Mirage Chairman Steve Wynn and billionaire Kirk Kerkorian, the majority shareholder in MGM Grand, are expected to take the high stakes deal to the next level after Mirage board members rejected the unsolicited bid, but left the door open for a better offer.

Mirage board members met for more than two hours Tuesday, then issued a news release saying the offer to acquire the company for $17 a share "is inadequate and not in the best interests of Mirage Resorts stockholders."

The board also invoked a shareholder plan commonly known as a "poison pill" initiative, which essentially allows a company to increase its number of shares and make a takeover effort prohibitively expensive.

The Feb. 23 bid by MGM Grand offered some $3.5 billion for the outstanding stock, plus assumption of $2 billion in Mirage debt.

"It's very clear that he (Wynn) has put the company in play," an industry insider who requested anonymity said Tuesday night. "He's basically saying the company is for sale, but not at $17."

The insider said he expected MGM to remain a major suitor.

Harrah's Entertainment Inc. had been mentioned last week as a possible player in the high stakes game, although gaming analysts speculated the company "had its plate full."

"Right now it's between Mirage and MGM," Harrah's spokesman Gary Thompson said Tuesday night. He declined to speculate whether the company might become a suitor.

The Mirage statement said the company "would be willing to consider a transaction which would fairly reflect the long-term values inherent in the Mirage properties, brand name and good will, rather than an opportunistic bid which is timed to maximize values for the bidder."

Jason Ader, a casino analyst for Bear, Stearns & Co., saw that as a good sign.

"Nobody really expected Steve Wynn to capitulate and say 17 was a fair price," Ader said Tuesday night. "The most important part of the release is that he acknowledged his willingness to speak to MGM. Some skeptics on Wall Street thought Steve would not be willing to discuss any deal."

Ader said the key will be whether MGM can come up with a number that would satisfy Mirage and not dilute the value of MGM stock.

"MGM is adamant in not doing a deal if it's dilutive to their stockholders, which means they can only pay about $20 a share," Ader said.

The next step is for the two sides to negotiate, Ader said.

"Kirk and Steve aren't ones to sit around and let the dust settle," the analyst said.

MGM Grand President James Murren did not immediately return a telephone call from The Associated Press seeking comment.

In its announcement, Mirage said it was putting in place a plan that would allow current stockholders to buy additional stock for half the market price if a person or group acquires more than 10 percent of the company.

Commonly known as a poison pill defense, such tactics are designed to increase the number of shares and make a takeover too expensive.

"This is a standard anti-takeover defense that one would expect in a company the structure of Mirage, where management owns a minority stake," Ader said.

Wynn owns about 10 percent of the stock, with the entire management team owning less than 20 percent, Ader said.

Wynn said the stock rights package was designed "to assure that all of Mirage Resorts' stockholders receive fair and equal treatment in the event of any proposed takeover of the company, and to guard against abusive tactics to gain control of Mirage Resorts without paying all stockholders a premium for that control."

The deal offers a premium of more than 56 percent over Mirage's closing share price of $10 7/8 the day before the offer was made, but comes as gaming company shares, and Mirage in particular, have been pummeled by investors.

It was rumored for several weeks that MGM Grand, buoyed by glowing fourth-quarter and 1999 financial figures, was in a buying mood and Mirage seemed a ripe target.

Despite owning the 3,025-room Bellagio hotel-casino, the biggest earning hotel on the Las Vegas Strip, Mirage disclosed fourth quarter earnings of $65.4 million in January that disappointed some analysts.

The company has struggled with its Beau Rivage resort that opened last March in Biloxi, Miss.

Meantime, MGM Grand reported all-time record revenues of $420.9 million for the quarter ending Dec. 31.

Wynn has been credited with the current boom in Las Vegas, which dates back to his opening of the company's flagship Mirage hotel-casino in 1989. The company also owns the Golden Nugget and Treasure Island hotel-casinos in Las Vegas, half interest in the Monte Carlo resort here, and the Golden Nugget in Laughlin.

Kerkorian has been a major player in Las Vegas for more than a quarter of a century. He has built the world's largest hotel here three times. He built the International, now the Las Vegas Hilton, and later built the old MGM Grand, now Bally's-Las Vegas. In 1993 he opened the new 5,005-room MGM Grand Hotel on the Las Vegas Strip.