Mahado is the guardian of the Millenium Ring. If you look closely in him, you can see Yugi's favorite card - Darl Magician.
Mahado's duty is to protect the Pharaoh. When Bakura appears, he decides to confront him in the tomb of the Pharaohs, so he can fulfill his duty and personally to protect Atem. Unfortunatelly, Mahado underestimates his enemy. Bakura wins and takes the Millenium Ring. Even then Mahado does not abandon the Pharaoh. His KA, Dark Magician, protects the Pharaoh in his battles with Diabound and even after that.
Translated from Bulgarian language by: Ted^Maverick (TV_Squad)