UPDATE 3-MGM Mirage gets $1 bln gain, but oper profit falls

(Adds company comments, updates stock price)

By Deena Beasley

LOS ANGELES, Feb 21 (Reuters) - MGM Mirage Inc (MGM.N: Quote, Profile, Research), the world's No. 2 casino operator, posted lower quarterly operating earnings on Thursday as labor costs rose and a slower U.S. economy began to take its toll.

Net profit, however, more than quadrupled, driven by a one-time gain of $1 billion from an investment in the company's Las Vegas CityCenter project by state-owned group Dubai World.

The quarterly results were "right in the middle" of what MGM had forecast when it warned earlier this month it expected lower earnings from continuing operations, said Bear Stearns analyst Joe Greff.

The company said on Feb. 7 that January earnings were down "a few cents" from a year earlier, but Chief Executive Terry Lanni declined to comment on whether that trend is expected to continue.

MGM, which operates resorts including the Bellagio, Mandalay Bay and Circus Circus in Las Vegas, had fourth-quarter net income of $872 million, or $2.85 per share, compared with $201.6 million, or 69 cents per share, a year earlier.

Excluding the CityCenter gain of $2.23 per share and other one-time items, earnings fell to 41 cents a share from 53 cents a year earlier. On that basis, Wall Street analysts had expected 44 cents a share, according to Reuters Estimates.

MGM attributed the lower operating profit to new labor contracts in Las Vegas and Detroit and higher costs related to continued capital investments.