS.com reached an agreement July 22 in which VEGAS.com would purchase the ownership interests of PPE and MRG in LAS Travel, including rights to the lasvegas.com Web site.
A day later, PPE and MRG provided Stephens with a notice of intent, giving Stephens 30 days to match the offer.
The suit says on Aug. 19, Stephens executive Sherman Frederick sent a letter to PPE and MRG exercising the company's option rights. But on Aug. 24, VEGAS.com President Howard Lefkowitz sent a letter to PPE and MRG stating that the Stephens bid did not match the terms of the VEGAS.com offer. Lefkowitz also said he was drafting a purchase agreement to close on the deal within 30 days.
A day later, an attorney for Stephens sent a letter saying the company had properly exercised its option and was also drafting a purchase agreement to close on the deal within 30 days.
Both companies followed with their respective purchase agreements.
"Both Stephens and VEGAS.com assert that plaintiffs are contractually bound to sell their ownership interests in LAS Travel to each of them, respectively, and further allege that consummation of the purchase with the other party would constitute a breach of contract," the suit says.
Neither the term sheet nor the agreement provide a mechanism for the resolution of that type of dispute, the suit says.
PPE and MRG sent letters to both companies on Sept. 3, requesting that the two companies resolve the issue among themselves or submit the matter to binding arbitration. But to date, the dispute has been unresolved and PPE and MRG say a delay in the resolution is causing them to lose money.
The suit is seeking a declaratory judgment of whether the Stephens bid validly exercised terms of the option clause and "to which party plaintiffs may, pursuant to the agreement, sell their ownership interests in LAS Travel."
The suit also asks that if the court determines that the controlling interest be sold to Stephens that a declaratory judgment be made that the terms set forth in the VEGAS.com term sheet be matched.
Representatives of Stephens and VEGAS.com could not be reached for comment today.