Jan. 13 (Bloomberg) -- MGM Mirage, the casino operator controlled by billionaire Kirk Kerkorian, will win U.S. Federal Trade Commission approval for a $4.8 billion takeover of Mandalay Resort Group without having to sell any Las Vegas casinos, people familiar with the matter said.

The combination of MGM Mirage, the world's third-largest casino operator, and Mandalay would create the world's largest gambling-resort company. The proposed combination of No. 2 Harrah's Entertainment Inc. and Caesars Entertainment Inc., the industry leader, would supplant MGM Mirage and Mandalay as the world's biggest if the FTC approves that takeover. Harrah's offered to buy Caesars for $5.18 billion in July.

FTC lawyers have concluded they lack evidence that the MGM Mirage-Mandalay combination would lead to higher room rates or fewer promotional discounts aimed at luring customers to the gaming tables, the people said. Together, the two companies would own almost half the hotel rooms on the Las Vegas Strip, a four- mile stretch of Las Vegas Boulevard between downtown and the airport. The five-member Federal Trade Commission seldom overrules its staff.

MGM Mirage agreed to pay $71 for each Mandalay share. Mandalay shares rose 10 cents to $70.61 as of 1:20 p.m. in New York Stock Exchange composite trading. MGM Mirage shares rose 66 cents to $75.11.

``We are confident we will be able to close the transaction by the end of the first quarter,'' MGM Mirage spokesman Alan Feldman said. An FTC spokeswoman didn't immediately return a call seeking comment.

Much Competition

The FTC staff can't refute the companies' argument that casino hotels on the Strip, where MGM Mirage and Mandalay together operate 10 casino-hotels, isn't a distinct market, people familiar with the case said. That's because casinos on the Strip face competition from those in downtown Las Vegas, the Bahamas, and some operated by American Indian tribes in California and Connecticut, they said.

Las Vegas also faces competition from luxury casinos in Australia and Macao.

To block a proposed merger, the government must prove that companies seeking to combine would gain power to raise prices in a distinct market.

MGM Mirage operates the Bellagio, the Mirage, MGM Grand, the Boardwalk and the Treasure Island casino resorts on the Strip. Mandalay Resort Group owns Mandalay Bay, Luxor, Excalibur, Monte Carlo and Circus Circus. Mandalay, based in Las Vegas, also operates casinos in four other Nevada cities, including Reno, as well as in Tunica, Mississippi, and Elgin, Illinois.

State Approvals

The companies must also get approval from gambling regulators in Nevada and Illinois. MGM Mirage's Feldman said the company hopes to get a February hearing before the Nevada Gaming Commission on its application. Mandalay operates the Grand Victoria riverboat casino in Elgin, about 40 miles northwest of Chicago.

MGM Mirage said last month it is considering selling one of two Michigan casinos to comply with the state's antitrust law. The company, which originally said it would sell Mandalay's 53.5 percent stake in the MotorCity casino in Detroit, said it was weighing offers for its Michigan property.

MGM Mirage, based in Las Vegas, also operates casino resorts in the Primm Valley area 25 miles south of Las Vegas near the California border and another in Biloxi, Mississippi.

Harrah's and Caesars will sell four casinos for $1.24 billion in cash to Colony Capital LLC as part of their attempt to win regulatory approval for their combination. The companies said they would sell two casinos in Tunica, Mississippi, one in Atlantic City, New Jersey, and another in East Chicago, Indiana.

Last June, the FTC cleared Harrah's $916 million purchase of Horseshoe Gaming Holding Co. eight months after the deal was announced. The agency required no divestitures. The takeover gave Harrah's ownership of Binion's Horseshoe Casino & Hotel in downtown Las Vegas, along with casinos in Mississippi, Louisiana and Indiana.

To contact the reporter on this story: James Rowley at jarowley@bloomberg.net

Last Updated: January 13, 2005 13:26 EST