LAS VEGAS — Casino operator MGM Mirage Inc. is selling the Treasure Island Hotel & Casino on the Las Vegas Strip to billionaire Phil Ruffin for $500 million, the company said Monday.

Ruffin, whose interests include casinos and greyhound race tracks, purchased the property through Ruffin Acquisition LLC for $500 million cash and $275 million in secured notes issued by Ruffin Acquisition and secured by Treasure Island's assets, MGM Mirage said. The combined value of the deal, including debt, is $775 million.

"This is a terrific deal for everyone involved," said Alan Feldman, spokesman for Las Vegas-based MGM Mirage. "We are able to complete a transaction at the right price with no financing involved through any other third party."

MGM Mirage has owned the Treasure Island since May 2000, when MGM Grand Inc. purchased Mirage Resorts Inc. The company said it anticipated a substantial gain on the sale.

MGM shares were up $1.34 or 12.5 percent, at $12.03, in morning trading.

Ruffin is the former owner of the New Frontier hotel-casino, which was imploded in November 2007 to make room for a multibillion-dollar resort bearing The Plaza brand, and the $1.2 billion Trump International Hotel & Tower that opened March 31 on the Las Vegas Strip.

MGM Mirage chief executive James Murren called Ruffin "a known and trusted community partner," and said the sale would increase MGM Mirage's financial flexibility.

In a statement issued through MGM Mirage, Ruffin called the Treasure Island "ideally located in the heart of the Strip."

Treasure Island is set next to The Mirage, amid the newer Wynn Las Vegas and Encore resorts, The Venetian and Palazzo towers and the Fashion Show retail mall.

It was built for $450 million by casino mogul Steve Wynn, and opened in 1993 featuring a public pirate show set on a replica ship in front of the building. It now has 2,885 guest rooms and suites, 90,000 square feet of gambling space, restaurants and entertainment.

The property was recast in 2003 by MGM Mirage as "TI," with a sexier "Sirens of TI" show replacing the Strip-front pirate extravaganza.

Ruffin and MGM Mirage noted that the sale must clear regulatory and governmental reviews. The acquisition was targeted to close by the end of the 2009 second quarter.

JPMorgan analyst Joseph Greff described the sale of what he called a noncore asset a good move for MGM Mirage, because it helps improve the company's liquidity.

Greff also viewed the transaction as a positive for Ruffin, partly due to the property's location and cash flows.

"We'd expect the deal to close easily and quickly given Ruffin (presumably) still has a Nevada gaming license," Greff wrote in a note to clients.